Landmark Judgments by the Hon’ble NCLAT from 16th to 31st December, 2022.
Kalinga Allied Industries India Pvt. Ltd. Vs. CoC (Bindals Sponnge Industries Ltd.) (NCLAT- New Delhi) [D.O.J.- 19.12.2022]
In the instant case an application was preferred by the COC before the NCLT for approval of resolution plan. That while the said application was pending adjudication, the COC in the meanwhile, moved an application to consider the new resolution plan of HCL i.e., a third party. The said application was allowed by the Hon’ble NCLT, aggrieved by the same an appeal was preferred before NCLAT by the SRA. The questions that arose for consideration were- whether the CoC after having approved the Resolution Plan can seek direction to consider the new Resolution Plan of a third party who was not a part of the CIRP Proceedings and seek to withdraw their approval after more than two years of the approval of the first Resolution Plan?
The Hon’ble NCLAT had set aside the Impugned order of the AA and held that once the Resolution Plan is submitted for approval before the AA, it is binding between the CoC and the SRA, unless there is any material irregularity or the same is against the provisions of Section 30(2) of the Code. Thus, the NCLT cannot, in its limited jurisdiction, which is a residuary jurisdiction, interfere in the process.
CA V. Venkata Sivakumar Vs. IDBI Bank Ltd. (NCLAT- Chennai) [D.O.J.- 20.12.2022]
In the instant case an application has been preferred before the Adjudicating Authority to replace the liquidator of CD by the Secured Financial Creditor. Aggrieved by the impugned order of AA of replacing the present liquidator by the new Liquidator, an appeal has been filled before the Hon’ble NCLAT.
The question that arose consideration before the Hon’ble NCLAT was whether the AA has the power to remove the Liquidator. The Hon’ble NCLAT upheld the impugned order of AA by dismissing the appeal. It held that the Liquidator does not have any personal rights, to continue in Liquidation and the AA can order for replacement of the Liquidator by recording sufficient reasons for the same. In relevance to section 33 and 34 of the Code and by the virtue of Section 16 of the General Clauses Act, 1897, AA has the power to appoint as well as to remove the Liquidator.
Link: https://ibclaw.in/ca-v-venkata-sivakumar-vs-idbi-bank-ltd-nclat-chennai/
Edelweiss Asset Reconstruction Company Ltd. Vs. Perfect Engine Components Pvt. Ltd. (NCLAT- New Delhi) (DOJ: 22.12.2022)
In the instant case the Corporate Debtor had defaulted on repayment of loan on 31.03.2009, their Account was declared as NPA on 30.06.2009, and the application under Section 7 of the Code was filed on 7.08.2020. However, it is pertinent to mention that the Corporate Debtor had acknowledged the debt by consistently mentioning it on their Balance Sheets till FY 2018-19. The Hon’ble AA had dismissed the petition on the ground that the same is barred by limitation. Aggrieved by the same, an Appel was preferred before the Hon’ble NCLAT. The issues that arose for consideration before the Hon’ble NCLAT were whether the present application under Section 7 of the Code was barred by limitation?
The NCLAT allowed the appeal and held that the limitation period of three years cannot be strictly construed to have commenced from the date of default/declaration of the Corporate Debtor’s account as NPA. If the CD makes any acknowledgement of debt and default within the period of limitation, the said period of limitation shall be extended to a further period of three years. Consequently, the present application was not barred by limitation as the Respondent has consistently acknowledged the debt and default between 2009-10 to 2018-2019.
Paramvir Singh Tiwana Vs. Puma Realtors Pvt. Ltd. (NCLAT- New Delhi) [DOJ- 26.12.2022]
In the instant case, an application was preferred by the creditors being aggrieved by the impugned order of Adjudicating Authority whereby the Resolution Plan was approved. The NCLT Order was challenged before the NCLAT, on the ground that the creditors had not received fair and equitable treatment under the Resolution Plan. The question that arose consideration was whether the Tribunal has equity based jurisdiction once the Resolution Plan is approved and was there discrimination between the class of Creditors?
The Hon’ble NCLAT upheld the impugned order of AA by dismissing the appeal. It held that once the Resolution Plan is approved, the AA has a very limited jurisdiction except in determining whether the requirements which are specified in sub-Section (2) of Section 30 have been fulfilled or not and cannot interfere in the merits of the ‘Business Decision of the CoC’. As long as the provisions and regulations of the Code have been met, it is the Commercial Wisdom of the CoC which is to negotiate and accept the Resolution Plan, which may involve differential payments to different classes of Creditor. It further held that Equity principle cannot be stretched to treating unequal equally.
Link:https://ibclaw.in/paramvir-singh-tiwana-vs-puma-realtors-pvt-ltd-nclat-new-delhi/