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IBC

Landmark Judgments by the Hon’ble NCLAT 1st to 15th October, 2021

  1. Bijoy Prabhakaran Pulipra RP PVS Memorial Hospital Pvt. Ltd. Vs. State Tax Officer (Works Contract) SGST Department, Kerala State (DOJ: 07.10.2021)

In the instant matter, Hon’ble NCLAT held that the claims of the GST Department cannot be edited or reduced by the Resolution Professional the GST amount is an amount of tax levied under the assessment order as per the GST Act, 2017.

The factual matrix of this matter surrounds a claim submitted by a State Tax Officer that submitted a claim that was revised by the Resolution Professional during the CIRP although all the assessment orders were passed before the declaration of moratorium. The RP reduced the claim after due verification of the GST claim with the books of accounts of the corporate debtor. Aggrieved by the actions of the RP, the State Tax Officer filed an application before the Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code to allow the claim amount submitted by the Respondent in full. The Adjudicating Authority vide its Order directed the Appellant to file an appeal before the Joint Commissioner, State Sales Tax Department for a reassessment of the GST amount payable.

Consequently, Hon’ble NCLAT observed that the Resolution professional committed an error in exercising its power and exercised the powers of GST Authorities under the pretext of Regulation 14 of the Code, which is not sustainable. Accordingly, the appeal was dismissed for the lack of merit.

Judgment link: https://bit.ly/3pb2aAa

  1. Vidyasagar Prasad Vs. UCO Bank (DOJ: 04.10.2021)

In the instant case, it was held by the Hon’ble NCLAT that the balance sheet that is brought on record before the Adjudicating Authority shall be taken into consideration while deciding the question of limitation and default on the part of the corporate debtor. The said documents cannot be ignored simply on the ground that it is not pleaded in the Application filed in Form-1 for initiation of the Corporate Insolvency Resolution Process.

Relying on the ratio of the judgment of Hon’ble Supreme Court in the case of Lakshmirattan Cotton Mills Co Ltd and further reiterated in Dena Bank’s case that there is an acknowledgement of subsisting liability of the Corporate Debtor. However, it may not necessarily specify the exact nature of the liability. But it indicates the jural relation between the parties, and in any event, the same can also be derived by implication.

Accordingly, the appeal was dismissed.

Judgment link: https://bit.ly/3n1ZVMO

  1. Dinesh Gupta Vs. Vikram Bajaj Liquidator M/s Best Foods Ltd. (DOJ: 29.09.2021)

In the instant case, the Adjudicating Authority by an impugned order admitted an application filed by the operational creditor to initiate an insolvency resolution process against the corporate debtor. Accordingly, the Interim Resolution Professional (IRP) was appointed. However, the resolution plan submitted by the sole Resolution Applicant (RA) was not in consonance with the Code. The Committee of Creditors (CoC) thus requested the RA to make changes to the resolution plan. However, it failed to submit a modified resolution plan. Meanwhile, the extended CIRP period was also over. Hon’ble NCLAT held that since there was no approved resolution plan of the CoC, the decision of Adjudicating Authority to liquidate corporate debtor was free from legal errors.

Accordingly, the appeal was dismissed sans merit.

Judgment link: https://bit.ly/3DU2Pdd

  1. Gail India Ltd. Vs. Ajay Joshi (RP of Alok Industries Ltd. & Ors.) [DOJ: 04.10.2021]

In the present case, it was held by the Hon’ble NCLAT that there is no embargo for the classification of Operational creditors into separate/different classes for deciding the way in which the money is to be distributed to them by the Committee of Creditors.

It was further observed by the Appellate authority that undoubtedly, the CoC has subjective final discretion of Collective Commercial Wisdom in relation to (1) The amount to be paid (2) The quantum of money to be paid, to a certain category or the incidental category of creditors while nicely balancing the interests of the Stakeholders and the Operational Creditors, as the case may be. Looking at from any angle, the impugned order passed by the Adjudicating Authority did not seem to suffer from any material irregularity or patent illegality in the eye of Law.

Consequently, the instant Appeal was dismissed for the lack of merit.

Judgment link: https://bit.ly/2Z0SMUP