IBC

1. Rakesh Kumar Agarwal v. Mr. Devendra P. Jain, Liquidator of M/s Asis Logistics Ltd. (DOJ: 01.06.2021)

In the instant matter, Adjudicating Authority held that the Corporate Debtor at this stage cannot claim to be fall under the classification of MSME and take the benefit of MSME in view of amendment vide notification on 01.06.2020 with effect from 01.07.2020 by having its retrospective effect when admittedly on the date of filing of Application under Section 10 of the Code, the Corporate Debtor does not fall under the criteria of MSME.

Hon’ble NCLAT while setting aside the order of adjudicating authority held that it is settled law as per the decisions of the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors. that the liquidation is only the last resort. Since the appellant became eligible to submit a scheme by virtue of an amendment, it was held that Appellants are allowed to submit a scheme of arrangement to the liquidator of the Corporate Debtor and the liquidator shall consider the scheme of arrangement in accordance with the law. Accordingly, the appeal was disposed of without any cost.

Judgment Link: https://bit.ly/3qAIYKB

2. Jayanta Banerjee v. Shashi Agarwal Liquidator of INCAB Industries Ltd (DOJ: 04.06.2021)

In the instant matter, Hon’ble NCLAT held that completing the CIRP strictly in terms of provisions of the Code, as per the Code and Regulations made thereunder, are an essential element of the CIRP. Skipping any statutory process as per the Code would have significant repercussions and impact on the entire Resolution Process. All the statutory provisions for the conduct of CIRP are interlinked; it doesn’t give any scope to the IRP/RP to skip any of the provisions. CIRP regulations are exhaustive and include a provision to deal with all the eventualities that may arise in the conduct of the CIRP. Without verification and admission of a claim, the IRP cannot assign the voting share to a creditor, and without that, there cannot be a meeting of the CoC.

It is also pertinent to mention that when the constitution of the CoC itself is found to be tainted, the decision of that CoC cannot be validated on the pretext of exercise of commercial wisdom. Hon’ble NCLAT also observed that role of IRP/RP/liquidator was not impartial in the conduct of the CIRP. The formation of the CoC in the instant case is a nullity in the eyes of the law. Therefore, the impugned order of liquidation passed by the Adjudicating Authority deserves to be set aside and the time spent from the date of earlier filing of the application till date is excluded from the period of CIRP. Accordingly, the appeal was disposed of without any cost.

Judgment Link: https://bit.ly/3dsMe5s

3. Martin S.K. Golla Erstwhile RP v. Wig Associates Pvt. Ltd. (DOJ: 04.06.2021)

In the instant case, the Adjudicating Authority while the passing the impugned order was aware of the IBC Amendment Ordinance enacted by the Central Government on 23.11.2017 which inserted Section 29A of the Code laying down law with regard to persons not eligible to be Resolution Applicants. Hon’ble NCLT observed that CIRP is a process which is continuous and the same is to be dealt with as per the provisions which existed on the date when the petition was admitted. It was recorded that as per Section 29A, Mr. Wig would fall in the category of connected persons under Section 29A of IBC; still NCLT went to examine the Resolution Plan which was basically One Time Settlement and to accept the same.

Hon’ble NCLAT held that ineligibility attaches at the time when the Resolution Plan is submitted by Resolution Applicant. The Hon’ble Supreme Court in Swiss Ribbons v. Union of India has upheld the insertion of Section 29A with retrospective effect. Considering the provisions of law and the fact as appearing from the record, the Tribunal found that the Resolution Plan submitted by Mr. Wig could not have been acted upon and the Appellant erred in presenting the same before COC. For above reasons, the Impugned Order is required to be set aside. Accordingly, the appeal was disposed of without any cost.

Judgment Link: https://bit.ly/35W8mBg

4. M/s. Oren Hydrocarbons Private Limited v. M/s. Akzo Nobel Industrial Chemicals (DOJ: 07.06.2021)

In the instant case Appellant (Corporate Debtor) was seeking permission from Hon’ble NCLAT to withdraw the instant Company Appeal and the same was granted. The tribunal however, granted liberty to the Appellant to file an application under section 12A of the Code before the Adjudicating Authority (National Company Law Tribunal, Division Bench-I, Chennai) within 10 days from the date of order and to seek redressal of its grievances if it so desires/advised.

Till the time granted within which the Appellant (CD) files a withdrawal Application under section 12A of the Code, the ‘Constitution of Committee of Creditors’ shall be stayed, if not already constituted. Accordingly, the appeal was disposed of without any cost.

Judgment Link: https://bit.ly/3AcWhFs

5. Earth Gracia Buildcon Pvt. Ltd. v. Earth Infrastructure Ltd. Through its RP (DOJ: 08.06.2021)

In this case, the promoters and directors of both the companies are common. Therefore, from the ledger entries of the Financial Creditor, it cannot be inferred that the money is disbursed with the lender company to the borrower company. On the other hand, the entries of ledger reflect the inflow and outflow of funds which are in the nature of running account, indicating that the debit and credit balances lack of any commercial effect of borrowing which is an essential element in terms of Section 5(8) (f) of the IBC.

Referring to the judgment of Hon’ble Supreme Court in the case of Phoenix Arc Pvt. Ltd. Hon’ble NCLAT held that the transactions in question between Financial Creditor and Corporate Debtor were sham in nature and didn’t qualify as Financial Debt, for the purposes of the Code. Thus, the Appellant has failed to prove that these transactions come within the definition of Financial Debt under Section 5(8) of the IBC. The Appellate Tribunal upheld the findings of the Adjudicating Authority and accordingly, the appeal was dismissed.

Judgment Link: https://bit.ly/3y65opS

6. The Assistant Commissioner of Central Tax v. Mr. V. Shanker, RP for M/s. Sri Ramanjaneya Ispat Pvt. Ltd.& Ors. (DOJ: 11.06.2021)

The Hon’ble NCLAT in this case reinstated what was held in the recent case of Ghanashyam Mishra v. Edelweiss Asset Reconstruction Company. The Appellant was required to file a claim in terms of IBC provisions but did not follow the procedure as laid down in the IBC read with the Regulations and did not duly file claim in proper format within time. Even when the time was over and the Appellant department was advised by the Resolution Professional to get delay condoned by moving Adjudicating Authority, the department instead of resorting to Section 60 of IBC and other enabling provisions only sent a letter, further with a wrong Format that too addressed to Adjudicating Authority.

No fault can be found of the Resolution Professional for not including such operational debt so as to be part of the Resolution Plan as necessary procedure was not followed. It was further observed that statutory dues, if not part of the Resolution Plan, shall stand extinguished, if they are not part of the Resolution Plan. Thus, it is material that if Appellant wanted to claim statutory dues, it had to file claim as per procedures as laid down in IBC read with Rules and Regulations. Accordingly, the appeal was dismissed.

Judgment Link: https://bit.ly/2Tlgs3v

7. Binay Kumar Singhania, Resolution Professional in Genegrow Commercial Pvt. Ltd. (DOJ: 14.06.2021)

In the instant case, it was held by the Hon’ble NCLAT that the stay granted does not lead to automatic revival of the company petition which has been already closed by the Adjudicating Authority.

When the CIRP was initiated and the RP was appointed, one of the Ex-Directors of the corporate debtor preferred an appeal in this Tribunal against the admission of application under section 7 of the Code. The Tribunal passed an order to set aside the order of admission. Subsequently, the Adjudicating Authority closed the proceedings against the corporate debtor. Aggrieved of the order, the SBI went in appeal before the Hon’ble Supreme Court wherein a stay was granted by the court against orders of this Tribunal until next date of hearing.

Consequently, the RP moved to the Adjudicating Authority to seek resumption of the CIRP and exclude the period of 363 days but the same was dismissed and it was observed that the stay granted does not lead to automatic revival of the Company Petition which has been already closed by the Adjudicating Authority. Subsequently, it was held by this Tribunal that without restoration of the Company petition that was closed by the Adjudicating Authority, the CIRP cannot continue.

Judgment Link: https://bit.ly/3hhm2Mw

 

8. Harish Polymer Product v. Mr. George Samuel, RP for Jason Dekor Pvt. Ltd. (DOJ: 18.06.2021)

In the instant case, CIRP was initiated against the Corporate Debtor on 19.12.2019 whereas Appellant (Operational Creditor) filed claim in Form-B with the RP sending the same by e-mail on 15.09.2020. RP rejected the claim and thereafter Adjudicating Authority also rejected the same on the ground of delay. The appellant contended that since Corporate Debtor is located in Ahmedabad and due to the ongoing lockdown, there was no knowledge of initiation of CIRP against the Corporate Debtor.

Hon’ble NCLAT upheld the decision of the Adjudicating Authority and observed that the reasons recorded by the Adjudicating Authority have substance and if at belated stage when the Resolution Applicants are already before the CoC with their Resolution Plan(s) if new claims keep popping up and are entertained, the CIRP would be jeopardized and Resolution Process may become more difficult. If requests as that of Appellant are accepted the purpose of Code would be defeated. Accordingly, the appeal was dismissed.

Judgment Link: https://bit.ly/3Acug15