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Landmark Judgments by the Hon’ble NCLAT 16th to 28th February, 2021

  1. Jalesh Kumar Grover v. Committee of Creditors of Akme Projects Ltd. (DOJ: 16-02-2021)

Hon’ble NCLAT in the aforementioned case, observed that exclusion of time period while computing the CIRP period should be seen from the prism of realism and pragmatic approach. Herein the said case, the period of 112 days was excluded while computing the CIRP period even when 270 days of exclusion was granted on earlier occasions. As per the Hon’ble NCLAT, it was stated that since the current CIRP relates to Real Estate Projects and involves legitimate interests of various stakeholders, it is just and reasonable to grant an additional extension.

However, the appeal was allowed and the order  was passed taking into account the peculiar circumstances of the case and shall not be considered to be a precedent for other cases.

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  1. Kotak Mahindra Bank Ltd. Indian Speciality Fats Ltd. (DOJ: 16-02-2021)

Hon’ble NCLAT rightly declined the appeal for initiating CIRP under Section 7 of the Code, 2016 on the grounds that Article 137 of the Limitations Act governs the filing of an application under Section 7 and the same stands ‘barred by limitation’.

It was observed that default had occurred over three years prior to filing of the application and while on the date of filing application under the Code, 2016 execution proceeding and recovery proceedings were subsisting. Hence, the appeal was dismissed stating that the said dismissal shall not affect the right of the appellant to pursue recovery proceedings and seek execution of the decree before the Competent Court.

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  1. Mani Kumar Singh v. Alchemist Asset Reconstruction Company Ltd. (DOJ: 18-02-2021)

Hon’ble NCLAT in the said matter observed that the Adjudicating Authority on a time bound CIRP process must limit its exercise of adjudicating at the pre-admission stage such that it does not warrant a prolonged hearing. The Adjudicating Authority in the said scenario dealt with all aspects concerning debt and default as required for deriving satisfaction that the application was complete in the very initial stage and also considered the effect of amendment introduced by Section 10A of the ‘I&B Code’ to ensure that the default has occurred before the cut-off date.

The said appeal was preferred by a suspended Director of the Corporate Debtor against the admission of application under Section 7 on the grounds that impugned order was passed without hearing the Corporate Debtor. Hon’ble Tribunal on analyzing the facts and circumstances held that no Rules of Natural Justice have been breached. Accordingly the appeal was disposed off.

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  1. Vekas Kumar Garg v. DMI Finance Pvt. Ltd. and Anr. (DOJ: 18-02-2021)

Hon’ble NCLAT held that in an application under Section 7 of the Code, 2016 – the financial creditor and the Corporate Debtor alone are the necessary parties and no third-party intervention is contemplated at that stage. The Hon’ble Tribunal further stated that the Adjudicating Authority, at the pre-admission stage, is only required to satisfy itself that there is a financial debt in respect whereof the Corporate Debtor who has committed a default so as to pass an order of admission or rejection on merit. In the meanwhile, no lengthy hearing must be warranted at the pre-admission stage nor  any dispute in regard to shareholding or inter se directorial issue is to be entertained.

On the basis of aforementioned grounds, the appeal was dismissed.

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  1. Sodexo India Services Pvt. Ltd. Chemizol Additives Pvt. Ltd. (DOJ: 22-02-2021)

It was observed by the Hon’ble NCLAT that the Adjudicating Authority would not be justified in drawing a conclusion with respect of there being dispute as regards debt and default merely on the strength of an Arbitration Agreement. In the said scenario, the Adjudicating Authority (NCLT Bengaluru Bench) disposed of the application directing the Corporate Debtor to make endeavors for outstanding debt failing which, Applicant would be at the liberty to invoke arbitration clause. The same was considered contradictory to Section 9 (5) of the Code, and it was further held that the Adjudicating Authority has only two options, either to admit the Application or to reject the same as no third option or course is postulated by the law.

Accordingly, the impugned order by the Adjudicating Authority was set aside and the present appeal was allowed.

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  1. Mohanlal Dhakad v. BNG Global India Limited (DOJ: 22-02-2021)

Hon’ble Tribunal in the said matter observed that one cannot ignore the fact that maturity of claim, default of claim or invocation of guarantee has no nexus in regard to the filing of claim before the Interim Resolution Professional under section 18(1)(b) and the Resolution Professional under section 25(2)(e) of the Insolvency and Bankruptcy Code. It was further stated that to determine the plea of ‘occurrence of default’ an existence of ‘debt’ and ‘default’ are to be met for ‘admission’ of an ‘Application’ under section 7 of the Code.

The aforementioned contentions were determined by the Hon’ble Tribunal when the Respondent, for the purpose of defining the investment made is a ‘debt’ or not – erroneously made reference to Companies (Acceptance of Debt) Rules, 2014 and Section 73, 74 & 76 of the Companies Act, 2013. The Appeal was accordingly allowed with directions to the Adjudicating Authority to restore the Company Petition filed under section 7 of the IBC.

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