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Landmark Judgments by the Hon’ble NCLAT 16th to 30th Nov, 2021

  1. Tijaria Polypipes Limited vs. Kevadiya Construction Pvt. Ltd. (DOJ: 17.11.2021)

In the instant case, the Hon’ble NCLAT relying on the Judgement of the Hon’ble Supreme Court in the matter of ‘Transmission Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables Limited’ observed that IBC is not intended to be substitute to a recovery forum. The Hon’ble tribunal further observed that the delivery of demand notice is a grey area but whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Appeal was dismissed.


  1. Henan Boom Gelatin Co. Ltd. Vs. Sunil Healthcare Ltd. (DOJ: 17.11.2021)

In the instant case the Hon’ble NCLAT observed that in reply to Demand Notice under Section 8(1) IBC, there is a statutory purpose requiring a Corporate Debtor to bring into notice of the Operational Creditor about the ‘existence of a dispute’. The purpose of which is that if there is a dispute in existence, the same may be immediately communicated to the Operational Creditor such that he may chart his course of action and in case of no mention of existence of dispute, the Operational Creditor can immediately file an Application under Section 9 of IBC. The Hon’ble NCLAT further observed that the Corporate Debtor is to raise a real substantial dispute and not bogus disputes. The NCLT is not to enter into adjudication of the dispute but to look only into the substance of the pleading to find out whether there is a real dispute is decipherable from the reply or not. Accordingly, the Hon’ble NCLAT set aside the order of the NCLT and admitted the Section 9 Application of the Appellant.


  1. Rajmee Power Construction Limited Vs. M/s. Jharkhand Urja Sancharan Nigam Ltd.

(DOJ: 18.11.2021)

The Hon’ble NCLAT relying on the judgment of Hon’ble Supreme Court in the matter of Dena Bank (now Bank of Baroda) Vs. C. Shivakumar Reddy & Anr. 2021 observed that once a recovery certificate is issued authorising the Creditor to realise its decretal dues, a fresh right accrues to the Creditor to recover amount of the final Judgement/Order/decree. In facts of the instant case, the Hon’ble NCLAT held that challenge to the Arbitral Award was dismissed on 06.10.2018 attaining finality and part payment was made on 31.03.2016. Therefore the Application filed by the Appellant on 04.06.2019 is not barred by Limitation. Accordingly, the Appeal was allowed.


  1. Jitender Arora RP M/s. Premia Projects Ltd. Vs. Tek Chand (DOJ: 18.11.2021)

In the instant case, the RP sought directions from the Hon’ble NCLT to either allow RP to take charge of assets of the Subsidiary Company, or allow RP of the Corporate Debtor to initiate joint CIRP of both the holding company and its subsidiary. NCLT rejected the same. The Hon’ble NCLAT observed that if a Corporate Debtor has intricate financial relationship with another company which is controlled in an overwhelming manner by the same set of directors, as the corporate debtor and their businesses are inter-related, intertwined and interwoven, such companies should be looked at jointly for matters related to insolvency resolution. Further, relying on the judgment of State Bank of India and Anr. versus Videocon Industries Limited & Ors, the Hon’ble NCLAT observed that in said case a 14 point test as to whether consolidation of individual CIRPs should be done or not, to yield maximum benefits to stakeholders is given.  In the facts of present case, the Hon’ble NCLAT held that the Corporate Debtor and the Subsidiary Company broadly satisfy the points enumerated in the 14-Point Test. Thus, the matter was remanded to NCLT with directions that an admission application for the subsidiary be considered by the NCLT and a consolidation of CIRP be thereafter considered so that the combined assets of land and flats be considered together to provide fair, just and proper relief to the creditors of the Corporate Debtor Premia Projects Limited.


  1. Bhatpara Municipality VS Nicco Eastern Private Limited & Anr. (DOJ: 22.11.2021)

In the instant case, an Appeal was preferred against the order of Hon’ble NCLT, whereby the claims in respect of past dues of the Appellant (Municipality) against a third party (Respondent/ Auction-Purchaser) were rejected. The facts of the case are that the respondent obtained possession of some property by means of an auction purchase in the Liquidation proceedings of a Corporate Debtor. Thereafter the respondent applied to the appellant to obtain trading licence and mutation of the said property in its name and issued a demand notice for pending dues of property tax.

The Hon’ble NCLAT, while relying on the relevant provisions of the IBBI (Liquidation Process) Regulations, 2016 and Transfer of Property Act, 1882 observed that a duty is cast upon the Liquidator to make a public announcement and thereafter preparation of an asset memorandum containing the value of the assets, including any other information that may be relevant for the sale of the asset. The Hon’ble NCLAT further relying on the Judgment of the Hon’ble Supreme Court in the matter of AI Champdany Industries Ltd. vs. The Official Liquidator & Anr. observed that the auction-purchaser cannot be held liable to pay any such dues relating to period prior confirmation of sale. Thus, outstanding dues of the property tax relating to a period prior to the sale are dues that are similar to the claims of an unsecured creditor and therefore should be discharged as per the provisions of Section 53 of IBC.  Accordingly, the appeal was dismissed.


  1. Manmohan Singh Jain vs State Bank of India (DOJ: 22.11.2021)

The instant case the Appellant being an MSME, availed credit facilities from a Consortium of Banks filed an Appeal against the order of NCLT whereby the Hon’ble NCLT had admitted section 7 IBC, which was defective as the date of default was not mentioned.  The Hon’ble NCLAT relying on the Judgment of the Hon’ble Supreme Court in Surendra Trading Co. v Juggilalkamlapat Jute Mills Co., observed that the timelines under Section 7(5) IBC are not mandatory but only ‘directory’. The Respondent/Financial Creditor in the present case had provided enough proof to establish the date of default in the pleadings and in other documents which the Corporate Debtor has received and acknowledged. Therefore, the non-mentioning of the date of default in Col. IV is not fatal to the application and on the sole ground, the application cannot be rejected mere taking a technical impediment. The Hon’ble Tribunal further while dealing with the issue of limitation, observed that the date of default is not similar to the date of declaration of NPA and the limitation is calculated from the date of default. The instant appeal was therefore dismissed.


  1. Shailendra Singh vs. Nisha Malpani, Resolution Professional (DOJ: 22.11.2021)

The instant case, the Appellant provided legal services to the Respondent/RP and raised legal bills but the said bills were not approved by the CoC. The Hon’ble NCLT directed the Respondent to pay to the Appellant within two days. However the Respondent did not abide with the orders of the NCLT. Consequently, the Appellant filed for initiating contempt proceeding against the Respondent but the same was dismissed by the NCLT.

The issue that arose before the Hon’ble NCLAT was whether, Section 425 of the Companies Act, 2013 empower NCLT and NCLAT to initiate proceedings against its contempt in matters related to IBC. The Hon’ble NCLAT while referring to the Statement and Objects and Reasons of the IBC Bill, 2016 observed that NCLT is to act as an Adjudicating Authority for the purpose of matters pertaining to the IBC and just because IBC does not specifically mention about the contempt provisions, it cannot be said that the NCLT has no powers of contempt. It further observed that if, such a restricted interpretation is to be given that NCLT has no jurisdiction of contempt, then its orders cannot be implemented and IBC shall remain in Black Letters without a teeth to bite. Hence, the present Appeal was allowed.


  1. Central Board of Indirect Taxes and Customs vs. Sundaresh Bhatt (DOJ: 22.11.2021)

In the instant case the Hon’ble NCLAT reiterated that IBC is a special law that provides a non-obstante clause under Section 238 of IBC, with overriding effect over other prevailing law and statute time being in force. Further, in case of two special statutes, which contain non-obstante provisions, the later statute must prevail. Therefore, by virtue of Section 238, IBC being a subsequent law, the proceeding contained therein shall have an overriding effect on the other proceedings of the Customs and Central Excise Act. The Hon’ble NCLAT further observed that the provisions of IBC and Customs Act, 1962 on levy of Customs stand on a different footing and by not paying requisite dues, the importer is deemed to have lost his title to the imported goods. Even before the initiation of CIRP, the Corporate Debtor Company could not have secured the possession of the imported goods except by paying the Customs duty. The NCLAT relying on the judgment in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta observed that that NCLT and NCLAT cannot usurp the legitimate jurisdiction of other Courts and Tribunals when the dispute does not arise solely from the Insolvency of the Corporate Debtor. Hence the present Appeal was allowed and the Appellant was allowed to recover its dues.


  1. Invent Assets Securitisation & Reconstruction Pvt. Ltd. Vs. Rajmal Labhchand Mogra, IRP of Enviiro Bulkk Handling Systems Pvt. Ltd. (DOJ: 26.11.2021)

In facts of instant case, the CoC decided to change the IRP on 16.07.2018 and application in this regard was filed before the Hon’ble NCLT on 31.07.2018. The application was allowed on 09.10.2018 with the fee to the IRP till 09.10.2018. The same was objected by CoC, hence Appeal was filed by the Hon’ble NCLAT, as to whether IRP is entitled to receive his fees till 09.10.2018 when he was replaced or he was entitled for his fees upto an early date. The Hon’ble NCLAT held that after 10 days of sending the name of RP to IBBI by the Hon’ble NCLT and there being no order of NCLT to continue the IRP as Resolution Professional, then the IRP has no right to continue to function as the RP after such date. The Hon’ble NCLAT further observed that NCLT has erred in allowing the claim of fee of RP till 09.10.2018. Accordingly, the appeal was allowed.