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Landmark Judgments by the Hon’ble NCLAT 1st April to 15th April, 2022

  1. Anil J. Nemaavarkar Vs. M/s. Kumar Builders Mumbai Realty Pvt. Ltd. now known as M/s. Kumar Urban Development Pvt. Ltd. (DOJ: 05.04.2022)

In facts of present case, the Appellant was the Vice President of the Corporate Debtor, who later was terminated. He claimed a debt of Rs. 64,44,270.60/- inclusive of interest against which a Section 9 Application was filed. The Ld. NCLT rejected the same on ground of pre-existing dispute. This Hon’ble Tribunal upheld the decision of the Ld. NCLT and observed that before filing of a Section 9 Application there were several disputes including a demand notice, Police Complaint and complaint before the Labour Court. Thus, this Hon’ble Appellate Tribunal reiterated that in case of ‘pre-existing disputes’ between the parties, an Application under Section 9 of the Code cannot be admitted as the Code is not meant for resolving issues of such nature.

Link: https://ibbi.gov.in//uploads/order/b696117611f5ff74f84fe06e7f68a16a.pdf

  1. Arun Kumar Jain, Ex-Director, M/s. P. K. Industries Pvt. Ltd. Vs. Rakesh Bhatia (Liquidator of M/s. P. K. Industries Pvt. Ltd.) (DOJ: 05.04.2022)

In facts of present case, Appellant challenged the decision of Hon’ble NCLT for transferring of matter from one bench to another being not in compliance with Rule 146 of NCLT Rules, 2016. The Appellant contented that as per Rule 146 NCLT Rules at time of disposal of case the parties shall be given a reasonable opportunity of being heard. This Hon’ble Appellate Tribunal observed that it is prerogative of the President of NCLT to assign a matter to a particular Bench or tag with any other matter. The power under Rule 16(d) has been exercised by the President, which empowers the President to transfer any case from one Bench to other Bench when circumstances so warrant. The said function of the President in addition to general powers provided in Act. Thus, it is not required that an opportunity of is required to be given before passing the order tagging the case with other two matters.

Link: https://ibbi.gov.in//uploads/order/9de750b9986ba273f940b863f022f10d.pdf

  1. Sharavan Kumar Vishnoi Vs. Upma Jaiswal & Ors. (DOJ: 05.04.2022)

In facts of instant case, the Ld. NCLT directed the Resolution Professional to place on record all the Resolution Plans before the CoC alongwith his opinion on the contravention or otherwise of the various provisions of law. However, the RP had not put forward the Plan submitted by one Ms. Upma Jaiswal stating the plan was not eligible as per Section 29A of the Code. The Hon’ble NCLAT observed that relying on the ratio of Hon’ble Supreme Court in the matter of Arcelormittal India Private Limited vs. Satish Kumar Gupta ((2019) 2 SCC 1), the RP is not to take decision regarding ineligibility of the Resolution Applicant, it has only to form its opinion being his duty to find out as to whether the Plan is in compliance to provisions of Code or not. Further, the RP can give his opinion with regard to each plan before the CoC and it is for the CoC to take a decision as to whether the plan is to be approved or not. Thus, in present case it was duty of RP to present the plan of Ms. Upma Jaiswal before the CoC along with his opinion on the contravention or otherwise of the various provisions of law and thereafter further steps are to be taken for the CoC as per the direction issued by the Adjudicating Authority.

Link: https://ibbi.gov.in//uploads/order/cb4542422a3ada86470943b06d64b93b.pdf

  1. M/s R.S Wire Industries Vs. Trans-Fab Power India Private Limited (DOJ: 04.04.2022)

In facts of instant case, The Appellant in this case supplied copper wire to the Appellant and upon the initiation of the CIRP against the Corporate Debtor, filed a claim with the Resolution Professional which was partially rejected. Against the same the Appellant filed an Application before the Hon’ble Adjudicating Authority dated 16.02.2021. The Resolution Plan for the Corporate Debtor was accepted on 25.03.2021, in light of which the Application filed by the Appellant was rendered infructuous and was dismissed. The Appellant subsequently filed an Appeal before the Hon’ble NCLAT stating the Resolution Plan to be erroneous and unsteady. The Hon’ble Appellate Tribunal made the observation that there was no illegality in the impugned order passed by the Hon’ble NCLT and held that once the Resolution Plan is duly approved by the Adjudicating Authority under Section 31(1), all claims provided in the plan shall remain frozen and binding for all the parties involved including any governmental entities. On the date of approval, any claims that are not a part of the Resolution Plan shall remain extinguished and cannot be brought up at a later date.

Link: https://ibbi.gov.in//uploads/order/5d6e57d25500ffca3540413ff2f4baf4.pdf

  1. Rajesh Kedia Ex-Director of Ajanta Paper and General Products Ltd. Vs. Phoenix ARC Pvt. Ltd. (DOJ: 11.04.2022)

In facts of instant case, the Appellant had filed an Application under Section 7 of the Code, initiating the process of CIRP against the Corporate Debtor. The Application was admitted by the Adjudicating Authority and in the same order had made a mention of certain ‘acknowledgement of debt’ with respect to debt arising out of some debentures issued by UTI to the Corporate Debtor. The Appellant had filed this Appeal in order to claim the amount of ‘outstanding debt’ in respect of these debentures. The Hon’ble NCLAT held that the issue of payment of debt does not fall for consideration at the stage of admission of the Application. The Appellate Tribunal further stated that at the stage of admission the only concern before the Adjudicating Authority is whether the minimum amount of outstanding debt as provided under the Code is met. The question of amount of ‘Claim’ is only to be ascertained and verified by the Resolution Professional at a later stage.

Link: https://bit.ly/3M5FOYY

  1. Berger Becker Coatings Pvt. Ltd. Vs. CoC of Asian Colour Coated Ispat Ltd. (DOJ: 04.04.2022)

This matter was an appeal arising out of an impugned Order passed by the Hon’ble NCLT, Principal Bench. The Appellant was an Operational Creditor of the Corporate Debtor claiming that the Resolution Plan passed by the CoC unjustly prioritised the Financial Creditors, paying them an amount of Rs. 15050 Cr., and underpaid the Operational Creditors with only 4.48% of the total Claim amount. The Hon’ble Appellate Tribunal placed reliance on the Hon’ble Supreme Court’s judgement in the matter of ‘Ghanashyam Mishra and Sons Private Limited’ Vs. ‘Edelweiss Asset Reconstruction Company Limited Through the Director & Ors.’ stating that the Adjudicating Authority under IBC has limited power when it comes to interfering with the commercial wisdom of the CoC, only under Section 30 and 31 of the Code. The Hon’ble NCLAT further stated that the Resolution Plan was in compliance with Section 30(2) of the Code and the amount so distributed is in the order of priority as per Section 53(1) of IBC.

Link: https://bit.ly/3xyF76E

  1. M/s. Genius Security and Allied Services Vs. Mr. Shivadutt Bannanje, RP M/s. Fortuna Urbanscape Pvt. Ltd. (DOJ: 07.04.2022)

The Appellant had a case that the Resolution Plan with an approval vote of 95.03% that was approved by the Adjudicating Authority makes no payment to the Operational Creditors and contains only three categories, namely (i) CIRP Cost, (ii) Employees dues, and (iii) Financial Creditors. There is no mention of Operational Debtors including employee and government dues. The Hon’ble NCLAT observed that as long as the Resolution Plan meets the requirement of sub section (2) and (4) of Section 30 of the Code, the plan may be approved by the Adjudicating Authority. The Hon’ble Appellate Tribunal further stated that no question of discrimination against Operational Creditors may arise as there is no payments assigned for any Operational Creditors.

Link: https://bit.ly/3xrxaA2

  1. ADS Resources Ltd. Vs. Shilpi Cables Technologies Ltd. Through Liquidator Mr. Huzefa Fakhri Sitabkhan (DOJ: 04.04.2022)

The Appellant in this case had made certain payments on behalf of the Corporate Debtor to a supplier in Hong Kong. The Appellant received a demand notice from the Corporate Debtor and subsequently he filed a claim with the Liquidator which was then rejected. The Hon’ble NCLAT in this matter observed that the Appellant in this case made no mention of the claim for the first 6 months of the Liquidation process and only filed a claim upon receiving a demand notice from the Liquidator. The Hon’ble Appellate Tribunal further put reliance on the Hon’ble Supreme Court’s Judgement in the matter of Ebix Singapore (P) Ltd. Vs. Educomp Solutions Ltd. and further stated that the Appellant did not file a claim within the stipulated time and therefore could not realise any of the amount so claimed by him.

Link: https://bit.ly/3xsJkZr