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

  1. Fipola Retail (India) Pvt. Ltd. v. M2N Interiors (DOJ: 01.09.2021)

Hon’ble NCLAT in the instant matter held that the definition of “Person” under Section 3(23) of the Insolvency and Bankruptcy Code, 2016 is inclusive, and includes a sole proprietorship. It was further observed by the Appellate Tribunal that a Proprietorship Firm represented by its Sole Proprietor by reflecting the name of sole proprietor itself would show that the Application is being represented by the Proprietorship Firm as well as the Proprietor, duly represented by its Sole Proprietor.

Here, the sole proprietorship firm, the respondent in the current matter filed an application under section 9 of the Code before the Adjudicating Authority wherein it was ordered that an amendment be done in the cause title in view of the definition of ‘person’ under Section 3(23) of the Code. Relying on Neeta Saha v. Mr. Ram Niwas Gupta, wherein the Appellate Tribunal held that the definition of ‘person’ under Section 3(23) is inclusive of sole proprietorship firms, the Respondent sought waiver from compliance with the amendment. The Adjudicating Authority considered the decision of the Neeta Saha and dispensed the Respondent from amending the cause title.

Accordingly, the appeal was dismissed being devoid of merits.

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

  1. PLBB Products Pvt. Ltd. v. Piyush Periwal (DOJ: 07.09.2021)

In the instant case, the Appellant is the ‘Successful Resolution Applicant’ whose Resolution Plan has been accepted by 91.84% of the members of the ‘Committee of Creditors’ (CoC) but the same in pending for approval before the Adjudicating Authority. The Respondents (Promoter and Erstwhile Director of the Corporate Debtor) expressed the desire to submit a Resolution Plan at a belated stage. The Adjudicating Authority gave one chance to the Suspended Management of the CD, an MSME Unit to submit a concrete composite Feasible and Viable Resolution Plan. Hon’ble NCLAT upheld the order of the Adjudicating Authority and held that keeping in mind the intention of the legislature, there is no harm in giving an opportunity to the MSME in accordance with the provisions of the Code for keeping the promotion of entrepreneurship alive. It was further observed that the Adjudicating Authority has only provided an opportunity to the MSME and has given the liberty to the CoC to negotiate with existing Resolution Applicant and MSME unit also and accept the one which is commercially viable and technically feasible.

Accordingly, the appeal was dismissed.

Judgment link: https://bit.ly/3AizJ67

 

  1. Air Travel Enterprises India Ltd., Founder, Promoter and Shareholder of M/s. Green Gateway Leisure Ltd. Vs. Union Bank of India (DOJ: 09.09.2021)

In the present case, the Appellant was a major Shareholder of the Corporate Debtor which had been in the business of the Travel  and Tourism Sector for more than four decades. The amount of default involved in this case is of a ‘Term Loan’ ‘restructured in 2015 and payable by 2022-23’. Meanwhile, admittedly an OTS Agreement was entered between the Respondent Bank and the Corporate Debtor on 05.11.2019 and finally approved on 27.11.2019.  Having agreed to the OTS, without giving sufficient time, Union Bank of India filed Application under Section 7. It was held that the  Corporate Debtor has settled the matter with Dhanlaxmi Bank, the Applicant of Section 7 Application in IA/06/KOB/2020 & IBA/41/KOB/2019 which was disposed of as withdrawn based on the settlement terms on 06.01.2020, during which period of pendency, this Section 7 application was filed on 27.12.2019 against the same Corporate Debtor. It was reiterated that the scope and objective of the Code is insolvency & not recovery.

The admission of Section 7 application was set aside.

Judgment link: https://bit.ly/3CeS18T

 

  1. M/s. Ergomaxx (India) Pvt. Ltd. v. The Registrar, National Company Law Tribunal (DOJ: 07.09.2021)

In the instant matter, Hon’ble NCLAT held that if an order/judgment of a Tribunal is not pronounced at all, the same is a nullity in the eye of law. Pronouncement is primarily considered to be a judicial act, which is the Sanctum Sanctorum of any judicial proceedings in our justice delivery system.

Here, the Appellant’s grievance was that the matter was never listed for pronouncement of an order and that the impugned order was also not available on the Tribunal’s website due to typographical error in the party name. To Appellant’s surprise, it found an Impugned order dated 07.12.2020 on 06.02.2021, which was uploaded in the NCLT Website which was not communicated to the Appellant through any mode prescribed under the NCLT Rules, 2016.

It was observed by the Adjudicating Authority that Pronouncement of Order is quite distinct from communicating/ informing/intimating a deliverance of an order.

The Appellate Authority while taking note of the facts and circumstances in the instant case came to a resultant conclusion that pronouncement is an essential judicial act and therefore  there was a significant omission in regard to the pronouncement of an order by the Tribunal and hence it is declared nullity in the eye of law. Accordingly, the Appeal was allowed and the and the matter was remitted back to the Adjudicating Authority.

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