Articles published in IBClaw.in

The Insolvency and Bankruptcy Board of India (IBBI) has time and again reiterated that the role of Insolvency Professional (‘IP’) is sacrosanct for achieving the legislative intent behind the Insolvency and Bankruptcy Code, 2016 (‘I&B Code’) itself. It has expressed vide its various circulars and orders that even a slight deviation from the scope of duties endowed upon the Insolvency Professional under the Code will attract strict penalization and disciplinary action from the Board.

The Board recapitulated its intent by pulling up the socks of all the working IPs through its recent order passed against an eminent IP, Mr. Vijay Kumar Garg. The order highlights how an IP’s role is of utmost vitality to any Corporate Insolvency Resolution Process (‘CIRP’) and his dutifulness the breath and soul of the Code. Key take-aways from the order have been discussed below.

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In a judgment dated 26^th November, 2020, a single judge bench of Justice Pratibha M Singh of Delhi High Court while adjudicating the matter between M/s Venus Recruiters Pvt. Ltd. v. Union of India (2020) ibclaw.in 41 HC, held that an avoidance application relating to preferential transaction under section 43 of Insolvency and Bankruptcy Code shall not survive beyond the conclusion of the insolvency resolution process.

The court observed that the continuation of the Resolution Professional for the purpose of prosecuting an avoidance application after the completion of insolvency resolution process (CIRP) is beyond the contemplation of the IBC.

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Insolvency Professional (IP) is an individual, enrolled with Insolvency Professional Agency (IPA) and registered with the Insolvency & Bankruptcy Board of India (IBBI or The Board). An IP is not a Public Servant (as per Section 232 of the IBC) and Section 233 of the Insolvency and Bankruptcy Code, 2016 (The Code or IBC) provides protection to the IP’s for the action taken in good faith.

Insolvency & Bankruptcy Code 2016 has facilitated in improving the index of ease of doing business in India.  The implementation of the IBC is being handled by the Government of India and the Insolvency and Bankruptcy Board of India (IBBI) in a very pragmatic manner by bringing necessary changes as necessitated with the implementation of the IBC, for achieving the intent and purpose of the Code.

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Introduction

This is well proven that the ultimate aim of civil lawsuits is to resolve disputes, which are typically accomplished by the constructive intervention of the judiciary, and sometimes by parties reaching out to court settlement as allowed by statute.

Previously, in accordance with the Insolvency and Bankruptcy Code, 2016 (“IBC”), no provision was made for the withdrawal of an application filed before the NCLT except as provided for in Rule 8 of the Insolvency and Bankruptcy (Application to the NCLT) Rules of 2016, where the NCLT could permit the withdrawal of the application on a request made by the applicant prior to its admission. The report of the Insolvency Law Committee too recommended amendment of Rule 8 to allow withdrawal after the admission of CIRP. Subsequently, Section 12A was inserted via Amendment Ordinance of 6th June 2018 which gave the Adjudicating Authority power to allow withdrawal on application by CIRP applicant with 90% voting share approval of CoC in such manner as “prescribed”.

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Whether Interim Resolution Professional (“IRP”) or Resolution Professional (“RP”) is required to appoint Independent Director to fulfil provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR 2015”) or Companies Act, during the Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor (“CD”) ?

Brief Introduction to Independent Director

The role of Independent Directors plays an important role in achieving the aims and objectives of Good Corporate Governance. Independent Directors plays a vital role to improve the proper and impartial working of the corporate companies. Further, the independent directors had control over the internal process, which can help the shareholders and the public at large to know if any mismanagement or fraud is being done by the company. The guidelines, role etc. are broadly set out in a code described in Schedule IV of the Companies Act, 2013.

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Claim Form To Be Filled By Workmen or Employees In Case The Company Is Under CIRP or Liquidation Process

In case the company is under CIRP, the employees and workmen has to file claim in FORM D i.e. Proof of Claim by a Workman or Employee, Under Regulation 9 of the Insolvency and Bankruptcy (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

In case the company is under Liquidation Process, the employees and workmen has to file claim in FORM E i.e. Proof of Claim by a Workman or Employee, Under Regulation 19 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016.

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The Bombay High Court on 19.3.2020 in Raj Shipping Agencies v. Barge Madhwa and Anr., considered the nature and provisions of proceedings under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act) and harmonised the provisions of the Admiralty Act with IBC.

The Hon’ble Court observed that the Admiralty Act is a complete code as regards legal proceedings in connection with vessels (otherwise called actions in rem), their arrest, detention, sale and determination of priorities in respect of the sale proceeds of the vessels that were ordered to be arrested. It was noted that a maritime claim is enforced by an action in rem against the vessel (or its sale proceeds) and thus the vessel is liable to pay the claim.

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