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Articles & Newsletter

Whether IRP or RP is required to appoint Independent Director to fulfil provisions of SEBI LODR, 2015 or Companies Act, during the CIRP of the Corporate Debtor? – By Adv. Shivam Jaiswal

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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Latest Procedural Developments VIS-À-VIS the I&B Code

Latest Procedural Developments vis a vis the I&B Code

The Insolvency and Bankruptcy Board of India (‘The Board’) on 13th November 2020 through a press release has notified various procedural amendments in the regulations pertaining to the Insolvency Resolution Process for Corporate Persons Regulations, the Liquidation Process Regulations and the Information Utility Regulations.

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Landmark Judgements by the Hon’ble NCLAT (1st to 15th November, 2020)

In Rajendra Bhai Panchal v. M/s Jay Manak Steels,

It was held that mere mistake in the demand notice under section 8 of the Code would not render such notice defective, and if the Corporate Debtor were to question the validity of the demand, the burden would lie on the Corporate Debtor to show that it was adversely affected by the mistake. It was further held that the mere fact of quantum of debt being mis-stated would not ipso facto render that decision defective, as long as the minimum satisfactory figure is owed since it is not the burden of the Adjudicating Authority to determine the quantum of debt. NCLAT clarified that, in such scenarios, the Court would only invalidate the notice if injustice is caused to the debtor if the failure to interfere would cause injustice to the debtor. The Appeal filed by the Appellant (Ex-Director & Shareholder of Corporate Debtor), against NCLT Ahmedabad Bench order dated 03.06.2020 admitting the application under section 9, was dismissed.

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NCLAT Landmark Judgements Roundup: Sep 2020 – Oct 2020

  1. The NCLAT in JM Financial Asset Reconstruction Company Ltd. v. Samay Electronics Pvt. Ltd., the same Bench of the Adjudicating Authority, which passed two conflicting orders, to make a reference to Hon’ble President, NCLT, if not already made, in terms of Section 419 (5) of the Companies Act 2013, for hearing on the issues and points on which the two Members of the Bench had divergent view in the split verdict so that the matter is placed before a third Member for hearing and the Company Petition is decided in accordance with the opinion of the majority of members who heard the case including the member before whom it is placed.

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How the claims filed Workmen or Employees under CIRP and Liquidation Process has to be differentiated between them under Insolvency and Bankruptcy Code 2016? – Adv. Shivam Jaiswal

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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IBC vis a vis Admirality Act – By CA Bimal Singhania

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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