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Insolvency and Bankruptcy Code, 2016 Important Updates

Lex Witness Bureau | October 2023
Insolvency and Bankruptcy Code, 2016 Important Updates
  • HIGH COURT
    1. SUNFLAG IRON & STEEL CO. LTD. V. J. POONAMCHAND [2023 SCC ONLINE BOM 1214]

      It was held that mere filing of an application under Section 7(1) of the IB Code, would not act as a bar to any proceedings under other statutes, until and unless the Adjudicating Authority admits the application.

  • NATIONAL COMPANY LAW APPELLATE TRIBUNAL
    1. V. DURAISAMY IRP OF M/S. H G S DIARIES AND AGRO LTD. VS. JEYAPRIYA FRUITS AND VEGETABLES COMMISSION AGENT [CA(AT)(CH)(INS) NO.25/2022]
      It was held that there is no provision in the Code that mandates constitution of the CoC with a single Operational Creditor. Therefore when it was seen from the record that despite the public announcement having been made, the IRP did not receive a single claim since initiation of CIRP of the Corporate Debtor, the Hon’ble NCLAT directed that CIRP of the Corporate Debtor may be closed.
    2. CENTRAL BOARD OF TRUSTEES VS. SHRI KUMAR RAJAN RP HINDUSTAN NEWSPRINT LTD. [CA(AT)(CH)(INS) NO. 268/2021]
      Hon’ble NCLAT held that both Provident Fund and Gratuity Fund is to be paid in full as per the provisions of EPF and MP Act, 1952 and Payment of Gratuity Act, 1972 and that the same shall be included in the Resolution plan. NCLAT relied upon judgement passed by Hon’ble Apex Court in Jalan Fritsch Consortium Vs. Regional Provident Fund Commissioner & Anr., whereby, it was laid down that the share of workmen dues shall be kept outside the Liquidation assets and the concerned workmen/Employees shall have to be paid the same, out of such Provident fund, Gratuity Fund, if any available. It was held that the words, ‘if any available’, cannot be read to mean that the workmen and employees are not entitled for Provident fund, Gratuity Fund, Pension fund, if not available with the Liquidator.
    3. STERLING & WILSON (P) LTD. V. EMBASSY ENERGY (P) LTD., [2023 SCC ONLINE NCLAT 270]
      It was held that insolvency cannot be initiated against Owner in absence of agreement between the Owner and Sub-Contractor and based on a bona fide assurance of the owner to pay the amount, no debt can be established against the owner.
    4. RAVI SHANKAR VEDAM V. TIFFINS BARYTES ASBESTOS & PAINTS LTD [2023 SCC ONLINE NCLAT 274]
      Hon’ble NCLAT upheld the order passed by Ld. NCLT whereby NCLT observed that ‘legislature did not mandate for seeking approval of shareholder in relation to the Resolution Plan. Therefore, any objection raised by the Shareholder cannot be considered by this Authority while approving or rejecting the Resolution Plan’
    5. KK ROPEWAYS LTD. V. BILLION SMILES HOSPITALITY (P) LTD. [2023 SCC ONLINE NCLAT 271]
      The Hon’ble NCLAT observed that as per the provisions of IBC a dispute in existence means and includes raising a dispute before a Court of law or an Arbitral Tribunal, before receipt of Notice under Section 8 of the IBC, 2016. Further, dispute continues at a stage where challenge to an Arbitral Award in an appeal is projected by a party so long as a dispute truly exists and is neither imaginary nor hypothetical. It was also to be kept in mind that Arbitration Proceedings and IBC Proceedings cannot go on together.
    6. ANHEUSER BUSCH INBEV INDIA LTD. V. PRADEEP KUMAR SRAVANAM [CA(AT) (CH) (INS.) NO. 12 OF 2023]
      It was held that the Resolution Professional has acted in a proper manner by keeping the claims of the Financial Creditor in abeyance, because of the pending arbitration proceedings and also taking into consideration the counterclaim of the Corporate Debtor. It was observed that only after conclusion of the Arbitration proceedings and considering the counter claim of the Corporate Debtor can the claim sum of the Creditor be determined with certainty.
  • NATIONAL COMPANY LAW TRIBUNAL
    1. RAM RATAN JAGATI v. MANGLAM APARTMENTS LIMITED [CP IB-614(ND)/2021
      It was held that the argument raised by the Respondent that the Petitioner is a foreign entity and cannot file the present petition is not tenable in view of Sec. 3[23(g) and 25] of IBC, wherein, the definition of person includes person resident outside India.
    2. STATE BANK OF INDIA VS NEXGEN LAMINATORS PRIVATE LTD. [IA NOS. 326/2021, 328/2021 & IA NO. 329/2021 IN CP (IB) NO. 406/CHD/PB/2018]
      It was held that the acceptance of Resolution Plans after the due date, but before the expiry of the timeline specified under IBC for completion of the process, is consciously approved by the COC then the same does not warrant judicial interference.
    3. BHAGWATI FERRO METAL PRIVATE LIMITED V/S SHREE SUKHKARTA DEVELOPERS PRIVATE LIMITED [C.P. (IB)- 4384 (MB)/ 2018]
      The object of the Code is to facilitate the resolution of the insolvency of the Corporate Debtor in a structured and time-bound manner. Therefore, since the Operational Creditor now pursues this Petition under Section 9 of the Code solely for realisation of the interest component of the operational debt, it cannot be maintained.
    4. STATE BANK OF INDIA VS DR. KONDAPALLI VENKAT SRINIVAS, LIQUIDATOR OF M/S. SURYAJYOTHI SPINNING MILLS LIMITED [IA NO.739 OF 2023 IN CP(IB) NO.166/7/HDB/2019]
      When there is no provision for change of Liquidator and when it is only with the discretionary powers of the Tribunal, the change of Liquidator can be effected, constitution of the Stakeholders’ Consultation Committee cannot be taken as a pre-condition for change of the Liquidator.

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