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Insolvency and Bankruptcy Code, 2016 Important Updates

Lex Witness Bureau | March 2024
Insolvency and Bankruptcy Code, 2016 Important Updates
SUPREME COURT
  • RAMKRISHNA FORGINGS LIMITED V RAVINDRA LOONKAR & ANR. (2023 SCC ONLINE SC 1490)
    Hon’ble Supreme Court criticized the unwarranted interference of NCLT and NCLAT in approving the Resolution Plan as approved by CoC and held that there should not be any interference in the commercial decisions of the CoC, especially when no irregularities were raised. The Bench also observed that the objective of the Resolution Plan was revival, not liquidation.
  • IFCI LTD. V. SUTANU SINHA & ORS. [CIVIL APPEAL NO. 4929 OF 2023]
    Hon’ble Supreme Court held that any Instrument which is fully, compulsorily convertible into shares is regarded as ‘Equity’, and not a ‘Loan’ or ‘Debt’. It was observed that in the facts of the case, the Compulsory Convertible Debentures were in the nature of ‘Equity Instruments’ and did not fall within the definition of ‘Financial Debt’ as defined under Section 5(8) of the Code. Further the Hon’ble Supreme Court held that the scope of second appeal under Section 62 is limited to only question of law.
  • PRINCIPAL COMMISSIONER OF CUSTOMS VS. RAJENDRA PRASAD TAK & ORS. [CIVIL APPEAL NOS. 6432-6433 OF 2023]

    Supreme Court clarified that the dues of the Central Board of Indirect Taxes and Customs, Department of Revenue, will only be paid using the waterfall mechanism outlined in Section 53 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

    Section 53 of the IBC specifies the order of priority in which profits from the sale of liquidation assets are to be allocated among Corporate Debtor’s creditors, stakeholders, and so on.

HIGH COURT
  • ABBA CONSULTANTS PRIVATE LIMITED VS. INSOLVENCY AND BANKRUPTCY BOARD OF INDIA & ORS. [W.P. (C) 8856/2020 & CM APPL. 28479/2020]
    Hon’ble High Court of Delhi held that the Court shall interfere under Article 226, only in case if the decision of the Insolvency and Bankruptcy Board of India is contrary to law or against public interest. If the process adopted in the enquiry is fair, reasonable and transparent then the Court does not require to interfere with the findings merely to substitute its own conclusion to the one arrived at by the authority simply because another view is possible.
  • JENY THANKACHAN VS. UNION OF INDIA AND ORS. [WP(C) NO. 31502 OF 2023]
    Hon’ble High Court of Kerala held that unless there is any repugnancy between the provisions of IBC and the provisions of SARFAESI Act, 2002, there is no question of IBC 2016 overriding the provisions of the SARFAESI Act, 2002 in totality, for the reason that the IBC and SARFASI Act operate in different fields.
  • TAMILNAD MERCANTILE BANK LTD. VS. RECOVERY OFFICER, THE REGIONAL COMMISSIONER-II, EPFO [W.P. NOS. 21777 & 22518 OF 2023 & W.M.P. NOS. 21117 & 21956 OF 2023]
    Hon’ble High Court of Madras held that Employees’ Provident Fund Organisation cannot issue orders prohibiting and restraining Secured Creditor from utilising the amount paid by Liquidator to Secured Creditor from sale proceeds of properties of the Corporate Debtor. The EPFO ought to have moved an application before the NCLT instead of intimating the Bank who was not directly in control of the Corporate Debtor
  • MR. FAROOQ ALI KHAN V. PUNJAB NATIONAL BANK AND ORS. [WRIT PETITION NO. 483 OF 2023]
    Hon’ble Karnataka High Court held that a Resolution Professional shall give notice of each meeting of CoC as per CIRP Regulation 19(2) even in case of adjournment of meeting where agenda is modified.
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
  • AMROP INDIA PVT. LTD. VS. THE HI-TECH GEARS LTD. [COMPANY APPEAL (AT)(INSOLVENCY) NO. 1251 OF 2023]
    The NCLAT held that, for nullifying CIRP application under Section 9 of IBC, the dispute must essentially exist at the time of filing a reply to the Demand Notice under Section 8(2) of IBC or at the time of filing the Section 9 application for “preexisting dispute”.
  • SURAKSHA REALTY LTD VS ANUJ BAJPAI RESOLUTION PROFESSIONAL OF PANACHE ALUMINIUM EXTRUSION PVT. LTD. [COMPANY APPEAL (AT) (INSOLVENCY) NO. 1389 OF 2023]
    The NCLAT upheld the judgement passed by NCLT whereby claim was rejected since the same was submitted subsequent to approval of the Resolution Plan by the CoC and also the debt of the claimant was not reflecting in the records of the Corporate Debtor, the same ought to be rejected
  • PANJWANI ELECTRICAL ENGINEERS AND CONSULTANTS V LARSEN AND TOUBRO LTD. [COMPANY APPEAL (AT) (INSOLVENCY) NO.1399 OF 2023]
    The NCLAT held that if the Corporate Debtor has denied its obligation to pay even before a demand notice is issued, then the petition under Section 9 of the IBC may be dismissed on account of a preexisting dispute.
  • FERVENT SYNERGIES LIMITED VS MANISH JAJU AND ORS. [COMPANY APPEAL (AT) (INSOLVENCY) NO.1338 OF 2023]
    The NCLAT held that the mandatory contents of the Resolution Plan are laid down in the CIRP Regulations, 2016. If a Resolution Plan is compliant with the provision of Section 30(2) of the IBC and the provisions of the Regulations, 2016, the Plan cannot be considered faulty merely on the ground of the promissory estoppel.
  • LORAMITRA RATH VS JM FINANCIAL ASSET [COMPANY APPEAL (AT)(INSOLVENCY) NO. 1359 & 1360 OF 2023]
    The NCLAT held that subsequent pleadings filed by way of an Application after the judgement is reserved shall not be entertained for reasons of procedural propriety.
  • HYTERA COMMUNICATIONS CORPORATION LTD. VS. SIMOCO TELECOMMUNICATIONS (SOUTH ASIA) LTD. COMPANY APPEAL (AT) (INSOLVENCY) NO.1116 AND 1523 OF 2022
    The NCLAT held that the merely because the Corporate Debtor or its Bankers were unable to obtain permission for remittance of due amount to an overseas account of the creditor, it cannot be made a reason to state that no default is committed.

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