RELEVANT JUDGMENTS

• SUPREME COURT

  • Kotak Mahindra Bank limited v. A. Balakrishnan & Anr in Civil Appeal No. 689 of 2021, date of judgment: 30.05.2022; The Hon’ble Supreme Court held that a liability in respect of a claim arising out of a Recovery Certificate would be a Financial Debt within the ambit of its definition under sub-clause (8) of Section 5 of the IBC as such, a “person” would be a “person” as provided under Section 6 of the IBC who would be entitled to initiate the CIRP, if initiated within three years from the date of issuance of such Recovery Certificate. Further, the Supreme Court in the said judgment reaffirmed and upheld the law as laid down in the matter of Dena Bank.
  • ii. Indian Overseas Bank vs. M/s RCM Infrastructure ltd. and another in CIVIL APPEAL No. 4750 of 2021, date of judgment 18.05.2022; The Hon’ble Supreme Court held that in terms of Section 14(1)(c) of the IBC, the Appellant Bank in the instant matter could not have continued with the proceedings under the SARFAESI Act once the Corporate Insolvency Resolution Process was initiated and the moratorium was ordered by the Adjudicating Authority
  • iii. New Okhla Industrial Development Authority V. Anand Sonbhadraa in Civil Appeal no. 2222 of 2021 with Civil Appeal no. 2367-2369 of 2021, date of judgment:17.05.2022: The Hon’ble Supreme Court in the said matter recognized NOIDA as an Operational Creditor and not a Financial Creditor. The Hon’ble Court held that a lease, which is not a finance or a capital lease under Section 5(8)(d) IBC, may create a Financial Debt within the meaning of Section 5(8) (f) if, on its terms, it is a transaction, under which, any amount is raised, having the commercial effect of the borrowing. The Apex court was of the view that in the instant matter the lease in question does not fall within the ambit of Section 5(8) (f) because the lessee has not raised any amount from the appellant under the lease, which is a transaction.
  • iv. PTC India Financial Services Limited V. Venkateswarlu Kari and another in Civil Appeal no. 5443 OF 2019, date of judgement: 12.05.2022; The Hon’ble Supreme Court held that registration of the pawn, that is the dematerialized shares, in favor of Appellant as the ‘beneficial owner’ does not have the effect of sale of shares made according to Sections 176 and 177 of the Contract Act. The pledge has not been discharged or satisfied either in full or in part. The Appellant is not required to account for any sale proceeds which are to be applied to the Debt on the ‘actual sale’. The two options either to retain or sell the pawned goods for recovery of the debt available to Appellant as the Pawnee under Section 176 of the Contract Act shall remain and are not exhausted. Further, the Apex Court observed that the Appellant has rightly made a claim as Financial Creditor of the Corporate Debtor without accounting for the value of the shares qua which pledge was invoked by the Financial Creditor.
  • v. Mahendra Kumar Jajodia etc. Vs. State Bank of India, Stressed Asset Management Branch Civil Appeal No(s). 1871-1872 of 2022, Date of Judgment:06.05.2022; The Hon’ble Supreme Court in the said matter upheld the order dated 27.01.2022 passed by Ld. NCLAT that an application under Section 95(1) IBC filed by State Bank of India was fully maintainable and could not have been rejected only on the ground that no CIRP or Liquidation Proceeding of the Corporate Debtor are pending before the NCLT. The Hon’ble Apex Court did not see any cogent reason to entertain or interfere in the present matter, therefore, the appeals were dismissed.