RELEVANT JUDGMENTS

• SUPREME COURT

• M/S S.S. Engineers Vs Hindustan Petroleum Corporation Ltd. & others in Civil Appeal NO. 4583 OF 2022, date of judgment 15.07.2022; The Hon’ble Supreme Court held that an Operational Creditor can only trigger the CIRP process against a Corporate Debtor, when there is an undisputed debt and a default in payment thereof. If the claim of an Operational Creditor is undisputed and the Operational Debt remains unpaid, CIRP must commence under Section 9 IBC, the Code does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor. However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed.
• Vidarbha Industries Power Industries Vs. Axis Bank Limited in Civil Appeal No. 4633 OF 2021, date of judgment-12.07.2022; The Hon’ble Supreme Court held that the Adjudicating Authority while examining the existence of debt and default by a Corporate Debtor in an application for initiation of CIRP filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, has the discretion to admit or not admit such application under Section 7(5)(a) IBC.

• HIGH COURT

• Vijay Kumar Ghai Vs. Pritpal Singh Babbar in CRM-M-22685-2021 (O&M) date of judgment-04.07.2022; The Hon’ble Punjab and Haryana High Court held that interpretation of terms “all the debts” and “any legal action or proceedings pending in respect of any debt” as occurring in Section 96 of the Code, means that it would cover all such debts including any debt payable by the Personal Guarantor in his capacity as a Director of a Company. Moratorium accordingly, shall be applicable to proceedings under Section 138 of the Negotiable Instruments Act.
• Bhushan Power and Steel Ltd. Vs. Union of India in W.P.(C) 7248/2020 and CM APPL. 24458/2020, date of judgment: 21.07.2022; The Hon’ble Delhi High Court held that once a Resolution

Plan has been approved by Ld. NCLT; the demand of Directorate of Revenue Intelligence stands extinguished in terms of the provisions of IBC 2016. The Hon’ble Court observed that the Respondents on the date when the public notice was issued did not lodge their claim. The Court in the said background held that reprising the Resolution Plan at this stage, would result in burdening the Petitioner with unexpected claims and thus derail it from its path to recovery.

• National Company Law Appellate Tribunal (NCLAT)

• Sundip Dutta Vs. State Bank of India Comp. App. (AT) (Insolvency) No. 807 of 2021, date of judgment 29.07.2022: The Hon’ble NCLAT held that the liability of a Personal Guarantor does not get extinguished upon subsequent acquisition of citizenship of a foreign country. Therefore, the right given to the Financial Creditor under the I&B Code to initiate proceedings under Section 95(1) is independent and the Financial Creditor can always invoke proceeding under Section 95 of IBC, despite there being availability of any other forum or proceedings against the said Personal Guarantor.
• S. Chandriah Vs. Sunil Kumar Agarwal Company Appeal (AT) Insolvency No. 22 of 2022, date of judgment-22.07.2022; The Hon’ble NCLAT held that the payment of earnest money towards purchase of land is not a “Financial Debt” because the disbursement of earnest money was not in consideration for the time value of money. The earnest money liability of the Corporate Debtor has been classified as a “Financial Liability”. Acknowledging the Liability of earnest money as a Financial Liability is not akin to admitting as a “Financial Debt”.
• Tejas Khandar Vs. Bank of Baroda in Company Appeal (AT) Insolvency no.371 of 2020, dated of judgment: 12.07.2022; The Hon’ble NCLAT held that One Time Settlement proposal falls within the ambit of ‘acknowledgement of debt’ as defined under Section 18 of the Limitation Act, 1963.
• Jaipur Trade Expo centre Private Limited Vs. M/s Metro Jet Airways Training Private Limited in Company Appeal (AT) (Insolvency) No. 423 of 2021, date of judgment:05.07.2022;The Hon’ble NCLAT held that debt pertaining to unpaid license fee was fully covered within the meaning of ‘Operation Debt’ under Section 5(21) because an Agreement was executed between the parties for providing services to the Corporate Debtor of the premises upon payment of licence fees and the Licensee was licensed for a particular kind of service for use by the Licensee i.e. for running a business of Educational Institution. Therefore, claim of the Licensor for payment of License Fee for use and occupation of immovable premises for commercial purposes is a claim of Operational Debt.

• National Company Law Tribunal (NCLT)

• Bank of Baroda Vs. Ind-Barath Energy (Utkal) Ltd in CP (IB) 276 of 2018, date of judgment-25.07.2022; The Hon’ble NCLT held that Adjudicating Authority is not empowered to terminate or remand back a Resolution Plan approved by the Committee of Creditors for re-consideration under Section 31 (1) IBC 2016. The Ld. Tribunal further held that Adjudicating Authority cannot look into the issues of deterioration of assets after approval of the Resolution Plan by unassailable majority of CoC. Therefore, an assessment can only be made to see whether the plan incorporates provisions for its smooth implementation or not. Hence, the Tribunal was of the view that the Resolution Plan submitted by the Successful Resolution Applicant was in accordance with law and accordingly the Resolution Plan of JSW Energy Ltd. Was approved.
• State Bank of India Vs. Shri. Ghanshyam Surajbali Kurmi in CP (IB) 297 of 2021 date of judgment: 07.07.2022; The Hon’ble NCLT held that the Personal Guarantor of a Corporate Debtor cannot enjoy a right of subrogation even after the Corporate Insolvency Resolution Process (“CIRP”) of the Principal Debtor gets concluded. Further, Ld. NCLT held that there is no bar on the Financial Creditor to initiate Insolvency Process against the Guarantor after conclusion of CIRP of the Principal Debtor upon approval of a Resolution Plan. Further Ld. NCLT was of the view that as per Section 134 of the Indian Contract Act, 1872, a Guarantor is discharged of its liability towards the creditor only if the creditor on its own instance discharges the Principal Debtor through voluntary act of the creditor and not due to operation of law.
• Asset Reconstruction Company (India) Ltd. Vs. Precision Fasteners Ltd. in CP (IB) 1339 of 2017, date of judgment-01.07.2022; The Hon’ble NCLT has directed the Deputy Commissioner of Income Tax to refund the TDS charged from the Corporate Debtor because the TDS amount was charged from the Corporate Debtor after the order of liquidation was passed. The dues of the statutory authorities, including the Income Tax Department, are considered operational debt under IBC and are paid as per the waterfall mechanism under Section 53 of the IBC and further Ld. Tribunal reiterated that a company under liquidation has no liability to fulfil income tax obligations.