No Bar On Corporate Debtor From Contesting Application U/S 9 Of IBC Even If No Reply Is Given To Demand Notice Issued U/S 8: NCLAT

The National Company Law Appellate Tribunal (“NCLAT”) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that just because no reply was given by the Corporate Debtor to the demand notice issued by the Operational Creditor under section 8 of the Insolvency and Bankruptcy Code, 2016 (Code), the Corporate Debtor cannot be precluded from contesting the application filed under section 9 of the...

Machinery Hypothecated By Corporate Debtor Against Loan Remains Its Asset If No Lease Deed Is Shown By Third Party: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) has held that the corporate debtor shall remain the owner of the machinery in its possession if no lease deed is shown under which the third party is claiming to be the owner of the machinery therefore the Resolution Professional is entitled to include such machinery in the Information Memorandum. Brief Facts: Bank of India...

Non-Registration Of “Charge” U/S 77 Of Companies Act Does Not Bar Creditor From Being Treated As “Secured Creditor” Under IBC During CIRP: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Yogesh Khanna (Judicial Member) and Mr. Arun Baroka (Technical Member) have held that non-registration of “charge” in terms of Section 77 of Companies Act, 2013 is not a sine qua non for a Creditor to be treated as a “Secured Creditor” under section 3(30) of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Resolution Professional (RP). The Tribunal observed that the intent of legislature was...

Related Party Can't Assign Debt To Bypass Disqualification From Participating In CoC: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that a 'related party' cannot assign its debt only with the object of securing a seat in the Committee of Creditors (CoC), to affect the interest and rights of other creditors. Background Facts: On October 13, 2023, the Corporate Insolvency Resolution Process ("CIRP") was initiated against...

Deposit Of Security Under Memorandum Of Understanding Without Intention Of Commercial Effect Of Borrowing Cannot Be Categorised As Financial Debt: NCLAT

The National Company Law Appellate Tribunal (“NCLAT”) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that the security amount deposited under a Memorandum of Understanding ('MoU') without any intention of commercial effect of borrowing and time value of money cannot be categorised as financial debt under section 5(8) of the Insolvency and Bankruptcy Code, 2016 (“Code”). Brief...

Once Resolution Plan Is Approved By CoC & Submitted To Adjudicating Authority For Approval, No Other Plan Can Be Considered By CoC: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that the Resolution Plan even prior to the approval of the Adjudicating Authority is binding inter se the Committee of Creditors (CoC) and the SRA. It also held that the CoC is clearly not entitled to consider any other request for consideration of any Resolution Plan after it has approved the Resolution Plan, which is pending...

Application U/S 7 Of IBC Must Be Decided First When Application U/S 54C Is Filed 14 Days After S.7 Application: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that when an application under section 54C of the IBC is filed after 14 days from the date of the application filed under section 7 of the IBC, the application under section 7 must be decided first as per section 11A(3) of the code. Brief Facts: The corporate debtor defaulted in repaying the loan facilities extended by the consortium of banks comprising SBI, IDBI Bank...

Constitution Of Project Management Committee Under Settlement Agreement Does Not Absolve Corporate Debtor From Repayment Obligations: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that any dispute even pending in the arbitration does not in any manner prohibit the financial creditor to take remedy under Section 7 of the code. It also held that the constitution of a Project Management Committee comprising members of financial creditors and corporate debtor in pursuance of a Settlement Agreement does not absolve...

NCLAT Orders NCLT To Decide BCCI's Plea For Settlement And Withdrawal Of CIRP Against Byju's Within One Week

The National Company Law Appellate Tribunal (NCLAT), Chennai bench comprising Justice (retd) Rakesh Kumar Jain (Judicial Member) and Jatindranath Swain (Technical Member) have directed the National Company Law Tribunal (NCLT) to decide the application filed by Board of Control for Cricket in India (BCCI) to withdraw the corporate insolvency resolution process (CIRP) against Byju's within a week's time. The Tribunal disposed of Riju Raveendran's (former Promoter of Byju's) appeal...

Pre-CIRP Electricity Dues Stand Extinguished Upon Approval Of Resolution Plan: NCLAT

The National Company Law Appellate Tribunal (NCLAT) bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) have reiterated that all claims which are not included in the approved Resolution Plan stand extinguished upon its approval. The Tribunal held that Damodar Valley Corporation (DVC/ Appellant) was not entitled to demand pre-CIRP dues from Mackeil Ispat & Forging Ltd. (Corporate Debtor/ Respondent No. 1) when it...

Decision Taken By Liquidator To Proceed With Private Sale By 'Swiss Challenge Method' Cannot Be Said To Be Beyond Jurisdiction: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that the decision taken by the Liquidator to proceed with private sale by adopting Swiss Challenge Mechanism, cannot be said to be a decision beyond the jurisdiction or authority of the Liquidator and that too when the said decision came to be approved by the Stakeholders Consultation Committee. Brief Facts: The liquidation process...

Claims Based On Uninvoked Guarantee Cannot Be Admitted By Resolution Professional: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that guarantee given by the corporate debtor cannot be invoked after initiation of the CIRP. Any claims based on such guarantee cannot be admitted by the Resolution Professional. Brief Facts: The CIRP against the Corporate Debtor commenced by order dated 10.10.2019. Publication in the newspaper inviting claims from creditors was...