anant merathia, advocate - icsi · against irpjil u/s 7 - appointed. anant merathia, advocate . ......
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Anant Merathia, Advocate
CORPORATE INSOLVENCY RESOLUTION TRANSACTIONS ( As on 30th Sep 2017)
Admitted Closure by No. of Corporates
undergoing Resolutions
at the end of the
Quarter
Appeal / Review Approval of Resolution
Plan
Commencement of
Liquidation
376 14 2 7 353
INITIATION OF CORPORATE INSOLVENCY TRANSACTIONS ( As on Sep 2017)
No. of Resolutions Processes Initiated by Total
Financial Creditor Operational Creditor Corporate Debtor
122 167 87 376
REGISTRATION OF INSOLVENCY PROFESSIONAL AS ON 30TH SEPTEMBER 2017 City Enrolled with Total
The Indian Institute of Insolvency Professional of ICAI
ICSI Insolvency Professional Agency
Insolvency Professionals Agency of Institute of Cost Accountants in India.
Delhi 131 103 29 263 Mumbai 133 53 16 202 Chennai 28 27 3 58 Kolkata 72 15 6 93 All India 639 371 97 1107
Anant Merathia, Advocate
Prominent issues faced/settled under IBC
Pre Admission Post Admission
Freedom to initiate CIRP Settlement/Withdrawal
Applicability of Limitation Act CoC and CIRP issues
Demand Notice-relevance Resolution Plan/Liquidation
Bank Certificate-relevance Insolvency Professional issues
Initiation by workmen Personal guarantor v Moratorium
Position of Flat buyers
Jaypee Infra
Anant Merathia, Advocate
Case Name RATIO
Neelkanth Township
Vs
Urban Infrastructure
IBC doesn’t have express provision regarding applicability of Limitation Act.
(But the SC has left the questions as to the applicability of Limitation act
towards I&B code matters open)
J.K. Jute Mill case
Adjudication of Application – 14 days - Directory
Rectification of defects - 7 days - Directory and not Mandatory
Term of interim Resolution Professional – 30 Days – Mandatory.
Moratorium Period - 180+90 Days – Mandatory
Mobilox
Vs
Kirusa
Duty of the NCLT to decide whether the dispute raised is bona fide / real and
not spurious, hypothetical, illusory and misconceived - expanded the meaning
of “Dispute” by not limiting it only to existing or pending suits or arbitration
proceedings.
Innoventive
Vs
ICICI Bank & Anr
Financial Creditor - enough to admit a company into CIRP, if FC is able to prove
“Default”. Once Moratorium is declared the erstwhile directors of the
company cannot represent on behalf of the company.
ISSUES P
RE-A
DM
ISSION
Mother Pride Diary;
Lokhandwala Kataria &
several other cases
SC has the power under Art 142 to entertain the case. SC
had accepted the settlement between the parties and
disposed of the order of the NCLT.
Uttara Food and Feeds
v.
Moha Pharmachem
Instead of all matters relating to compromise coming to the
Supreme Court under Article 142, the relevant rules may be
amended to include the inherent powers for NCLAT to
allow settlements post admission.
Alchemist Asset Re-Construction
Vs
Hotel Gauadavan (P) Ltd
Initiation of Arbitration proceedings after declaration of
Moratorium is Non – Est in Law.
Anant Merathia, Advocate
ISSUES P
OST-A
DM
ISSION
Anant Merathia, Advocate
Freedom to Initiate Corporate Insolvency
APPLICANT Vs RESPONDENT BENCH RATIO
Ind. & Comm. Bank of China
Vs. Alok Industries Ahmedabad
Pendency of winding up in HC before admission is no bar debarring a
creditor from triggering the insolvency resolution u/s 7, 9, 10. There is
nothing to prevent the financial creditors from triggering IRP u/s 7.
Bharatbhai Vrajiialbhal Selani Vs.
State Bank of India Ahmedabad
Initiation of proceedings under the SARFAESI Act or before the DRT is
not a ground for not commencing the IRP. Object of the Code is only to
protect the genuine Corporate Debtors with a view to maximise their
value of assets and find out a Resolution Plan - not to delay the other
recovery proceedings.
R.G. Shaw & Sons Vs Naviplast
Traders (P) Ltd. NCLAT
Existence of proceedings U/s. 138 of N.I Act, is not a ground to reject
the application
Yogendra Vasupal Vs Jigsaw
Solutions & Anr NCLAT Existence of a proceeding relating to Bail shall not be a dispute
LIMITA
TION
CASE NAME BENCH RATIO
Neelkanth Township
Vs
Urban Infrastructure
SC
Code doesn’t have express provision reg. applicability of
Limitation Act.
Speculum Plast v. PTC Techno
Parag Gupta v. B.K. Educational Services
Ashkay Infra Vs LDS Engineers
NCLAT
Limitation Act is not applicable in IBC - Reliance placed on Bankruptcy Law Reforms Committee Report 2015 Separate time period provided under IBC for everything - shows legislative intent on making the IBC a self-contained complete Code Right accures from 1st Dec 2016; hence cannot be barred by limitation AA given discretion in Sec 7 & 9 matters – if long delay – to be explained and to see if laches
Anant Merathia, Advocate
Demand Notice Form & Content and Service CASE NAME BENCH RATIO
Jord Engineers;
Bhagwan Motors
& Several others
NCLAT
Appellate Tribunal - No Advocate, CA, CS in absence of
any authority of BOD and holding no position in relation
to the OC cannot issue a Demand Notice.
Legal Notice is different from IBC Demand Notice
Shriram EPC Limited
Vs
Rio Glass Solar Sa
NCLAT
Demand Notice not given by the Operational Creditor
but through an advocate / Law firm is not permissible.
Palogix Infrastructure Private Limited
Vs
ICICI Bank Limited
NCLAT A Power of Attorney holder cannot make an Demand
Notice.
Anu Elastics (P) Ltd Vs Aggarwal Elastice
NCLAT
On refusal of a notice by a party, it is deemed to be
served but if the same is for insufficient or wrong
address the notice cannot deemed to be served.
Anant Merathia, Advocate
BANK CERTIFICATE ISSUE CASE NAME BENCH RATIO
Shriram EPC Limited
Vs
Rio Glass Solar Sa
NCLAT Bank Certificates from Bank which cannot be
classified as a Financial institution, not acceptable
by NCLT
Smart Timings Steel
Vs
National Steel & Agro Industries Ltd
NCLAT Filing of a Certificate from a Financial Institution as
per the Insolvency and Bankruptcy Code, 2016 is
mandatory
Magicrete Building Solutions
Vs
Prathiba Industries Limited
NCLT
Mumbai
Bank had refused to give Bank Certificate to an OC;
NCLT - “all citizens of the country are bound by the
statute governing the people of this country –
Banks are not exempted under this statute”
Anant Merathia, Advocate
WORKMEN
CASE NAME BENCH RATIO
Nitin Gupta
Vs
Electro Magnetic (P) Ltd
NCLT Delhi CIRP can be initiated if Co. has defaulted in paying employee
dues – approaching Labor Department does not bar an unpaid
employee to invoke IBC- NCLT not a forum to decide what
amount is due towards the Workmen and it was the duty of the
COC and the IRP to decide the same.
C.Ganapathy
Vs
Aruna Hotels
NCLT,
Chennai
The Corporate Debtor was admitted into CIRP, for not paying
the salary of the employee.
J.K.Jute Mills Mazdoor Morcha
Vs
Jugilal Kamalpat Jute Co.
NCLT,
Allahabad
The Union of workers cannot present an application nor
become an Operational Creditor on behalf of all its workers.
Anant Merathia, Advocate
POSITION OF FLAT BUYERS CASE NAME BENCH RATIO
Nikhil Mehta
Vs
AMR Infra
NCLAT
Balance Sheet of Builder showed money due with committed
returns – hence OC- Flat Buyers not Operational Creditors (many
cases)
Col. Vinod Awasty
Vs
AMR Infrastructure Limited
NCLT,
Principal
bench
NCLT had ruled that, notwithstanding the presence of an assured
return clause, a purchaser of a flat cannot be treated as a provider
of 'goods' or 'services' to the builder and therefore, does not qualify
as an 'Operational Creditor' and cannot initiate Insolvency Process
in that capacity.
Rubina Chandra,
Sajive kanwar &
Mukesh Kumar
Vs
AMR Infrastructure Limited
NCLAT
Flat buyers cannot be treated as financial creditors since such debts
are not disbursed against the consideration for the time value of
money.
Claimed to be an operational creditor, the NCLT, held that a flat
purchaser cannot be treated as operational creditor as the debt has
not arisen out of provisions of goods, services or employment.
IDBI Bank Limited
Vs
Jaypee Infrastructure Limited
NCLT,
Allahabad
CD defaulted to IDBI Bank - Application for CIRP was admitted
against JIL u/s 7 - IRP appointed.
Anant Merathia, Advocate
JAYPEE INFRA CASE- Supreme Court
Anant Merathia, Advocate
On 16.08.2017 - IBBI came with a notification that apart from FC&OC – Flat
buyers can make claims and brought amendments to - CIRP Regulations 2016
04.09.2017
Chitra Sharma
v.
Union of India
Writ Petition - ground - proceedings under IBC would render the home-
buyers remediless. Prayer - S. 14 shall not curtail the rights of the flat buyers
as consumers under the Consumer Protection Act or alternatively declare
the flat buyers as secured creditor. SC stayed the NCLT order.
IA filed for vacating earlier order on ground that the stay of NCLT order
resulted in Management being restored to JIL. SC ordered (i) the IRP to take-
over the management of JIL; (ii) appointment of representative of buyers in
the CoC meeting; (iii) JAL to deposit Rs 2000 crores by 27.10.17; approval of
court for sale of any assets by JAL
11.09.2017
SC appoints amicus curiae to assist the court and open a web-portal to
collect details of flat buyers. Matter has been listed for 22.11.2017
13.11.2017
SETTLEMENT/WITHDRAWAL
CASE NAME BENCH RATIO
Mother Pride Diary;
Lokhandwala Kataria
& Several other cases SC
SC has the power under Art 142 to entertain the
case. SC had accepted the settlement between the
parties and disposed of the order of the NCLT.
Consolidated Construction
Consortium Limited Vs
Va Tech Wabag Limited
Chennai
Application admitted – CD settled OC – Joint
Memo filed - CD stated it had not defaulted any of
its payments towards its Financial Creditors. IRP
submitted – no other claims received – NCLT
recalled its order
Anant Merathia, Advocate
Aruna Chauhan & Ors.
Vs. M/s. BOP Projects
Delhi Financial Creditor arrived at a settlement with the respondent and withdrew the
petition. The NCLT dismissed the petition.
M/s. Dwarkesh Transport
Corporation
Ahmed. Operational Creditor sought permission to withdraw the petition on the ground of
settlement. The same was allowed by the NCLT.
Vedha Marketing Vs. G.K.
Shelters Private Limited
Bengaluru A joint memo was filed by the parties stating the settlement of the matter..
Mundhra Bright Steel Vs.
Gillanders Arbuthnot &
Co. Ltd.
Kolkata Operational Creditor and Corp Debtor prayed to withdraw the petition on the
ground of settlement.
Rotomac Global Pvt. Ltd.
Vs. Cane Agro Energy
India Ltd.
Mumbai Consent Terms were arrived at between the parties. The NCLT dismissed the
petition as withdrawn.
SETTLEMENT/WITHDRAWAL PRE- ADMISSION
Committee of Creditors and CIRP Issues APPLICANT Vs RESPONDENT BENCH RATIO
M/s Raj Oil Mills Ltd. Vs. M/s
Edelweiss Asset Reconstruction
Company Ltd.
Mumbai
Agenda to approve the continuance of IRP was voted only by
61.84% of voting share. Therefore, a viable solution is to give
the preference to the decision taken by the largest percentage
in voting rights of the FCs in COC voting.
BASF India Limited
Vs
Mosmetro India (P) Ltd
Chennai
The NCLT directed the Creditors not to make payments from
the account or dispose properties of the Corporate Debtor
without the prior permission of the Insolvency Resolution
Professional.
IOB
v.
IRP, Amtek
NCLAT Once moratorium declared it is not open to any person
including FCs and Appellant Bank to recover any amount from
the account of the Corporate Debtor, nor it can appropriate
any amount towards its own dues. The Bank has to file its
claims before IRP and can seek to be included in CoC
RESOLUTION PLAN/LIQUIDATION CASE NAME BENCH RATIO
VNR Infrastructure Hyderabad
NCLT ordered liquidation - after the borrowers and lenders failed to
come up with a plan to revive operations-independent valuation report
valued Rs 80 crore - loan Rs 1,000 crore.
Synergies Dooray Automotive
Limited
Hyderabad
NCLT had accepted the resolution plan which was accepted by more
than 90% of the Committee of Creditors
(Under challenge before NCLAT)
Prowess International Private
Limited
NCLT,
Kolkata
NCLT had accepted the resolution plan which was accepted by the
Committee of Creditors – OC paid in this plan
Anrak Aluminum Vs SBI Hyderabad
Application u/s 10 rejected - considering the case of public money
invested + total spend being Rs 5712 Cr; national interest – pursue with
State Govt & revive project. Liberty given to file afresh after exploring
Anant Merathia, Advocate
CASE NAME BENCH RATIO
Rolex Cycles V. Hero Steels
Limited
NCLT
Hyderabad
IRP faced resistance from CD , CA and Lenders. Tribunal held lenders
were totally non co-operative with IRP holding meetings of CoC and
directed CA to hand over the books.
R.S.Polychem V. Ekdantam
Infrastructure
NCLT,
Delhi
Ordered Police Protection to IP as the promoter was not co-operating
and there was possible threat to life.
Central Bank of India and
SBI V. Ashok Magnetics NCLT Chennai
Police assistance given; directed CD to furnish the book of account,
list of financial and operational creditors and assets to the IRP.
IDBI Bank Limited V. Lanco
Infratech Limited
NCLT
Hyderabad
IP must refrain from accepting too many assignments, if he is unlikely
to be able to devote adequate time to each of his assignment.
Sandeep Reddy & Anr Vs
Jaycon Infrastructure
NCLAT
Code does not empower the AA to suggest any name or appoint an
Interim Resolution Professional of its own choice (NCLAT left the
Question open)
IRPs
MORATORIUM PROTECTS GUARANTORS?
CASE NAME BENCH RATIO
Veesons Energy NCLT
CHENNAI
Banks restrained from selling the assets of the
Personal Guarantor during the moratorium
period. (Pending in NCLAT)
Schwitzer Systemtek India
AND
Alpha & Omega Diagnostics (P) Ltd
NCLAT
Assets of the Personal Guarantor will not fall
within the ambit of Moratorium.
Anant Merathia, Advocate
Anant Merathia , Advocate
Ph: +91 99405 20500
“Justice isn’t about fixing the past; it’s about healing the past's future.” ― Jackson Burnett