The Ibc Digest March 2021

THE IBC DIGEST VOLUME V MARCH 2021 The Insolvency and Bankruptcy Code Digest: March 2021 The Insolvency and Bankruptcy Code, 2016 has been one among the most dynamic legislative enactments in India that has been amended from time to time to meet the ever-changing needs in the field of insolvency laws. Each legislature gets its shape over increased litigation that helps conclusively decide matters and acts as a tool for interpretation of the provisions of the statute. The provisions of the IBC have been tested time and again before the judicial and quasi-judicial authorities ranging from the Hon’ble National Company Law Tribunal to the Apex Court namely the Supreme Court of India. The judgments passed by the National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), the High Court and the Supreme Court of India have helped the Insolvency Professionals and every professional practicing in the field of Insolvency Laws, interpret the Code read with the relevant Regulations, in its true letter and spirit. ‘The Insolvency and Bankruptcy Code Digest’, is an initiative by Corpvin Curious, the Knowledge and Research Cell of Corpvin Consulting LLP to summarize all the landmark judicial pronouncements passed each month in the field of Insolvency and interpret the amendments that are introduced in the Code or the Regulations made thereunder, if any, to assist professionals in understanding the implications of such pronouncements and/or amendments in a summarized way. Corpvin Curious is the brainchild of CS Jasveen Bindra and the team of Corpvin Curious is led by her. About the Author: CS Jasveen Bindra is a member of the Institute of Company Secretaries of India as a Practicing Professional. She is a designated partner at Corpvin Consulting LLP. She has an enriching experience in the field of Insolvency Laws, relating to; inter alia, the Initiation of Corporate Insolvency Resolution Process (CIRP) by a Financial Creditor, Initiation of CIRP by an Operational Creditor, Process specific compliances during CIRP, Handholding of Insolvency Professionals to ensure the smooth execution of CIRP and Liquidation Processes. Happy Reading! Disclaimer: Nothing contained in this document shall be construed as a legal opinion or view of Corpvin Consulting LLP whatsoever and the content is to be used strictly for educational purpose only. 1 | P a g e Table of Contents Supreme Court Judgments .............................................................. 6 1. Kridhan Infrastructure Private Limited v. Venkatesan Sankaranarayan & Ors……………………………………………………………..…………6 Upheld the Liquidation order against the Corporate Debtor due to delayed implementation of the approved Resolution Plan and also held that time is a crucial facet of the scheme under the IBC. 2. A. Navinchandra Steels Private Limited v. SREI Equipment Finance Limited & Ors…..………………………………………………………..6 A petition either under Section 7 or Section 9 of the IBC is an independent proceeding which is unaffected by winding up proceedings that may be filed qua the same company. 3. P. Mohanraj & Ors. v. M/s. Shah Brothers Ispat Private Limited ............ 7 Whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments Act, 1881 can be said to be covered by the moratorium under Section 14 of the IBC? 4. Gujrat Urja Vikas Nigam Limited v. Mr. Amit Gupta & Ors. ................. 8 Whether the Hon’ble NCLT and NCLAT can exercise jurisdiction under the IBC over dispute arising from contracts such as the Power Purchase Agreement (PPA)? 5. Kalpraj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr….. ................................................................................................................ 9 Whether the provisions of Section 14 of the Limitation Act, 1963 or the principles laid down therein would be applicable to proceeding under the Insolvency and Bankruptcy Code, 2016? 2 | P a g e 6. Alok Kaushik v. Mrs Bhuvaneshwari Ramanathan and Others ..............11 The issue in the present appeal relates to the costs, charges, expenses and professional fees payable to a registered valuer appointed after the initiation of the CIRP under the IBC, in a situation where the CIRP is eventually set aside by the Adjudicating Authority or, as the case may be, Appellate Authority. 7. Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. & Anr. ............12 It was held that a person who is ineligible under Section 29A of the IBC to submit a resolution plan, is also barred from proposing a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013. 8. Sesh Nath Singh & Anr. v. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr..... ………………………………………………………….13 Whether prior proceedings under the SARFAESI Act qualify for the exclusion of time under Section 14 of the Limitation Act, 1963? 9. Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. .....................................................................15 It was held that in the Adjudicatory process concerning a resolution plan under the Code, there is no scope for interference with the commercial aspects of the decision of the Committee of Creditors (CoC). 10. Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund & Ors………………………………………………………………………15 Decision upon the priority of consideration of an application under Section 8 of the Arbitration and Conciliation Act, 1996 vis-à-vis an application under Section 7 of the IBC by the Hon’ble NCLT. 11. Laxmi Pat Surana v. Union Bank of India & Anr. ..................................17 Whether an action under Section 7 of the IBC can be initiated by a financial creditor against a corporate person (being a corporate debtor) concerning guarantee offered 3 | P a g e by it in respect of a loan account of the principal borrower (not being a Corporate Debtor)? National Company Law Appellate Tribunal Judgments 1. India Resurgence ARC Private Limited v. Amit Metaliks Limited and Ors. ........................................................................................................19 It was held that the discretion of the CoC to take into account the value of security interest of a Secured Creditor in approving of a Resolution Plan, is a guideline and not imperative in terms. 2. Mr. Gulabchand Jain v. Mr. Ramchandra D. Choudhary ........................20 CoC is empowered to take a decision in regard to the liquidation of the Corporate Debtor even after an application has been filed by the Resolution Professional placing the Resolution Plan approved by the CoC before the Adjudicating Authority for approval. 3. Vijay Sitaram Dandnaik v. Punjab National Bank and Anr. ...................20 The provisions of Section 18 of the Limitation Act, 1963 shall be applicable only if the debt is acknowledged within three years i.e. before the expiry of the Limitation Period. 4. Committee of Creditors of EMCO Limited v. Mary Mody and Anr. ......21 Whether the Adjudicating Authority can direct the CoC to raise interim finance even if the CoC has voted against the proposition? 5. Ram Ratan Kanoongo v. Veda Kumar Nimbagal and Anr. ....................21 It was held that a claim from third parties relating to any contract entered into by the Corporate Debtor shall be deemed to have been extinguished upon approval of this Resolution Plan, without any liability whatsoever on the Corporate Debtor. 4 | P a g e 6. Mr. Ravi Shankar Deverakonda v. Committee of Creditors of Meenakshi Energy Limited ......................................................................................19 The exercise of the power of extending the time limit by the ‘Adjudicating Authority’ in negation of the statutory provision under Section 12 of the Code may be desirable in an exceptional/extraordinary circumstances 7. Indian Overseas Bank v. RAM Infrastructure Ltd., and Anr. .................22 Whether after imposition of moratorium any transaction done with respect to the assets of the Corporate Debtor is deemed to be valid or not? 8. Radico Khaitan Ltd. v. BT & FC Pvt. Ltd. and Ors. ...............................23 Parameters for consolidation of Corporate Insolvency Resolution Processes 5 | P a g e Supreme Court Judgments 1. Kridhan Infrastructure Private Limited v. Venkatesan Sankaranarayan & Ors. Date of Pronouncement: 01.03.2021 Order Passed by: The Hon’ble Supreme Court of India Coram: Hon’ble Justice Dr Dhananjaya Y Chandrachud, Hon’ble Justice M R Shah In the impugned matter, the appellant submitted a Resolution Plan for the Corporate Debtor under the Insolvency and Bankruptcy Code 2016. The Resolution Plan was approved by the CoC on 8 March 2019 with a majority of 89.92%. The Resolution Plan was approved by the National Company Law Tribunal on 15 May 2019. The appellant accordingly deposited an amount of Rs 5 Crores in an Escrow Account of the Corporate Debtor. However, the appellant did not fulfil its further obligations, including equity infusion, under the Resolution Plan despite numerous opportunities over a period of six months. The Hon’ble Supreme Court, while passing an order in the matter, inter alia, held that time is a crucial facet of the scheme under the IBC. To allow such proceedings to lapse into an indefinite delay will plainly defeat the object of the statute. A good faith effort to resolve a corporate insolvency is a preferred course. However, a resolution applicant must be fair in its dealings as well. The appellant has, unreasonably, failed to abide by its obligations

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