Key Legal Developments in India: Supreme Court & IBC Updates
Table of Contents
February 2024 Legal Developments: NCLT, NCLAT, Arbitration, MSME & Criminal Law Highlights
SALIL SHASHANK KULKARNI VS. RUBIQUE TECHNOLOGIES INDIA PRIVATE LIMITED
CITATION: Salil Shashank Kulkarni Vs. Rubique Technologies India Private Limited, MANU/NC/0013/2024, IA No. No. 4372 of 2023 in Company Petition (IB) No. 4304 (MB) of 2019, NCLT (COURT II) Mumbai, decided by Hon’ble Justice Kuldip Kumar Kareer and Anil Raj Chellan, dated 24.01.2024
LINK: https://ibclaw.in/pranav-j-damania-nclt-mumbai-bench/
FACTS: An application was filed by the Resolution Professional (RP) of the Corporate Debtor under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), seeking extension for the Corporate Insolvency Resolution Process (CIRP) after the CIRP period of 180 days was elapsed during the pendency of the Liquidation Application, in order to consider one resolution plan.
RATIO: The Hon’ble NCLT held that the primary object of IBC is value maximization as well as revival/resolution of the financially stressed Corporate Debtors. Further, it was held that the one resolution plan received by the Committee of Creditors during the pendency of the liquidation application should be given another chance which may help revive/resolve the Corporate Debtor, despite the time of 180 days of CIRP has already elapsed. The Hon’ble NCLT further extended the CIRP period by 60 days by considering the overall interest of the stakeholders involved.
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY PROFESSIONALS) (AMENDMENT) REGULATIONS 2024, No. IBBI/2023-24/GN/REG 110, dated on 31.01.2024
FACTS: The Insolvency and Bankruptcy Board of India (IBBI) Regulations of 2024, issued on January 31, 2024, introduced new requirements for Insolvency Professionals (IP) to enhance oversight and accountability in managing corporate insolvencies. This Amendment focused on refining eligibility standards, improving disciplinary measures, and emphasizing ethical conduct among IPs.
RATIO: Clause 22 A was inserted in the IBBI (IP) Regulations of 2016: “the resignation of IP during the pendency of the matter, now has to be approved by the Adjudicating Authority. The Insolvency Professional shall continue to discharge his duties, functions and responsibilities till the approval of the resignation by the Adjudicating Authority.” Explanation to Clause 23B was inserted: “the IP entity can provide any service to the Corporate Debtor relating to any of its assignment except valuation and audit. It is to ensure that the conduct of insolvency professionals aligns with the Insolvency and Bankruptcy Code’s objective of fair and efficient corporate debt resolution, thereby protecting stakeholder interests and promoting transparency in the insolvency process.
THE AUTHORISED OFFICER, CENTRAL BANK OF INDIA V. SHANMUGAVELU
CITATION: The Authorised Officer, Central Bank of India Vs. Shanmugavel, MANU/SC/0080/2024 (2024 INSC 80), Hon’ble Supreme Court, decided by Hon’ble CJI Dr. Dhananjaya Y. Chandrachud, Justice Manoj Misra and Justice J.B. Pardiwala, dated 02.02.2024.
LINK: https://ibclaw.in/the-authorised-officer-central-bank-of-india-vs-shanmugavelu-supreme-court/
FACTS: The Central Bank of India (Appellant) forfeited the earnest money deposited by the Respondent in lieu of non-fulfilment of the contract on the part of the Respondent in depositing the entire money as per the sale auction. Debt Recovery Tribunal (DRT) held that only 5 Lakhs can be forfeited by the Appellant and Debt Recovery Appellate Tribunal (DRAT) held that 55 Lakhs can be forfeited by the Appellant. The same was challenged before the High Court, which passed an order wherein it was held that Rule 9(5) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Rules are merely an enabling provision which permits forfeiture in principle and cannot override the underlying ethos of Section 73 of the Indian Contract Act.
RATIO: The Supreme Court held that SARFAESI Act is a special legislation with an overriding effect on the general law, hence the principle envisaged under Section 73 & 74 of the Contract Act will have no application to SARFAESI Act, more particularly for the forfeiture of earnest money deposit as specified under Rule 9(5) of the SARFAESI Act. Further, it was held that the harsh forfeiture of the entire earnest money deposit has been consciously incorporated by legislature and no extent of equity can either substitute or dilute the statutory consequence of forfeiture of 25% of deposit under Rule 9(5) of the SARFAESI Rules.
MAMTA SHAILESH CHANDRA V. STATE OF UTTARAKHAND & ORS.
CITATION: Mamta Shailesh Chandra V. State of Uttarakhand & Others, MANU/SC/0470/2024, Criminal Appeal No. 462 of 2024 (Arising from SLP (Crl.) No. 7273/2019), Hon’ble Supreme Court, decided by Justice Aniruddha Bose and Justice Sanjay Kumar, dated 29.01.2024.
FACTS: The Hon’ble Supreme Court examined an appeal arising from a criminal matter which involved examining the procedural validity of charges filed against the appellant during the pendency of the petition under Section 482 of Code of Criminal Procedure (CrPC) was pending adjudication before the Hon’ble High Court.
RATIO: The Supreme Court held that the High Court would continue to have the power to entertain and act upon a petition filed under Section 482 of CrPC to quash the FIR even when a chargesheet is filed by the police during the pendency of such 482 petition.
ARVIND KEJRIWAL V. STATE AND ANR.
CITATION: Arvind Kejriwal V. State and Another., 2024 SCC OnLine Del 719, CRL.M.C. 6347/2019, High Court of Delhi, decided by Hon’ble Justice Swarana Kanta Sharma, dated 05.02.2024.
FACTS: The case involved allegations against Kejriwal related to remarks made during a public address that were claimed to be defamatory towards a political opponent. The said Tweet was retweeted and the impact magnified. The petitioner sought to quash the proceedings initiated based on these allegations, arguing that the statements were made in the context of political discourse and therefore should be protected under the right to free speech.
RATIO: The Court emphasized that though every retweet of defamatory imputation would ordinarily amount to publication under Section 499 of IPC, it is ultimately for the person so aggrieved to decide as to which retweet caused more harm to his reputation and inter alia lowered his moral or intellectual character or his credibility among the members of society. Further in the matter of Defamation involving political parties, the Court has to consider the responsibility that accompanies the petitioner’s political and social standing, while deciding such matter.
SBP AND CO. V. PATEL ENGINEERING LTD. AND ANOTHER
CITATION: SBP and Co v. Patel Engineering Limited and Another, Civil Appeal No. 4168 of 2003, Hon’ble Supreme Court, decided by Hon’ble CJI R.C. Lahoti, Hon’ble Justice B.N. Agrawal, Hon’ble Justice Arun Kumar, Hon’ble Justice G.P. Mathur, Hon’ble Justice A.K. Mathur, Hon’ble Justice P.K. Balasubramanyan and Hon’ble Justice C.K. Thakker, dated 26.10.2005.
FACTS: The dispute arose from a contract between SBP and Company and Patel Engineering Limited. Following disagreements over the contract’s terms and performance, SBP sought to initiate arbitration under the Arbitration and Conciliation Act, 1996 (Act). Patel Engineering contested the arbitration proceedings, arguing that the arbitration clause was not enforceable due to certain procedural lapses. The matter reached the Supreme Court to determine whether the courts had the authority to intervene in the arbitration process when the matter was pending before the Arbitrator.
RATIO: The Supreme Court held that once the matter reaches Arbitral Tribunal, the High Court would not interfere with orders passed by the Arbitrator or the Arbitral Tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Sections 34 or 37 of the Act. The aggrieved party is to challenge the award in accordance with Section 34 or Section 37 of the Act and not under Article 226 of the Constitution of India. The Supreme Court further held that the High Court’s Order passed under Section 11 of the Act, can be challenged under Article 226 and Special Leave Petition under Article 136 of the Constitution of India.
RAJEEV KUMAR JAIN V. UNO MINDA LTD. AND ANR.
CITATION: Mr. Rajeev Kumar Jain V. Uno Minda Ltd. and Another, 2024 SCC OnLine NCLAT 28, Company Appeal (AT) (Insolvency) No. 947 of 2022 & I.A. No. 2682, 2683 of 2022 & 1652 of 2023, NCLAT New Delhi, decided by Hon’ble Justice Rakesh Kumar Jain and Hon’ble Justice Mr. Naresh Salecha, dated 02.01.2024
LINK: https://ibclaw.in/mr-rajeev-kumar-jain-vs-uno-minda-ltd-and-anr-nclat-new-delhi/
FACTS: Financial assistance was provided by Respondent No. 1 (Uno Minda Ltd) to the Promoters of the Corporate Debtor (CD) and later due to its failure to return the same, the Respondent No. 1 approached the NCLT under Insolvency and Bankruptcy Code (IBC). The Hon’ble NCLT allowed the Application filed by Respondent No.1 and ordered for Corporate Insolvency Resolution Process (CIRP). Being aggrieved by the Order of the NCLT for CIRP, the Appellant filed Appeal, stating that the financial assistance was sought by the Promoters of CD and not CD, and the debt could only be treated as operational debt and not as financial debt under Section 5(8) of the IBC.
RATIO: The NCLAT held that interest is not sine-qua non, therefore, interest may or may onot be payable by the CD, further held that it is implied that any disbursal made on behalf of CD or at the instructions of CD may also amount to disbursal made to CD, ultimately the CD was the beneficiary of the financial assistance, despite the amount was disbursed to the Promoters of CD and held that in the present case, the debt amounts to financial debt under Section 5(8) of IBC. MONIKA
M/S. NORTHROOF VENTURES PRIVATE LIMITED V. M/S. XYNC STRUCTURAL SOLUTIONS PVT. LTD. & ANR.
CITATION: M/S. Northroof Ventures Private Limited v. M/S. XYNC Structural Solutions Private Limited & Another, 2024 SCC OnLine Kar 748, Writ Petition No. 5509 of 2023, High Court of Karnataka, decided by Hon’ble Mr Justice M. Nagaprasanna, dated 30.01.2024.
FACTS: Petitioner entered into an Agreement with the Respondent and as per the Agreement, the Petitioner issued Purchase Order, eventually an Invoice is raised by Respondent. Post the same the Respondent registered itself under MSME. Due to the dispute between the parties, the Respondent filed an Application before the MSEFC, and during the pendency of the application before the MSME, the Respondent gets the certificate of registRATIOn. The conciliation before the MSMEFC was failed and the matter was referred to Arbitration as per the MSMED Act. The Petitioner filed an Application under Order 14 Rule 2(2) of CPC to try the issue of jurisdiction as a preliminary issue but the same was dismissed by the Arbitrator. Being aggrieved the Petitioner approached the Hon’ble High Court under Article 226 & 227 of Constitution of India. SUMMARISE MONIKA –
Nikitha vs Global
RATIO: The High Court held that the Micro and Small Enterprises Facilitation Council (MSEFC) had no jurisdiction to conciliate a matter since the dispute arose long before the party applied for registration as a Micro, Small & Medium Enterprises (MSME), while noting that the when companies had entered into an agreement, the respondent company had not submitted an application seeking registration of the firm as an MSME, when the disputed transactions took place. Further, it was held that “For registration of a Unit as MSME, registration under the MSMED Act is imperative”. The Court also held that no amount of consent of the parties can confer jurisdiction on any fora. Therefore, merely because the petitioner has not objected to it, would not mean it would clothe jurisdiction upon the Council, which it did not have under the statute.
NARESH CHANDRA AGRAWAL V. THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ORS.
CITATION: Naresh Chandra Agrawal v. The Institute of Chartered Accountants of India and Others, MANU/SC/0091/2024, Civil Appeal No. 4672 of 2012, Hon’ble Supreme Court of India, decided by Hon’ble Justice Pamidighantam Sri Narasimha and Hon’ble Justice Aravind Kumar, dated 08.02.2024.
FACTS: The appellant was member of a firm which was given audit work to the complainant-Bank. Some suspicious transactions involving large sums of money took place in the Bank’s branch, but they were not flagged by the audit firm. As such, the complainant registered a complaint with Director (Discipline), who called for the audit firm to disclose the name of the person charged with auditing and preparing report to the subject transaction. Eventually, the Director came to a prima facie conclusion that the appellant was not guilty of any professional or other misconduct within the meaning of clause (7), (8) and (9) of Part 1 of the Second Schedule to the Act, when the decision was placed before the Board of Discipline, it disagreed with the Order of the Director and referred the matter to the Disciplinary Committee for further action. The said Order was challenged before the High Court and the High Court upheld the decision of referring the matter to the Disciplinary Committee. Being aggrieved the Appellant approached the Supreme Court of India. MINIMISE
RATIO: The Supreme Court emphasized the importance of procedural fairness in disciplinary proceedings. They opined that the Act prohibits professional misconduct, with an aim to uphold honesty, integrity, and professionalism in the practice of chartered accountancy. As such, the Rule fell within the scope of Section 29A(1) of the Act, under which the Central government is empowered to make Rules for carrying out purposes of the Act. The Board was right in referring the matter to Disciplinary Committee for further action. If the Board does not involve in such a situation, prima facie opinion of the Director if not will become nothing but a final opinion, which will defeat the very purpose of the Rule.
IFCI LTD. VS RMOL ENGIEERING AND OFFSHORE LTD
JIGAR BHATT, LIQUIDATOR RMOL ENGINEERING AND OFFSHORE LTD.
CITATION: Mr. Jigar Bhatt, Liquidator RMOL Engineering and Offshore Ltd., IA/189(AHM) 2024 in CP(IB) 171 of 2017, NCLT Ahmedabad, decided by Mr. Shammi Khan, Hon’ble Member and Mr. Sameer Kakar, Hon’ble Member, dated 02.02.2024.
LINK:https://ibclaw.in/mr-jigar-bhatt-liquidator-rmol-engineering-and-offshore-ltd-nclt-ahmedabad-bench/
RATIO: The Tribunal’s decision underscored the adherence to the IBC’s structured approach for resolving disputes among creditors and ensuring a fair distribution of assets in the event of liquidation. The ruling emphasized that financial creditors like IFCI Ltd. must substantiate their claims and comply with the procedural requirements to be considered valid. The judgment reinforced the principle that claims should be settled according to the priority established by the Code, ensuring that the liquidation process remains orderly and equitable for all stakeholders involved.
GURWINDER SINGH V. STATE OF PUNJAB AND ANR.
CITATION: Gurwinder Singh V. State of Punjab and Another., (2024) 5 SCC 403, Criminal Appeal No. 704 of 2024, Hon’ble Supreme Court of India, decided by Hon’ble Justice M.M. Sundresh and Hon’ble Justice Aravind Kumar, dated 07.02.2024.
FACTS: Gurwinder Singh appealed against dismissal order of regular bail by the Trial Court and by the High Court. Wherein an FIR against the Appellant and other accused was registered under Sections 124A, 153A, 153B, 120 B of the Indian Penal Code (IPC), under Sections 17, 18, 19 of the Unlawful Activities (Prevention) Act (UAPA) and Sections 25 & 54 of the Arms Act.
RATIO: The Hon’ble Apex Court held that Bail is an exception and Jail is the Rule under the UAPA. Further held that the ordinary rule is that the Bail is a rule and jail is an exception cannot be applied in the serious cases. The form of the words used in proviso to Section 43D (5) – ‘shall not be released’ in contrast with the form of the words as found in Section 437(1) of the Criminal Penal Code (CrPC) – ‘may be released’ – suggests the intention of the Legislature to make bail, the exception and jail, the rule. It was held that in such cases the Court should apply 2 tests, the first test is Whether the test for rejection of the bail is satisfied, the proviso to Section 43D(5) lays down that if the Court, on perusal of the case diary or the final report, is of the opinion that there are reasonable grounds for believing that the accusation against a person, as regards commission of offence(s) under Chapter IV and/or VI of UAPA, is prima facie true, such accused person shall not be released on bail or on his own bond. Second test is Whether the accused satisfied the general triple test for grant of bail? – prima facie true, Degree of satisfaction at post chargesheet stage and broad probabilities regarding involvement of the accused in the commission of the offence, not the standard of proof beyond reasonable doubt.
BANK OF BARODA V. MRS ZULEKHA AMIR DODHIA
CITATION: Bank of Baroda V. Mrs. Zulekha Amir Dodhia, 2024 SCC OnLine NCLT 653, C.P. (IB) 1275/MB/2021, NCLT Mumbai, decided by Hon’ble Justice Anu Jagmohan Singh and Hon’ble Member Kishore Vemulapalli, dated 01.02.2024.
LINK: https://ibclaw.in/mr-shailesh-bhalchandra-desai-nclt-mumbai-bench/
FACTS: An application under Section 95 of the Insolvency and Bankruptcy Code (IBC) was filed for initiating insolvency against the personal guarantor.
RATIO: Hon’ble NCLT Mumbai Bench held that there is no bar under Section 95 of the IBC to proceed against each separate Personal Guarantor for same debt. Moreover, pendency of Corporate Insolvency Resolution Process against the Principal Borrower does not debar lender from proceeding against Personal Guarantor. Further, it was held that pendency of Resolution Plan approval also cannot be a ground for dismissal of proceedings against the Personal Guarantor.
M/S BAFNA UDYOG V. MICRO & SMALL ENTERPRISES, FACILITATION COUNCIL AND ANR.
CITATION: M/s Bafna Udyog V. Micro & Small Enterprises, Facilitation Council and Anr., 2024 SCC OnLine Bom 110, Arbitration Petition No. 201 of 2023, High Court of Bombay, decided by Hon’ble Justice Neela Gokhale, dated 16.01.2024.
FACTS: The Petitioner initiated an application before the Micro and Small Enterprises Facilitation Council (MSEFC) against the Respondent No. 2, however the Petitioner’s multiple efforts to resolve the issue failed as such Petitioner filed a certificate of termination of the conciliation proceedings before the MSEFC under Section 76(d) of the Arbitration & Conciliation Act, 1996 (Act). The MSEFC, however, did not refer the matter to Arbitration in accordance with Section 18(3) of the Micro, Small and Medium Enterprises Development Act (MSMED). Aggrieved by the same, Petitioner filed an application under Section 11(6) of the Act in the Bombay High Court.
RATIO: The High Court held that the contractual authority for the Arbitral Tribunal to adjudicate disputes is derived from the arbitration agreement, in which parties enter voluntarily, relinquishing their rights to adjudicate through conventional legal channels. It further held that Section 18 of the MSMED provides conciliation as the initial step, and if unsuccessful, the MSEFC may take up the dispute for arbitration or refer it to any institution. Only then do the provisions of the Act apply and not otherwise.
CATMOSS RETAIL PVT. LTD., IN RE
CITATION: Catmoss Retail Pvt. Ltd. In re, 2024 SCC OnLine Del 776, Co. Pet. 36/2013, Delhi High Court, decided by Hon’ble Justice Dharmesh Sharma, dated 07.02.2024.
LINK: https://ibclaw.in/re-catmoss-retail-pvt-ltd-delhi-high-court/
FACTS: Petitioner filed an application for stay of Petitions pending under Section 138 of the Negotiable Instruments Act (NI Act), which were initiated against the Petitioner and its Director, after the Company has been ordered for winding up by the National Company Law Tribunal (NCLT).
RATIO: The Hon’ble High Court held that it is a consistent legal proposition that if the demand notice and the cognizance of complaint under Section 138 of the NI Act is taken after the initiation of winding up proceedings or Insolvency and Bankruptcy Code proceedings, the proceedings under Section 138 of NI Act cannot continue not only against the Corporate Debtor but also against its Directors. – READ ONCE AGAIN. MONIKA
P.T. INFRAPROJECTS LTD. AND ANR. V. STATE OF JHARKHAND AND ORS.
CITATION: G.P.T. Infraprojects Ltd. and Anr. V. State of Jharkhand and Others., 2024 SCC OnLine Jhar 184, LPA No. 186 of 2016, High Court of Jharkhand, decided by Hon’ble Acting Chief Justice Shree Chandrashekhar and Hon’ble Justice Anubha Rawat Choudhary, dated 29.01.2024.
FACTS: The appellants, G.P.T. Infraprojects Ltd., filed a letter patent appeal challenging the decision of a single bench that dismissed their writ petition stating that the Appellants should challenge the award under Section 34 of the Arbitration & Conciliation Act (Act), wherein the Appellants challenged the Award passed by the Micro and Small Enterprises Facilitation Council (MSEFC), wherein the Micro, Small and Medium Enterprises (MSME) passed an Award under the Act, instead of referring the matter to Arbitration after the failure of conciliation, as specified under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).
RATIO: The Hon’ble High Court held that an award passed by MSEFC without recording failure of Conciliation proceedings and without entering into reference to decide the dispute through Arbitration cannot be said to be an award passed under the Act and the same cannot be challenged under Section 34 of the Act. Further, the matter was referred back to the MSEFC for considering the issue afresh in accordance with the MSMED Act. SUMMARISE MONIKA
GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY V. PRABHJIT SINGH SONI AND ANR
CITATION: Greater Noida Industrial Development Authority v. Prabhjit Singh Soni and Another, (2024) 6 SCC 767, Civil Appeal Nos. 7590-7591 of 2023, Hon’ble Supreme Court of India, decided by Hon’ble CJI D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra, dated 12.02.2024.
FACTS: A Company Petition was filed against the Corporate Debtor (CD) and the same was admitted. Consequent thereto, claims were invited through a public announcement. The Appellant, Greater Noida Industrial Development Authority (GNIDA), submitted its claim as a financial creditor of the CD. The Resolution Professional (RP) treated the appellant as an operational debt and requested the Appellant to file its claim in Form B, according to Regulation 16 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations of 2017. The Appellant failed to file the same, hence the RP rejected the claim and simultaneously the Resolution was approved by the National Company Law Tribunal (NCLT). The Appellant challenged the resolution plan and the RP’s decision to treat the Appellant as operational creditor, which was dismissed by NCLT and National Company Law Appellate Tribunal (NCLAT). Being aggrieved, the present Appeal is filed.
RATIO: The Hon’ble Apex Court held that the merely because the claim with proof is filed in wrong form, does not entitle it to be dismissed or overlooked. Subsequently, the resolution plan was set aside and held that the it shall be sent back to the Committee of Creditors for resubmission after satisfying the parameters set out by the Insolvency and Bankruptcy Code.
UMESH KUMAR V. MR. NARENDRA KUMAR SHARMA, IRP OF INDIRAPURAM HABITAT CENTRE PVT. LTD.
CITATION: Mr. Umesh Kumar V. Mr. Narendra Kumar Sharma, IRP of Indirapuram Habitat Centre Pvt. Ltd., 2024 SCC OnLine NCLAT 226, Company Appeal (AT)(Insolvency) No. 100 of 2024, NCLAT Delhi, decided by Hon’ble Justice Ashok Bhushan, Barun Mitra and Arun Baroka, dated 13.02.2024.
FACTS: Umesh Kumar, the appellant, challenged the decisions made by the Interim Resolution Professional (IRP), wherein the IRP was pleased to dismiss the claim of the Appellant for inadequate proof despite multiple requests to the Appellant to produce supporting documents for its claim.
RATIO: Hon’ble NCLAT held that when claims are submitted to the IRP, even though there are no adjudicatory powers vested on the IRP, the provision under the Insolvency and Bankruptcy Code enables the IRP to seek information towards establishment of the correctness of a claim. If credible and satisfactory evidence is not forthcoming from the creditor in spite of adequate opportunity made available to provide the same, the IRP can always keep in abeyance the decision to accept/reject the said claim. Further, it was held that by mere filing of claims, the creditor cannot rest on its oars and refrain from providing further evidence if it so sought by the IRP by stating that the IRP lacks adjudicating powers. The IRP is very much required to undertake appropriate verification and analysis of the claims filed. The IRP cannot afford to be unmindful of the fact that they are expected to assist in the Corporate Insolvency Resolution Process in a fair and objective manner in the best interest of all stakeholders.
STATE TRADING CORPORATION OF INDIA LTD V. MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL DELHI
CITATION: State Trading Corporation V. MSEFC Delhi, 2024 SCC OnLine Del 979, LPA 91/2024 and CM APPL. 6199/2024, CM APPL. 6200/2024 & CM APPL. 6201/2024, High Court of Delhi, decided by Hon’ble Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, dated 08.02.2024.
FACTS: An Award passed by the Arbitration Tribunal was challenged by the Appellant before the High Court under Article 226 & 227 of the Constitution of India, stating that the Micro & Small Enterprises Facilitation Council (MSEFC) lacked jurisdiction to refer the matter to Arbitration, thereafter that the Arbitral Tribunal had no jurisdiction to pass the Award.
RATIO: The Court held that when a dispute resolution mechanism is provided under the Arbitration and Conciliation Act (Act), to challenge the Award including Jurisdiction under Section 34 of the Act, and the same cannot be challenged under Articles 226/227 of the Constitution of India before the Hon’ble High Court. BETTER WORDINGS – MONIKA
RAJESH VIREN SHAH V. REDINGTON (INDIA) LIMITED
CITATION: Rajesh Viren Shah V. Redington (India) Limited, (2024) 4 SCC 305, Criminal Appeal No. 888 of 2024 (Arising out of Special Leave Petition (Crl.) No. 6905 of 2022) and Criminal Appeal No. 889 2024 (Arising out of Special Leave Petition (Crl.) No. 7050 of 2022), Hon’ble Supreme Court of India, decided by Hon’ble Justice B.R. Gavai and Justice Sanjay Karol, dated 14.02.2024.
FACTS: A Complaint under Section 138 of Negotiable Instruments Act (NI Act) was registered against the Appellant (Rajesh Viren Shah) and the Trial Court had taken cognizance. The Appellant filed a Petition for quashing the 138 proceedings under Section 482 of the Code of Criminal Procedure (CrPC), stating that the Appellant Directors resigned from the Respondent Companies in the 2013 and 2014 respectively, by filing necessary Form 32 as specified under the Companies Act. But the 138 proceeding was initiated in the year 2019 much after his resignation, despite the Appellant having no relation with the Respondent Companies. However, the Hon’ble High Court dismissed the Petition filed under Section 482 of CrPC. Being aggrieved, the present Criminal Appeal was filed.
RATIO: The Hon’ble Supreme Court held that, the position of law as to the liability that can be fastened upon a Director for non-realisation of a cheque is no longer res integra. However, the Court quashed the 138 proceedings pending against the Appellant, stating that the material aspects of the matter should be taken into consideration and that in the present matter, the Appellant resigned from his Directorship of the Companies in the year 2013 and 2014 respectively as evident from Form 32 and the same is not questioned by the Respondent. (NOT SIGNATORY)
RUPASHREE H. R. V. THE STATE OF KARNATAKA & ORS.
CITATION: Rupashree H. R. v. The State of Karnataka & Ors., Writ Petition (Civil) No. 538 of 2019, Hon’ble Supreme Court of India, decided by Hon’ble Justice Vikram Nath and Satish Chandra Sharma, dated 12.02.2024
FACTS: The petitioner, Rupashree H. R., challenged the resolution passed by the Mysore Bar Association that no member of the Bar should file Vakalatnama on behalf of the Petitioner and any other related case.
RATIO: The Hon’ble Apex Court held that Right to Defend Oneself is a Fundamental Right under Part III of the Constitution of India and further, the Right to Appear for a Client is also a Fundamental Right being a part of carrying on one’s profession as a Lawyer. Thus, the Resolution passed by the Mysore Bar Association was quashed.
STATE OF RAJASTHAN V. SWARN SINGH @ BABA
Citation: State of Rajasthan V. Swarn Singh @ Baba, MANU/SC/0813/2024, Criminal Appeal No. 856 of 2024 (Arising out of SLP (Criminal) No. 3146 of 2021), Hon’ble Supreme Court of India, decided by Justice Bela M. Trivedi and Justice Pankaj Mithal, dated 12.02.2024.
FACTS: A First Information Report (FIR) was registered against the Respondent Mr. Swarn Singh for the offences under Sections 8/18, 25 & 29 of the Narcotic Drugs and Psychotropic Substances Act of 1985 (NDPS). He filed an Application under Section 91 of the Code of Criminal Procedure (CrPC) before the Trial Court for summoning of the call details of the seizure officer and some other police officials for the date of seizure. The same was rejected by the Trial Court, thus the Respondent approached the High Court and his Appeal was allowed. The State being aggrieved by the Order of the High Court preferred the present Appeal.
RATIO: The Hon’ble Apex Court held that the Respondent would have no right to invoke Section 91 CrPC at the stage of framing of charge. Accordingly, Appeal was allowed. However, the Respondent shall be at liberty to file application at the appropriate stage of the Trial.
NAVAYUGA ENGINEERING COMPANY LTD. V. MR. UMESH GARG RP OF ATHENA DEMWE POWER LTD. AND ORS
CITATION: Navayuga Engineering Company Ltd. Vs. Mr. Umesh Garg RP of Athena Demwe Power Ltd. and Others, 2024 SCC OnLine NCLAT 218, Company Appeal (AT) (Insolvency) No. 783 of 2023, NCLAT Delhi, decided by Hon’ble Justice Ashok Bhushan and Mr. Barun Mitra, dated 16.02.2024.
FACTS: Appellant (Navayuga Engineering Company Ltd) filed the present Appeal being aggrieved by the National Company Law Tribunal (NCLT) Order on a Company Application, wherein the Hon’ble NCLT rejected the application to declare the Appellant as disqualified under Section 29 A and eventually rejected the Appellant to take part in the insolvency resolution of Corporate Debtor.
RATIO: The Hon’ble NCLAT held that the relevant date for examining the ineligibility is the date of submission of Resolution Plan. Section 29A(c) of the Insolvency and Bankruptcy Code does, not only disqualify, those who were in management and control of the Corporate Debtor at the time when its account was declared a Non-Performing Asset, but also disqualifies those, who were in management and control of the Corporate Debtor and in close proximity of time, before submission of Resolution Plan, who failed to clear the debts of the Corporate Debtor.
M/S TRILOKCHAND FABRICATION PVT LTD V. STATE OF UP & ORS.
CITATION: M/s Trilokchand Fabrication Pvt Ltd V. State of UP & Others., 2024 SCC OnLine All 103, Writ – C No. 39914 of 2023, High Court of Allahabad, decided by Hon’ble Justice Shekhar B. Saraf, and Siddhartha Varma, dated 11.01.2024.
FACTS: Trilokchand Fabrication Pvt Ltd filed the present Writ Petition for issuance of Certiorari against the order passed by the Trial Court wherein the Trial Court directed that an application under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) to be kept in abeyance till the disposal of the Injunction Suit filed by one tenant during the recovery procedure and the Trial Court further granted Temporary Injunction in favour of the tenant who was in possession of the mortgaged property, leading to the Petitioner’s inability to proceed with Section 14 of SARFAESI.
RATIO: The High Court explained the remedies available to a tenant in case of the proceedings initiated under SARFAESI during the validity of the tenancy period and stated that a tenant, on becoming aware of the proceedings initiated under Section 14 of SARFAESI, may approach the authorized officer empowered by the District Magistrate (DM)/Chief Metropolitan Magistrate (CMM), to take possession of the secured asset. The authorized officer, on receipt of such an application, will then file an affidavit and submit the application for determination of tenancy rights before the DM/CMM. On receipt of such an application, the DM/ CMM will provide an opportunity to the tenant to present his case, and then determine the validity of tenancy in accordance with the law. In case, the DM/CMM concluded that the tenant has a valid lease, in accordance with the law, no order shall be passed under Section 14 of SARFAESI, delivering the possession of asset in question to the secured creditor and further by way of Certiorari, the Injunction Order and the abeyance Order was quashed.
MEENA SUREKA, LIQUIDATOR MR. SANTOSH KUMAR JAISWAL AND ORS.
CITATION: Meena Sureka V. Mr. Santosh Kumar Jaiswal and Others, MANU/NC/0035/2024, IA (IBC)/52/GB/2023 in CP (IB)/20/GB/2022 and IA (IBC)/38/GB/2023 in CP (IB)/21/GB/2022, NCLT Guwahati, decided by Hon’ble Justice H.V. Subba Rao and Mr. Satya Ranjan Prasad, dated 25.01.2024.
FACTS: An application under Section 10 of the Insolvency and Bankruptcy Code (IBC) was filed and Interim Resolution Professionals (IRPs) were appointed for the respective Corporate Debtors (CD). Accordingly, moratorium was imposed on the respective CDs under Section 14 of the IBC. The IRPs were replaced by the members of Committee of Creditors (COC) and separate applications were filed for replacement of the IRP. The erstwhile IRPs discovered that the CDs settled the dues to certain entities after the initiation of the Corporate Insolvency Resolution Process (CIRP) and an application to that effect was filed by the IRP for recovery of the said transacted amount from the CDs.
RATIO: The Hon’ble NCLT held that in terms of provisions of Section 14(1)(b) of the IBC, during the period of moratorium, any transfer encumbering, alienating or disposing off the property of the CD is restrained. Further, it was held that the purpose of the Moratorium is to temporarily freeze all actions as contemplated under Section 14. The amount transferred by the CDs after initiation of CIRP was thus called to be refunded.
SWASHBUCKLER HOSPITALITY PVT. LTD. V. AVDESH MITTAL & ANR.
CITATION: Swashbuckler Hospitality Pvt. Ltd. V. Avdesh Mittal & Another, 2023 SCC OnLine Del 8150, Arb. P. 849/2023, Hon’ble High Court of Delhi, decided by Hon’ble Justice Dinesh Kumar Sharma, dated 20.12.2023.
FACTS: Swashbuckler Hospitality Pvt Ltd. (the petitioner) filed a Petition under Section 11(6) of the Arbitration & Conciliation Act (Act), seeking for appointment of Arbitrator for the dispute arising out of an unstamped Letter of Intent entered between the Petitioner and Respondents.
RATIO: The Court held that the intention of the parties to the Agreement must be looked into and though the Letter of Intent is unstamped, the Court needs to only take the prima facie check as to whether an Arbitration Agreement exists or not. In that view, the Court held that an unstamped Agreement having the Arbitration Clause is still valid and the matter to be referred to Arbitration in such cases.
