1. M/s. Consortium of Prudent ARC Ltd. & M/s. Vizag Minerals & Logistics Pvt. Ltd. Vs. Mr. Ravi Sankar Devarakonda RP of M/s. Meenakshi Energy Ltd.

Citation: M/s. Consortium of Prudent ARC Ltd. & M/s. Vizag Minerals & Logistics Pvt. Ltd. Vs. Mr. Ravi Sankar Devarakonda RP of M/s. Meenakshi Energy Ltd. (23.01.2023 – NCLT – Hyderabad Bench – II): MANU/NC/0290/2023; Decided by Hon’ble Justice Smt. Telaprolu Rajani, Member (Judicial) and Hon’ble Shri Charan Singh, Member (Technical).

Ratio: The Adjudicating Authority ruled that the Resolution Professional (RP) has discretion, as indicated by the word “may,” in choosing between two methods in the Resolution Plan. The word “or” does not restrict the inclusion of both methods in the plan. If both methods are not envisaged in the plan, the RP cannot exercise that discretion. Therefore, it is against the spirit of freedom given to the Resolution Applicant to restrict the plan to only one method. Additionally, Clause 1.17 of the Resolution Plan allows the Committee of Creditors (CoC) to negotiate with other qualified applicants and adopt various negotiation processes for maximizing stakeholder value.

2. Ashoka Hi-Tech Builders Pvt. Ltd. vs. Sanjay Kundra and Ors.

Citation: Ashoka Hi-Tech Builders Pvt. Ltd. vs. Sanjay Kundra and Ors. (18.01.2023 – NCLAT, New Delhi): MANU/NC/0290/2023; Decided by Hon’ble Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical).

Ratio: For a debt to be a ‘financial debt’ there should be disbursal against the consideration for time value of money and in this case, there was none, hence the appeal was rightfully dismissed in view of the judgment of the NCLAT being – Namdeo Ramchandra Patil & Ors. which fully covers a similar issue.

3. Ajay Dabra v. Pyare Ram and Others

Citation: Ajay Dabra v. Pyare Ram & Ors. (31.01.2023 – SC): MANU/SC/0081/2023; Decided by Hon’ble Justice Sudhanshu Dhulia and Hon’ble Justice Krishna Murari.

Ratio: The Supreme Court made an observation stating that the lack of sufficient funds to pay court fees does not serve as a valid reason to seek the condonation of delay in filing an appeal. The court highlighted that Section 149 of the Code of Civil Procedure (CPC) offers the option to file such ‘defective’ appeals within the prescribed time frame.

4. Rishipal Ruhil v. Kotak Mahindra Bank Ltd.

Citation: Rishipal Ruhil v. Kotak Mahindra Bank Ltd: (06.02.2023 – Calcutta HC): MANU/WB/0341/2023; Decided by Hon’ble Justice Tirthankar Ghosh.

Ratio: The Court noted that the intention behind filing the disputed complaint is to seek recovery of outstanding arrears/interest amounting to Rs. 1 crore. The Court further observed that the transactions in question do not constitute offenses under Sections 417 and 426 of the Indian Penal Code (IPC).

The Court held that based on the alleged nature of the transaction in the present case, it is evident that it is a case for recovery and does not warrant the initiation of criminal proceedings. The Court emphasized the well-established legal principle that a mere breach of agreement or contract does not automatically constitute a cause of action for criminal breach of trust. This is especially true when the parties involved have had a continuous history of transactions between them.

5. State Bank of India v. Moser Baer Karamachari Union

Citation: State Bank of India v. Moser Baer Karamachari Union: (07.02.2023 -SC of India): MANU/SCOR/18061/2023; Decided by Justice B.R. Gavai and Justice Vikram Math

Ratio: The Supreme Court upheld the National Company Law Tribunal order that the provident fund, pension fund and gratuity fund are not part of the liquidation estate, for distribution under Section 53 of the Insolvency and Bankruptcy Code, 2016 which provides for a waterfall mechanism and the same must be paid to the employees under the stated heads.

6. Greymatter Entertainment Pvt. Ltd. Vs. Pro Sportify Pvt. Ltd.

Citation: Greymatter Entertainment Pvt. Ltd. Vs. Pro Sportify Pvt. Ltd. (09.02.2023 – NCLAT, New Delhi): MANU/NL/0091/2023; Decided by Hon’ble Justice Ashok Bhushan, Chairperson and Shreesha Merla, Member (Technical).

Ratio: The Hon’ble NCLAT concluded that it is possible for the Corporate Debtor to bring forward evidence of pre-existing disputes before the Adjudicating Authority during the notice issuance under Section 9 of the IBC, 2016 or in their reply to the demand notice under section 8 of the same act. Therefore, the fact that the Corporate Debtor did not provide a reply within 10 days or did not file a reply to the demand notice does not prevent them from presenting relevant evidence to establish pre-existing disputes, which may result in the rejection of the Section 9 application. Further, it was stated that considering Section 9(5)(ii), which states that the Adjudicating Authority can reject an application if there is a “record of dispute” in the Information Utility, even in the absence of a notice of dispute. This provision indicates that the Adjudicating Authority has the power to reject an application based on a dispute recorded in the Information Utility, regardless of whether a notice of dispute has been received.

7. Maharashtra State Electricity Distribution Company Ltd. vs. NRC Ltd. and Ors.

Citation: Maharashtra State Electricity Distribution Company Ltd. vs. NRC Ltd. and Ors. (17.01.2023 – NCLAT, New Delhi): MANU/NL/0062/2023; Decided by Hon’ble Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical)

Ratio:  The above case was concerned with the limitation for filing an appeal, and thus Section 17(1)(c) was not relevant to the circumstances. Section 17(1) of the Limitation Act, 1963, pertains to the period of limitation for suits or applications. It is evident that Section 17(1)(c) does not apply to appeals since it specifically relates to limitation in suits or applications.

The NCLAT reiterated the provisions of IBC which bars it from condoning a delay of more than 15 days over the 30 days within which an order of the Adjudicating Authority can be appealed.

8. Sikandar Mohammad Ali Dalal & ANR vs. Babu Hanumanth Mindolkar & Others.

Citation: Sikandar Mohammad Ali Dalal & Anr vs. Babu Hanumanth Mindolkar & Ors. (18.01.2023 – HC of Karnataka, Dharwad Bench): MANU/KA/0274/2023; Decided by the Hon’ble Justice S.R. Krishna Kumar

Ratio: According to the Karnataka High Court, a court may exercise its authority under Order 21 Rule 29 of the Code of Civil Procedure and issue an order delaying the execution of a judgment only if the lawsuit contesting the decree and the referred execution proceedings are being heard by the same court, and not by two separate courts that lack coordinate jurisdiction.

Further, the court cautioned the trial court and stated that the use of the power and jurisdiction to stay its own proceeding pending before itself by the executing Court has to be exercised only under extraordinary and exceptional circumstances and not as a matter of course and care/caution has to be taken by the executing Court to find out if staying its own proceedings would result in abuse of process of law.

9. Noble Co-operative Bank Ltd. Vs. Garvit Innovative Promoters Ltd.

Citation: Noble Co-operative Bank Ltd. Vs. Garvit Innovative Promoters Ltd. (16.02.2023 – NCLAT): MANU/NC/0957/2023; Decided by Hon’ble Justice Praveen Gupta, Member (Judicial) and Ashish Verma, Member (Technical).

Ratio: The above matter was filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 against Garvit Innovative Promoters Limited. The bank provided a current cum overdraft account to the corporate debtor, but they failed to maintain proper financial discipline and incurred significant outstanding debts. The bank issued a demand notice, but the corporate debtor stated its inability to pay due to financial crises. The Tribunal served notice to the corporate debtor, but they did not respond, resulting in ex-parte proceeding. A moratorium was declared, an IRP (Insolvency Resolution Professional) was appointed, and the resolution process was initiated.

The Interim Resolution Professional was directed to convene a meeting of the Committee of Creditors and identify a prospective resolution applicant within a specified timeframe. The applicant was directed to deposit a certain amount with the IRP.

10. Shibu Job Cheeran, Suspended Director of CD Vs. Mr. Ashok Velamur Seshadri, Liquidator of M/s. Archana Motors Ltd.

Citation: Mr. Shibu Job Cheeran, Suspended Director of CD Vs. Mr. Ashok Velamur Seshadri, Liquidator of M/s. Archana Motors Ltd. (01.03.2023 – NCLAT, Chennai Bench): MANU/NL/0137/2023; Decided by Hon’ble Justice M. Venugopal, Member (Judicial) and Naresh Salecha, Member (Technical).

Ratio: The National Company Law Appellate Tribunal (“NCLAT”) held that to establish a fraudulent purpose, it must be shown that the former directors of the corporate debtor knew about the company’s insolvency but continued to operate the business with dishonest intentions. In a broader sense, concealing the true financial position of the corporate debtor can also fall under such provisions.

The NCLAT observes that the success of a Section 66 application requires the establishment of the following elements:

(i) The business of the corporate debtor was carried out with the intention to defraud creditors.

(ii) The directors participated in the business of the corporate debtor despite knowing about its likely insolvency.

The NCLAT stated that in a typical corporate structure, the board of directors ultimately holds responsibility for the affairs of the corporate debtor through board meetings and cannot escape liability if the Adjudicating Authority is satisfied regarding the requirements of Section 66 of the Insolvency and Bankruptcy Code, 2016.

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