1. Sabarmathi Gas Ltd. Vs Shah Alloys Ltd

Citation: Sabarmati Gas Ltd. Vs. Shah Alloys Ltd. (04.01.2023 – Supreme Court of India): Civil Appeal No 1669 of 2020; Decided by Hon’ble Justice Ajay Rastogi and Hon’ble Justice C.T.Ravikumar.

Ratio: The Supreme Court held that under Section 9 of the Insolvency and Bankruptcy Code 2016 (IBC), the time limit for initiating Corporate Insolvency Resolution Process (CIRP) should be calculated from the date of default rather than the date of the commencement of IBC. According to Section 137 of the Limitation Act, 1963, the prescribed period for filing such proceedings is three years from the date of default. This period can only be extended by applying Section 5 of the Limitation Act, which allows for condonation of the delay.

It was emphasized that if a CIRP is filed beyond the prescribed limitation period, it is the responsibility of the Adjudicating Authority to consider the request for condonation of the delay. In other words, if the proceedings are filed late, the authority must assess whether there are valid reasons to excuse the delay and allow the case to proceed.

2. IFB Argo Industries Ltd vs SICGIL India Ltd. & Ors

Citation: IFB Argo Industries Ltd vs. SICGIL India Ltd & Ors. (04.01.2023 – Supreme Court of India): MANU/SC/0007/2023; Decided by Hon’ble Justice A.S. Bopanna and Justice Pamidighantam Sri Narasimha.

Ratio:  It was emphasized by the Hon’ble National Company Law Tribunal that the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 provide a comprehensive scheme for inquiry, investigation, procedural safeguards, and the issuance of restitutionary orders by the Board and any attempt to circumvent this process by applying under Section 111A of the Companies Act, 1956, as the jurisdiction and determination of violations rest with the SEBI and the appropriate regulatory authorities. The regulator must scrutinize the transaction in question to determine if there has been a violation of the SEBI Act and the relevant regulations.

Securities and Exchange Board of India (SEBI) plays a crucial role in regulating the securities market, particularly regarding insider trading. It is stated that seeking rectification under Section 111A of the 1956 Act cannot bypass the important role of SEBI as the regulator. Any transaction alleged to be in violation of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 must be examined and scrutinized through the regulations and remedies provided by SEBI.

3. Kotak Mahindra Bank Ltd. Vs. Girnar Corrugators Pvt. Ltd. & Ors.

Citation: Kotak Mahindra Bank Ltd. Vs. Girnar Corrugators Pvt. Ltd. & Ors. (05.01.2023 – SC of India): MANU/SC/0013/2023; Decided by Hon’ble Justice M.R. Shah and Hon’ble Justice Krishna Murari.

Ratio: The Supreme Court observed that the dues under the Micro, Small, and Medium Enterprises Development Act, 2006 would not prevail over the SARFAESI Act. The significance of this judgment cannot be overemphasized, laying down a significant precedent for further prospective litigation. Neither District Magistrate nor Metropolitan Magistrate would have any jurisdiction to adjudicate and/or decide the dispute even between the secured creditor and the debtor.

Therefore, if any person is aggrieved by the steps under Section 13(4) / order passed under Section 14, then the aggrieved person has to approach the Debts Recovery Tribunal by way of appeal/application under Section 17 of the SARFAESI Act.

4. Vemula Amarchand vs Krishna Mohan Gollamudi

Citation: Vemula Amarchand vs Krishna Mohan Gollamudi (23.12.2022 – NCLT Hyderabad Bench) MANU/NC/6397/2022; Decided by Dr. Venkata Ramakrishna Badrinath Nandula, Member (Judicial) and Ajai Das Mehrotra, Member (Technical)

Ratio: In this judgment, the court examined Regulation 30A of the Corporate Insolvency Resolution Process Regulations, 2016 and concluded that it requires a special reason to be provided when filing an application under Section 30A(1)(b) after the publication of an invitation for Resolution Application. The regulation implies that if a Resolution Plan has been issued, there must be a valid justification for withdrawal. The court emphasized that this regulation was formulated with a comprehensive understanding of the entire insolvency process, which includes the approval of the Resolution Plan by the Committee of Creditors (CoC) and the subsequent filing of the application for approval by the Adjudicating Authority.

This Judgement makes it clear that the regulation does not allow for the filing of a Section 12A application after the Resolution Plan has been approved by the CoC. The court referred to previous judgments and clarified that the exit route provided under Section 12A is not applicable to a Resolution Applicant.

5. Excise and Taxation Commissioner Vs. Hitesh Goel, Liquidator for Anandtex International Pvt. Ltd.

Citation: Excise and Taxation Commissioner Vs. Hitesh Goel, Liquidator for Anandtex International Pvt. Ltd (8.12.2022 – NCLT Chandigarh Bench): IA No. 232/2022; Decided by Hon’ble Mr. Harnam Singh Thakur, Member (Judicial) and Hon’ble Mr. Subrata Kumar Dash, Member (Technical)

Ratio: The Adjudicating Authority, citing the Supreme Court’s decision in the case of State Tax Officer (1) vs. Rainbow Papers Limited, determined that the Taxation Department is not obligated to lodge a claim for statutory dues that have been communicated to the corporate debtor. Such claims should be treated as debts owed to secured creditors under Section 53(1)(b)(ii) since a security interest has been created by operation of law. The liquidator was instructed to consider the claim of the Excise and Taxation Authorities based on these observations.

Section 142(8) of the Goods and Services Act, 2017 allows authorities to take necessary steps for tax recovery. The Adjudicating Authority stated that there is no justification for the authorities to attach the corporate debtor’s ITC, as it would adversely affect their business and go against the objectives of the IBC.

6. Hem Singh Bharana vs. Pawan Doot Estate Pvt. Ltd & Ors

Citation: Hem Singh Bharana Vs. M/s Pawan Doot Estate Pvt. Ltd. 05.01.2023 – NCLAT New Delhi): MANU/NL/0019/2023; Decided by Hon’ble Justice Ashok Bhushan (Judicial) and Hon’ble Member Barun Mitra (Technical).

Ratio: The Hon’ble Court analysed Regulation 30A of the Corporate Insolvency Resolution Process  Regulations, 2016 and concluded that the provision intends for a special reason to be presented when filing an application under Section 30A(1)(b) after the publication of an invitation for Resolution Application. The regulation indicates that if a Resolution Plan has been issued, there must be sufficient justification for withdrawal. The court emphasized that the regulation was framed with the understanding of the entire insolvency process, including the approval of the Resolution Plan by the Committee of Creditors (CoC) and the filing of the application for approval by the Adjudicating Authority. The court determined that the regulation does not contemplate the filing of a Section 12A application after the approval of the Resolution Plan by the CoC. The court referred to previous judgments and highlighted that the exit route provided under Section 12A is not applicable to a Resolution Applicant. Additionally, it stated that inquiries into the eligibility of applicants cannot be entertained after the approval of the Resolution Plan.

7. Nirmal Kumar Agarwal vs. SBI

Citation: Nirmal Kumar Agarwal vs. SBI (19.12.2022 – NCLAT, New Delhi) MANU/NL/1047/2022; Decided by Justice Rakesh Kumar Jain, Member (Judicial) and Kanthi Narahari, Member (Technical)

Ratio: The NCLAT allowed an appeal that challenged the NCLT Kolkata Bench’s decision to admit an application filed by a financial creditor under Section 7 of the Insolvency and Bankruptcy Code (IBC) against a Corporate Guarantor, which was an NBFC (Non-Banking Financial Company). The NCLAT examined the provisions of the IBC, particularly the definition of a corporate person under Section 3(7), which explicitly excludes any financial service provider.

The NCLAT concluded that the NCLT lacked jurisdiction to initiate Corporate Insolvency Resolution Process (CIRP) proceedings in this case since Section 7 application was not maintainable against the Corporate Guarantor, which was an NBFC.

8. IDBI Bank Ltd vs. Indian Oil Corporation Ltd & Ors

Citation: IDBI Bank Ltd vs Indian Oil Corporation Ltd & Ors (10.01.2023 – NCLAT, New Delhi): MANU/NL/0037/2023; Decided by Justice Anant Bijay Singh, Member (Judicial) and Shreesha Merla, Member (Technical)

Ratio: Considering the provisions of the Insolvency and Bankruptcy Code (IBC), the court has concluded that an irrevocable and unconditional Bank Guarantee can be enforced even during the moratorium period. This conclusion is based on the amended provision of Section 14(3)(b) of the IBC. This judgement further buttresses the fact that the National Company Law Tribunal has no jurisdiction to decide the question of disputes and claims/counter claims.

Bank Guarantees, specifically Performance Bank Guarantees (PBGs), are not covered by the moratorium provision stated in Section 14 of the IBC. Section 3(31) of the IBC explicitly excludes PBGs from the scope of the moratorium.

9. Nitin Jain vs Lucky Holdings Pvt. Ltd

Citation: Nitin Jain vs. Lucky Holdings Pvt. Ltd. (18.01.2023 – NCLAT, New Delhi) MANU/NL/0078/2023; Decided by Justice Ashok Bhushan, (Chairperson) and Barun Mitra, Member (Technical)

Ratio: The Adjudicating Authority rightly allowed the withdrawal and directed the refund of the EMD and the first installment. Based on the Delhi High Court’s order accepting the Successful Auction Purchaser’s desire to exit, the liquidator cannot proceed with and finalize the auction sale. The assets of the corporate debtor were attached under the PMLA Act, which prevented the auction purchaser from depositing the entire sale amount.

The Successful Auction Purchaser filed an application to withdraw from the auction and requested a refund of the Earnest Money Deposit (EMD). However, the Authority’s direction to refund the amount with interest was deemed unsustainable. Therefore, the NCLAT partly allows the appeal, setting aside the direction for interest refund while upholding the refund of the EMD and the first installment.

10. Arvind Garg vs Jagdish Khattar & Ors

Citation: Arvind Garg vs Jagdish Khattar & Ors (20.01.2023 – NCLAT, New Delhi): MANU/NL/0266/2023; Decided by Justice Rakesh Kumar Jain, Member (Judicial) and Kanthi Narahari, Member (Technical)

Ratio: The Hon’ble Tribunal, after hearing both the parties, opined that since the term “legal representative” is not defined in the Insolvency and Bankruptcy Code, 2016 (“IBC”), the definition as given in the Civil Procedure Code, 1908 should be referred to, and upon doing the same, the Court held that Legal representatives including the widow of a deceased Promoter/Director of a Company can be impleaded as parties in an application under Section 43, 45, 50 & 66 of the IBC for avoidance of transactions.

From the above judgment we can conclude that since IBC is a new legislation and lacks the depth and polish of other central acts like the CPC, 1908, the Courts/tribunals may fall back upon CPC for joining the missing threads in IBC.

11. Super Agri Seeds Ltd.

Citation: Super Agri Seeds Ltd. (03.03.2022 – NCLT, Hyderabad Bench): MANU/NL/0266/2023; Decided by Hon’ble Justice Bhaskara Pantula Mohan – Member Judicial and Hon’ble Justice Dr. Binod Kumar Sinha – Member Technical

Ratio: The Hon’ble NCLT, Hyderabad Bench, took suo moto cognizance of this matter purely in academic interest and dictated its opinion in open Court, being that an Advocate who is simultaneously practicing any other profession other than Advocacy, like that of a CA, CS, Cost Accountancy, Liquidator or of that of an Insolvency Professional, etc. He/She must not wear the uniform of a lawyer (Band, Gown) to any Court. However, he/she may practice such other profession simultaneously until a clarificatory order is passed by the Government.

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