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Citation: Rajeev Vidyadharan and Ors. vs. P.J. Mathews and Ors. (18.10.2022 – NCLAT): MANU/NL/0827/2022; Decided by Hon’ble Justice M. Venugopal, J. Member (Judicial) and Naresh Salecha, Member (Technical)
Ratio: The National Company Law Appellate Tribunal (NCLAT) upheld the order of the National Company Law Tribunal (NCLT) to appoint an inspector to investigate allegations of oppression and mismanagement in a company. The NCLAT found that the NCLT had the power to appoint an inspector under Section 244(1)(b) of the Companies Act, 2013, even though the number of members who had applied for the appointment of an inspector was less than the number required under Section 244(1)(a). The NCLAT found that the proviso to Section 244(1)(b) gives power to the Tribunal to waive any requirement specified in clause (a) or clause (b) so as to enable the members to apply under Section 241.
In conclusion, the NCLAT upheld the order of the NCLT to appoint an inspector to investigate allegations of oppression and mismanagement in a company. The NCLAT found that the NCLT had the power to appoint an inspector under Section 244(1)(b) of the Companies Act, 2013.
Citation: SN Engineers vs. Vedant Dyestuffs Intermediaries Pvt Ltd: C.P.(IB)- 3079 (MB)/2018, NCLT Mumbai, Decided by Hon’ble Justice P.N. Deshmukh (Judicial) and Hon’ble Shyam Babu Gautam (Technical)
Ratio: The Hon’ble NCLT found that there was insufficient evidence to prove the existence of operational debt since the Operational Creditor was unable to provide properly raised Tax invoices to support their claim. The Operational Creditor was unable to provide sufficient evidence to support their claim for payment of an operational debt. The court found that there were discrepancies in the Proforma invoices, and that the Operational Creditor had not raised Tax Invoices for the work that had been done. As a result, the court dismissed the Company Petition.
Citation: Smt Veenashri vs. Sri Shankar: Criminal Petition No. 2129 of 2019, High Court of Karnataka, Decided by Hon’ble Justice M.I. Arun
Citation: Diamond Entertainment Technologies Pvt Ltd vs. Religare Finvest Ltd: ARB.P.62/2022, High Court of Delhi, Decided by Hon’ble Justice Ms. Neena Bansal Krishna
Ratio: The Hon’ble Delhi High Court held that the option of arbitration should not be viewed as a one-time solution, and that invoking an arbitration clause does not mean that arbitration is no longer available for any future disputes. In other words, parties cannot be prevented from seeking arbitration for a subsequent cause of action simply because they have already invoked arbitration for a previous dispute. The importance of trying to consolidate multiple arbitrations under the same arbitrator, to avoid inefficiencies and ensure consistency in decision-making. The court suggests that while arbitration can be a useful tool for resolving disputes, it is important to approach it in a thoughtful and strategic manner to ensure its
effectiveness. Merely because the proceedings under the SARFAESI Act have been initiated, arbitration of disputes does not get per se barred.
Citation: Muhammed Yasin vs. The Station House Officer and Anr: Crl. MC No. 7667 of 2022, High Court of Kerala, Decided by Hon’ble Justice Kauser Edappagath
Ratio: The cancellation of bail is a matter that directly affects the personal liberty of the accused and is therefore closely tied to the constitutional freedoms guaranteed under Article 21 of the Constitution of India. It is important to recognize that once bail has been granted, it cannot be cancelled in a mechanical or automatic manner without first considering the conduct of the accused after being granted bail and any new circumstances that have arisen. In order to uphold principles of natural justice, it is essential to provide notice to the affected party before any action is taken against them. The Latin maxim audi alteram partem, which means “hear the other side,” reflects this fundamental principle that no person should be condemned without being given an opportunity to present their case. Thus, no decision should be made by a court without first hearing both sides. The court’s decision that notice does not need to be given to the accused when seeking to cancel bail on the grounds of violating bail conditions is not justifiable. It is essential to provide notice to the accused in order to ensure that the principles of natural justice are upheld and that the affected party has an opportunity to present their case.
Citation: Axis Trustee Services Limited vs. Brij Bhushan Singal and Ors.: (17.09.2021 – DELHC): 2022 SCC OnLine Del 3634; Decided by Hon’ble Justice Jayanth Nath
Ratio: It was argued that the interim moratorium applicable to one co-guarantor should also apply to the other co-guarantor for the same debt. However, the court determined that the language of Section 96(1) of the IBC does not encompass all co-guarantors under the interim moratorium. The provision refers to “all the debts” of a particular debtor, indicating that it applies solely to the debts of that specific debtor. Therefore, it does not automatically extend to other independent guarantors for the same debt of a corporate debtor. In this case, the defendants are independent guarantors with joint and several liability, and each can be pursued independently by creditors.
Citation: Vasanth Aditya J vs. State of Karnataka: 2022 SCC OnLine Kar 1172, Criminal Petition No. 9845 of 2022, High Court of Karnataka, Decided by Hon’ble Justice K. Natrajan
Ratio: The Petitioner filed a quashing petition under Section 482 of Cr.P.C. for offenses under IPC Section 324 (Voluntarily causing hurt by dangerous weapons or means), 341 (wrongful restraint), 354 (Assault of criminal force to woman with intent to outrage her modesty), 506 (criminal intimidation) and 509 (insulting modesty of a woman). During the pendency of the petition, parties filed a compounding application before the Hon’ble Court on the grounds that that the complaint arose out of some misunderstanding which led to conflict. The Hon’ble Court held that despite the fact that the offences alleged were non-compoundable in nature and were heinous and serious, since the offence is merely a civil matterarising from commercial transactions, wrong is personal in nature and parties have resolved the dispute, proceedings may be quashed.
Citation: Assam Tea Employees Provident Fund Organization vs. Hail Tea Ltd and Anr: Company Appeal (AT) (Insolvency) No. 262 of 2022, NCLAT Delhi, Decided by Hon’ble Justice Ashok Bhushan
Ratio: In the above matter, the dispute revolves around the claim amount admitted by the Resolution Professional in the resolution plan. The case refers to a recent judgment that addressed a similar issue in the matter of “Association of Aggrieved Workmen of Jet Airways (India) Limited vs Jet Airways India Limited & Ors.” Wherein it was clarified that provident fund dues are not subject to haircut and should be paid in full.
The appellant’s claim for provident fund dues was accepted by the Resolution Professional, but the resolution plan allocated a lower amount. The appellant filed an appeal seeking the full amount. The Tribunal held that the appeal was not barred by time and directed the successful resolution applicant to make the payment of the remaining provident fund amount to the appellant to uphold the validity of the resolution plan.
Citation: Suzlon Synthetics Ltd vs Stressed Asset Stabilization Fund and Anr: Company Appeal (AT)(Insolvency) No. 662-663 of 2022, NCLAT Delhi, decided by Hon’ble Justice Rakesh Kumar Jain (Judicial) and Member Alok Srivastava (Technical)
Ratio: The appellant claimed that the Adjudicating Authority had fixed a precise amount of the claim, causing adverse impact on their financial interest. However, upon examining the impugned order and relevant provisions, the appellate tribunal found no merit in the appellant’s argument. The Adjudicating Authority had merely recorded the claim without delving into the calculation of the amount specified in the Section 7 application. The tribunal emphasized the clear procedure outlined in the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016 for the invitation, submission, verification, and finalization of claims. In the case of a Section 7 application, it is only necessary to determine if the amount in default exceeds the minimum threshold value specified in Section 4(1) of the IBC. The tribunal concluded that the appellant failed to demonstrate that the Adjudicating Authority had fixed a precise claim amount, and thus the appeal was dismissed.
Citation: Verender Singh vs DVS Infrastructure Pvt Ltd and Anr.: 2 022 SCC OnLine NCLAT 445, Comp. App. (AT)(Ins) No. 1378 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical) and Member Barun Mitra (Technical).
Ratio: The above appeal was filed against the order of the Adjudicating Authority, which admitted a Section 9 application filed by the operational creditor. The operational creditor had supplied goods to the corporate debtor and issued invoices with a GST number. The corporate debtor later informed the creditor of a different GST number. The corporate debtor never informed the respondent that they were using another GST number until later when they made the necessary amendment. The parties do not dispute the supply of goods or the quality of the goods. The appellant’s counsel admitted that they did not raise any dispute regarding the supply or quality but contended that the demand was invalid due to the incorrect
mention of the GST number on the invoices.
However, the Tribunal found that the GST number initially mentioned in the invoices was registered with the corporate debtor at the time and deemed the demand valid. The Tribunal dismissed the appeal, stating that the Adjudicating Authority did not err in admitting the Section 9 application.
Citation: Avneet Goyal vs Radha Kishan Gobind Ram Ltd: Company Appeal (AT)(Insolvency) No. 1388 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical) and Member Barun Mitra (Technical).
Ratio: In the above matter, the Tribunal concluded that in Section 9 proceedings, it is not necessary for the court to delve into evidence and make findings like a civil court. The Section 9 application was rejected based on the defense presented by the corporate debtor, and the Tribunal found no error in this rejection. Therefore, the appeal was dismissed.
Ratio: In the present case, the revision petitioner had got loan of Rs. 15 lakhs from the respondent in cash and repaid the same by 15 cheques of Rs. 1 lakh each. Upon the dishonour of one such cheque, the petitioner was convicted u/ Section 138 of the NI Act. The petitioner in this revision petition stated that there was no legally enforceable debt and the conviction is liable to be set aside u/ Section 139 NI Act on the grounds that under Section 269SS of the Income Tax Act, loans in cash above Rs. 20000 are not allowed and invite penalty under Section 271D of the Income Tax Act.
Held, Section 269SS of the Income Tax Act was implemented to prevent tax evasion but has no bearing on current contract. Necessary action may be taken against the lender by the tax authorities. Mere contravention of Section 269SS does not make an alleged transaction void. Hence, the petition was dismissed.
Citation: N. N. Global Mercantile Pvt Ltd vs Indo Unique Flame Ltd & Ors.: (2021) 4 SCC 379, Civil Appeal Nos. 3802 – 3803 of 2020, Supreme Court of India, decided by Hon’ble Justice DY Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee
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Ratio: Arbitration clause in an unstamped agreement is unenforceable till Stamp Duty is adjudicated and paid on the substantive contract.
Citation: Teena Saraswat Pandey vs Jhanvi Rajpal Automotive Pvt Ltd & Ors: (MP) CP (IB) No. 6 of 2020, NCLT Indore, decided by Hon’ble Justice Dr. Madan. B. Gosavi (Judicial) and Member Kaushalendra Kumar Singh (Technical)
Ratio: Following the admission of the corporate debtor into CIRP, the Committee of Creditors (COC) decided to renew a respondent no. 1’s rent agreement for an additional 5 months. However, respondent no. 1 failed to pay the rent for the specified period, leading the COC to terminate the agreement and serve a legal notice for the vacation of the premises.
Citation: Shantilal Javerchand Jain vs Varsha Corporation Ltd.: Company Appeal (AT)(Insolvency) No. 719 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical), Member Barun Mitra (Technical).
Ratio: The Tribunal referred to another case to emphasize the establishment of a financial debt in the present case, unlike the lack of evidence shown by the appellant in that case. Additionally, the Tribunal highlighted the obligation of the Adjudicating Authority to carefully investigate the nature of the transaction before admitting an application, noting that in this case, all the relevant documents and events were examined, leading to the conclusion that the debt qualified as a ‘financial debt.’
In the above matter, although the promissory note and loan agreement did not specify a date of default, the Tribunal found that a letter from the corporate debtor clearly acknowledged the loan and stated that dishonouring the cheques would be considered a default, allowing the financial creditor to take legal action. Hence, the Tribunal determined that the Adjudicating Authority did not make any errors in admitting the Section 7 application, and thus, the appeal was dismissed.
Citation: Plus Corporate Ventures Pvt Ltd vs Transnational Growth Fund Ltd: Company Appeal (AT)(Insolvency) No. 1270 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson) and Member Barun Mitra (Technical)
Citation: Jet Aircraft Maintenance Engineers Welfare Association vs Ashish Chhawchharia: 2022 SCC OnLine NCLAT 629, Company Appeal (AT)
(Insolvency) No. 295 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Member Alok Srivastava (Technical) and Member Shreesha Merla (Technical).
Ratio: The NCLAT, upon examining the issues at hand, held that the workmen and employees are entitled to receive their full amount of provident fund and gratuity since these funds are not considered part of the liquidation estate. The workmen should receive their dues from the Corporate Debtor for a period of 24 months, at least up to the minimum liquidation value prescribed under Section 53(1)(b) of the Code. It is important to note that funds such as provident fund, gratuity fund, and pension fund maintained by the Corporate Debtor are assets belonging to the employees and workmen, and the Resolution Professional is not required to take control of these funds during the Corporate Insolvency Resolution Process (CIRP).
Therefore, these assets should be fully utilized for the payment of provident fund, pension fund, and gratuity to the workmen and employees, and should not be considered as assets of the Corporate Debtor in the Information Memorandum. Claims for unpaid provident fund, gratuity, and leave encashment were filed and admitted by the Resolution Professional, but since the Corporate Debtor does not maintain these funds, the admitted claims must be satisfied in accordance with the provisions of the Code, specifically Section 30(2) read with Section 53(1). The Successful Resolution Applicant must make the remaining payments to fulfil their statutory obligations and ensure compliance with Section 30(2)(e) to safeguard the resolution plan.
Citation: TCI Express Ltd vs Vinayak Manutrade Pvt Ltd: CP No. (IB) – 217/9/JPR/2020, NCLT Jaipur, decided by Hon’ble Justice Deep Chand Joshi (Judicial) and Member Prasanta Kumar Mohanty (Technical)
Additionally, The AA considering the Supreme Court’s order in the case of Mobilox Innovations Pvt Ltd Vs Kirusa Software Pvt Ltd., were not inclined to initiate the Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor in view of the pre-existing dispute regarding the debt between the parties established by way of the email correspondences.
1. Mr. Rajeev Vidyadharan and Ors v P.J. Mathews and Ors
Citation: Rajeev Vidyadharan and Ors. vs. P.J. Mathews and Ors. (18.10.2022 – NCLAT): MANU/NL/0827/2022; Decided by Hon’ble Justice M. Venugopal, J. Member (Judicial) and Naresh Salecha, Member (Technical)
Ratio: The National Company Law Appellate Tribunal (NCLAT) upheld the order of the National Company Law Tribunal (NCLT) to appoint an inspector to investigate allegations of oppression and mismanagement in a company. The NCLAT found that the NCLT had the power to appoint an inspector under Section 244(1)(b) of the Companies Act, 2013, even though the number of members who had applied for the appointment of an inspector was less than the number required under Section 244(1)(a). The NCLAT found that the proviso to Section 244(1)(b) gives power to the Tribunal to waive any requirement specified in clause (a) or clause (b) so as to enable the members to apply under Section 241.
In conclusion, the NCLAT upheld the order of the NCLT to appoint an inspector to investigate allegations of oppression and mismanagement in a company. The NCLAT found that the NCLT had the power to appoint an inspector under Section 244(1)(b) of the Companies Act, 2013.
2. SN Engineers v Vedant Dyestuffs Intermediaries Pvt Ltd
Citation: SN Engineers vs. Vedant Dyestuffs Intermediaries Pvt Ltd: C.P.(IB)- 3079 (MB)/2018, NCLT Mumbai, Decided by Hon’ble Justice P.N. Deshmukh (Judicial) and Hon’ble Shyam Babu Gautam (Technical)
Ratio: The Hon’ble NCLT found that there was insufficient evidence to prove the existence of operational debt since the Operational Creditor was unable to provide properly raised Tax invoices to support their claim. The Operational Creditor was unable to provide sufficient evidence to support their claim for payment of an operational debt. The court found that there were discrepancies in the Proforma invoices, and that the Operational Creditor had not raised Tax Invoices for the work that had been done. As a result, the court dismissed the Company Petition.
3. Smt Veenashri v Sri Shankar
Citation: Smt Veenashri vs. Sri Shankar: Criminal Petition No. 2129 of 2019, High Court of Karnataka, Decided by Hon’ble Justice M.I. Arun
Ratio: The Hon’ble High Court of Karnataka has held that the petitioner is not a signatory to the cheque and the respondent himself has averred that it was not a joint account as well. Hence the petitioner/wife cannot be held liable for dishonour of cheque by the respondent/husband.
4. Diamond Entertainment Technologies Pvt Ltd v Religare Finvest Ltd
Citation: Diamond Entertainment Technologies Pvt Ltd vs. Religare Finvest Ltd: ARB.P.62/2022, High Court of Delhi, Decided by Hon’ble Justice Ms. Neena Bansal Krishna
Ratio: The Hon’ble Delhi High Court held that the option of arbitration should not be viewed as a one-time solution, and that invoking an arbitration clause does not mean that arbitration is no longer available for any future disputes. In other words, parties cannot be prevented from seeking arbitration for a subsequent cause of action simply because they have already invoked arbitration for a previous dispute. The importance of trying to consolidate multiple arbitrations under the same arbitrator, to avoid inefficiencies and ensure consistency in decision-making. The court suggests that while arbitration can be a useful tool for resolving disputes, it is important to approach it in a thoughtful and strategic manner to ensure its
effectiveness. Merely because the proceedings under the SARFAESI Act have been initiated, arbitration of disputes does not get per se barred.
5. Muhammed Yasin v the Station House Officer and Anr
Citation: Muhammed Yasin vs. The Station House Officer and Anr: Crl. MC No. 7667 of 2022, High Court of Kerala, Decided by Hon’ble Justice Kauser Edappagath
Ratio: The cancellation of bail is a matter that directly affects the personal liberty of the accused and is therefore closely tied to the constitutional freedoms guaranteed under Article 21 of the Constitution of India. It is important to recognize that once bail has been granted, it cannot be cancelled in a mechanical or automatic manner without first considering the conduct of the accused after being granted bail and any new circumstances that have arisen. In order to uphold principles of natural justice, it is essential to provide notice to the affected party before any action is taken against them. The Latin maxim audi alteram partem, which means “hear the other side,” reflects this fundamental principle that no person should be condemned without being given an opportunity to present their case. Thus, no decision should be made by a court without first hearing both sides. The court’s decision that notice does not need to be given to the accused when seeking to cancel bail on the grounds of violating bail conditions is not justifiable. It is essential to provide notice to the accused in order to ensure that the principles of natural justice are upheld and that the affected party has an opportunity to present their case.
6. Axis Trustee Services Ltd. v Brij Bhushan Singal & Anr
Citation: Axis Trustee Services Limited vs. Brij Bhushan Singal and Ors.: (17.09.2021 – DELHC): 2022 SCC OnLine Del 3634; Decided by Hon’ble Justice Jayanth Nath
Ratio: It was argued that the interim moratorium applicable to one co-guarantor should also apply to the other co-guarantor for the same debt. However, the court determined that the language of Section 96(1) of the IBC does not encompass all co-guarantors under the interim moratorium. The provision refers to “all the debts” of a particular debtor, indicating that it applies solely to the debts of that specific debtor. Therefore, it does not automatically extend to other independent guarantors for the same debt of a corporate debtor. In this case, the defendants are independent guarantors with joint and several liability, and each can be pursued independently by creditors.
7. Vasanth Adithya J v State of Karnataka
Citation: Vasanth Aditya J vs. State of Karnataka: 2022 SCC OnLine Kar 1172, Criminal Petition No. 9845 of 2022, High Court of Karnataka, Decided by Hon’ble Justice K. Natrajan
Ratio: The Petitioner filed a quashing petition under Section 482 of Cr.P.C. for offenses under IPC Section 324 (Voluntarily causing hurt by dangerous weapons or means), 341 (wrongful restraint), 354 (Assault of criminal force to woman with intent to outrage her modesty), 506 (criminal intimidation) and 509 (insulting modesty of a woman). During the pendency of the petition, parties filed a compounding application before the Hon’ble Court on the grounds that that the complaint arose out of some misunderstanding which led to conflict. The Hon’ble Court held that despite the fact that the offences alleged were non-compoundable in nature and were heinous and serious, since the offence is merely a civil matterarising from commercial transactions, wrong is personal in nature and parties have resolved the dispute, proceedings may be quashed.
8. Assam Tea Employees Provident Fund Organization v Hail Tea Ltd and Anr
Citation: Assam Tea Employees Provident Fund Organization vs. Hail Tea Ltd and Anr: Company Appeal (AT) (Insolvency) No. 262 of 2022, NCLAT Delhi, Decided by Hon’ble Justice Ashok Bhushan
Ratio: In the above matter, the dispute revolves around the claim amount admitted by the Resolution Professional in the resolution plan. The case refers to a recent judgment that addressed a similar issue in the matter of “Association of Aggrieved Workmen of Jet Airways (India) Limited vs Jet Airways India Limited & Ors.” Wherein it was clarified that provident fund dues are not subject to haircut and should be paid in full.
The appellant’s claim for provident fund dues was accepted by the Resolution Professional, but the resolution plan allocated a lower amount. The appellant filed an appeal seeking the full amount. The Tribunal held that the appeal was not barred by time and directed the successful resolution applicant to make the payment of the remaining provident fund amount to the appellant to uphold the validity of the resolution plan.
9. Suzlon Synthetics Ltd v Stressed Asset Stabilization Fund and Anr
Citation: Suzlon Synthetics Ltd vs Stressed Asset Stabilization Fund and Anr: Company Appeal (AT)(Insolvency) No. 662-663 of 2022, NCLAT Delhi, decided by Hon’ble Justice Rakesh Kumar Jain (Judicial) and Member Alok Srivastava (Technical)
Ratio: The appellant claimed that the Adjudicating Authority had fixed a precise amount of the claim, causing adverse impact on their financial interest. However, upon examining the impugned order and relevant provisions, the appellate tribunal found no merit in the appellant’s argument. The Adjudicating Authority had merely recorded the claim without delving into the calculation of the amount specified in the Section 7 application. The tribunal emphasized the clear procedure outlined in the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016 for the invitation, submission, verification, and finalization of claims. In the case of a Section 7 application, it is only necessary to determine if the amount in default exceeds the minimum threshold value specified in Section 4(1) of the IBC. The tribunal concluded that the appellant failed to demonstrate that the Adjudicating Authority had fixed a precise claim amount, and thus the appeal was dismissed.
10.Verender Singh v DVS Infrastructure Pvt Ltd and Anr
Citation: Verender Singh vs DVS Infrastructure Pvt Ltd and Anr.: 2 022 SCC OnLine NCLAT 445, Comp. App. (AT)(Ins) No. 1378 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical) and Member Barun Mitra (Technical).
Ratio: The above appeal was filed against the order of the Adjudicating Authority, which admitted a Section 9 application filed by the operational creditor. The operational creditor had supplied goods to the corporate debtor and issued invoices with a GST number. The corporate debtor later informed the creditor of a different GST number. The corporate debtor never informed the respondent that they were using another GST number until later when they made the necessary amendment. The parties do not dispute the supply of goods or the quality of the goods. The appellant’s counsel admitted that they did not raise any dispute regarding the supply or quality but contended that the demand was invalid due to the incorrect
mention of the GST number on the invoices.
However, the Tribunal found that the GST number initially mentioned in the invoices was registered with the corporate debtor at the time and deemed the demand valid. The Tribunal dismissed the appeal, stating that the Adjudicating Authority did not err in admitting the Section 9 application.
11.Avneet Goyal v Radha Kishan Gobind Ram Ltd
Citation: Avneet Goyal vs Radha Kishan Gobind Ram Ltd: Company Appeal (AT)(Insolvency) No. 1388 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical) and Member Barun Mitra (Technical).
Ratio: In the above matter, the Tribunal concluded that in Section 9 proceedings, it is not necessary for the court to delve into evidence and make findings like a civil court. The Section 9 application was rejected based on the defense presented by the corporate debtor, and the Tribunal found no error in this rejection. Therefore, the appeal was dismissed.
12.Gajanan v Appasaheb Siddamallappa Kaveri
Citation: Gajanan vs Appasaheb Siddamallappa Kaveri: Criminal Revision Petition No. 2011 of 2013, High Court of Karnataka, decided by Hon’ble Justice G Basavaraja
Ratio: In the present case, the revision petitioner had got loan of Rs. 15 lakhs from the respondent in cash and repaid the same by 15 cheques of Rs. 1 lakh each. Upon the dishonour of one such cheque, the petitioner was convicted u/ Section 138 of the NI Act. The petitioner in this revision petition stated that there was no legally enforceable debt and the conviction is liable to be set aside u/ Section 139 NI Act on the grounds that under Section 269SS of the Income Tax Act, loans in cash above Rs. 20000 are not allowed and invite penalty under Section 271D of the Income Tax Act.
Held, Section 269SS of the Income Tax Act was implemented to prevent tax evasion but has no bearing on current contract. Necessary action may be taken against the lender by the tax authorities. Mere contravention of Section 269SS does not make an alleged transaction void. Hence, the petition was dismissed.
13.N. N. Global Mercantile Pvt Ltd v Indo Unique Flame Ltd & Ors
Citation: N. N. Global Mercantile Pvt Ltd vs Indo Unique Flame Ltd & Ors.: (2021) 4 SCC 379, Civil Appeal Nos. 3802 – 3803 of 2020, Supreme Court of India, decided by Hon’ble Justice DY Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee
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Ratio: Arbitration clause in an unstamped agreement is unenforceable till Stamp Duty is adjudicated and paid on the substantive contract.
14.Teena Saraswat Pandey v Jhanvi Rajpal Automotive Pvt Ltd & Ors
Citation: Teena Saraswat Pandey vs Jhanvi Rajpal Automotive Pvt Ltd & Ors: (MP) CP (IB) No. 6 of 2020, NCLT Indore, decided by Hon’ble Justice Dr. Madan. B. Gosavi (Judicial) and Member Kaushalendra Kumar Singh (Technical)
Ratio: Following the admission of the corporate debtor into CIRP, the Committee of Creditors (COC) decided to renew a respondent no. 1’s rent agreement for an additional 5 months. However, respondent no. 1 failed to pay the rent for the specified period, leading the COC to terminate the agreement and serve a legal notice for the vacation of the premises.
The resolution plan submitted by respondent no. 2 was approved by the Adjudicating Authority. However, respondent no. 1 refused to vacate the premises, thereby hindering the implementation of the resolution plan. In light of these circumstances, it was determined that the only immovable property owned by the corporate debtor was under the possession of respondent no. 1. It was further concluded that without the surrender of this property, respondent no. 2 would be unable to implement the resolution plan. Given that the Corporate Insolvency Resolution Process is time-bound and delaying the resolution plan implementation would defeat the purpose of the code, it was deemed necessary for respondent no. 1 to vacate the premises within 15 days from the order. In the event of non- compliance, the monitoring committee was granted the authority to seek assistance from local police authorities to ensure the vacation of the premises from the possession of respondent no. 1.
15. Shantilal Javerchand Jain v Varsha Corporation Ltd
Citation: Shantilal Javerchand Jain vs Varsha Corporation Ltd.: Company Appeal (AT)(Insolvency) No. 719 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Justice Alok Srivastava (Technical), Member Barun Mitra (Technical).
Ratio: The Tribunal referred to another case to emphasize the establishment of a financial debt in the present case, unlike the lack of evidence shown by the appellant in that case. Additionally, the Tribunal highlighted the obligation of the Adjudicating Authority to carefully investigate the nature of the transaction before admitting an application, noting that in this case, all the relevant documents and events were examined, leading to the conclusion that the debt qualified as a ‘financial debt.’
In the above matter, although the promissory note and loan agreement did not specify a date of default, the Tribunal found that a letter from the corporate debtor clearly acknowledged the loan and stated that dishonouring the cheques would be considered a default, allowing the financial creditor to take legal action. Hence, the Tribunal determined that the Adjudicating Authority did not make any errors in admitting the Section 7 application, and thus, the appeal was dismissed.
16.Plus Corporate Ventures Pvt Ltd v Transnational Growth Fund Ltd
Citation: Plus Corporate Ventures Pvt Ltd vs Transnational Growth Fund Ltd: Company Appeal (AT)(Insolvency) No. 1270 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson) and Member Barun Mitra (Technical)
Ratio: According to the NCLAT, the proviso to Section 10A states that no application can be filed for the initiation of CIRP (Corporate Insolvency Resolution Process) for defaults occurring during the specified period. Since the appellant was not allowed to file an application for the committed default, the Adjudicating Authority did not make an error in rejecting the application as barred by Section 10A of the Code.
17.Jet Aircraft Maintenance Engineers Welfare Association v Ashish Chhawchharia
Citation: Jet Aircraft Maintenance Engineers Welfare Association vs Ashish Chhawchharia: 2022 SCC OnLine NCLAT 629, Company Appeal (AT)
(Insolvency) No. 295 of 2022, NCLAT New Delhi, decided by Hon’ble Justice Ashok Bhushan (Chairperson), Member Alok Srivastava (Technical) and Member Shreesha Merla (Technical).
Ratio: The NCLAT, upon examining the issues at hand, held that the workmen and employees are entitled to receive their full amount of provident fund and gratuity since these funds are not considered part of the liquidation estate. The workmen should receive their dues from the Corporate Debtor for a period of 24 months, at least up to the minimum liquidation value prescribed under Section 53(1)(b) of the Code. It is important to note that funds such as provident fund, gratuity fund, and pension fund maintained by the Corporate Debtor are assets belonging to the employees and workmen, and the Resolution Professional is not required to take control of these funds during the Corporate Insolvency Resolution Process (CIRP).
Therefore, these assets should be fully utilized for the payment of provident fund, pension fund, and gratuity to the workmen and employees, and should not be considered as assets of the Corporate Debtor in the Information Memorandum. Claims for unpaid provident fund, gratuity, and leave encashment were filed and admitted by the Resolution Professional, but since the Corporate Debtor does not maintain these funds, the admitted claims must be satisfied in accordance with the provisions of the Code, specifically Section 30(2) read with Section 53(1). The Successful Resolution Applicant must make the remaining payments to fulfil their statutory obligations and ensure compliance with Section 30(2)(e) to safeguard the resolution plan.
18.TCI Express Ltd v Vinayak Manutrade Pvt Ltd
Citation: TCI Express Ltd vs Vinayak Manutrade Pvt Ltd: CP No. (IB) – 217/9/JPR/2020, NCLT Jaipur, decided by Hon’ble Justice Deep Chand Joshi (Judicial) and Member Prasanta Kumar Mohanty (Technical)
Ratio: In this matter, the correspondence between the parties clearly indicate that a dispute had already arisen after the alleged services were provided by the Applicant, which the Corporate Debtor claimed were not satisfactory. The exchange of emails between them demonstrates the existence of a pre-existing dispute regarding the services provided.
Additionally, The AA considering the Supreme Court’s order in the case of Mobilox Innovations Pvt Ltd Vs Kirusa Software Pvt Ltd., were not inclined to initiate the Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor in view of the pre-existing dispute regarding the debt between the parties established by way of the email correspondences.
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