Anant Merathia, Advocate - ICSI · against IRPJIL u/s 7 - appointed. Anant Merathia, Advocate . ... valued Rs 80 crore - loan Rs 1,000 crore. Synergies Dooray Automotive Limited

Anant Merathia, Advocate

CORPORATE INSOLVENCY RESOLUTION TRANSACTIONS ( As on 30th Sep 2017)

Admitted Closure by No. of Corporates

undergoing Resolutions

at the end of the

Quarter

Appeal / Review Approval of Resolution

Plan

Commencement of

Liquidation

376 14 2 7 353

INITIATION OF CORPORATE INSOLVENCY TRANSACTIONS ( As on Sep 2017)

No. of Resolutions Processes Initiated by Total

Financial Creditor Operational Creditor Corporate Debtor

122 167 87 376

REGISTRATION OF INSOLVENCY PROFESSIONAL AS ON 30TH SEPTEMBER 2017 City Enrolled with Total

The Indian Institute of Insolvency Professional of ICAI

ICSI Insolvency Professional Agency

Insolvency Professionals Agency of Institute of Cost Accountants in India.

Delhi 131 103 29 263 Mumbai 133 53 16 202 Chennai 28 27 3 58 Kolkata 72 15 6 93 All India 639 371 97 1107


Prominent issues faced/settled under IBC

Pre Admission Post Admission

Freedom to initiate CIRP Settlement/Withdrawal

Applicability of Limitation Act CoC and CIRP issues

Demand Notice-relevance Resolution Plan/Liquidation

Bank Certificate-relevance Insolvency Professional issues

Initiation by workmen Personal guarantor v Moratorium

Position of Flat buyers

Jaypee Infra


Case Name RATIO

Neelkanth Township

Vs

Urban Infrastructure

IBC doesn’t have express provision regarding applicability of Limitation Act.

(But the SC has left the questions as to the applicability of Limitation act

towards I&B code matters open)

J.K. Jute Mill case

Adjudication of Application – 14 days - Directory

Rectification of defects - 7 days - Directory and not Mandatory

Term of interim Resolution Professional – 30 Days – Mandatory.

Moratorium Period - 180+90 Days – Mandatory

Mobilox

Vs

Kirusa

Duty of the NCLT to decide whether the dispute raised is bona fide / real and

not spurious, hypothetical, illusory and misconceived - expanded the meaning

of “Dispute” by not limiting it only to existing or pending suits or arbitration

proceedings.

Innoventive

Vs

ICICI Bank & Anr

Financial Creditor - enough to admit a company into CIRP, if FC is able to prove

“Default”. Once Moratorium is declared the erstwhile directors of the

company cannot represent on behalf of the company.

ISSUES P

RE-A

DM

ISSION

Mother Pride Diary;

Lokhandwala Kataria &

several other cases

SC has the power under Art 142 to entertain the case. SC

had accepted the settlement between the parties and

disposed of the order of the NCLT.

Uttara Food and Feeds

v.

Moha Pharmachem

Instead of all matters relating to compromise coming to the

Supreme Court under Article 142, the relevant rules may be

amended to include the inherent powers for NCLAT to

allow settlements post admission.

Alchemist Asset Re-Construction

Vs

Hotel Gauadavan (P) Ltd

Initiation of Arbitration proceedings after declaration of

Moratorium is Non – Est in Law.


ISSUES P

OST-A

DM

ISSION


Freedom to Initiate Corporate Insolvency

APPLICANT Vs RESPONDENT BENCH RATIO

Ind. & Comm. Bank of China

Vs. Alok Industries Ahmedabad

Pendency of winding up in HC before admission is no bar debarring a

creditor from triggering the insolvency resolution u/s 7, 9, 10. There is

nothing to prevent the financial creditors from triggering IRP u/s 7.

Bharatbhai Vrajiialbhal Selani Vs.

State Bank of India Ahmedabad

Initiation of proceedings under the SARFAESI Act or before the DRT is

not a ground for not commencing the IRP. Object of the Code is only to

protect the genuine Corporate Debtors with a view to maximise their

value of assets and find out a Resolution Plan - not to delay the other

recovery proceedings.

R.G. Shaw & Sons Vs Naviplast

Traders (P) Ltd. NCLAT

Existence of proceedings U/s. 138 of N.I Act, is not a ground to reject

the application

Yogendra Vasupal Vs Jigsaw

Solutions & Anr NCLAT Existence of a proceeding relating to Bail shall not be a dispute

LIMITA

TION

CASE NAME BENCH RATIO

Neelkanth Township

Vs

Urban Infrastructure

SC

Code doesn’t have express provision reg. applicability of

Limitation Act.

Speculum Plast v. PTC Techno

Parag Gupta v. B.K. Educational Services

Ashkay Infra Vs LDS Engineers

NCLAT

Limitation Act is not applicable in IBC - Reliance placed on Bankruptcy Law Reforms Committee Report 2015 Separate time period provided under IBC for everything - shows legislative intent on making the IBC a self-contained complete Code Right accures from 1st Dec 2016; hence cannot be barred by limitation AA given discretion in Sec 7 & 9 matters – if long delay – to be explained and to see if laches


Demand Notice Form & Content and Service CASE NAME BENCH RATIO

Jord Engineers;

Bhagwan Motors

& Several others

NCLAT

Appellate Tribunal - No Advocate, CA, CS in absence of

any authority of BOD and holding no position in relation

to the OC cannot issue a Demand Notice.

Legal Notice is different from IBC Demand Notice

Shriram EPC Limited

Vs

Rio Glass Solar Sa

NCLAT

Demand Notice not given by the Operational Creditor

but through an advocate / Law firm is not permissible.

Palogix Infrastructure Private Limited

Vs

ICICI Bank Limited

NCLAT A Power of Attorney holder cannot make an Demand

Notice.

Anu Elastics (P) Ltd Vs Aggarwal Elastice

NCLAT

On refusal of a notice by a party, it is deemed to be

served but if the same is for insufficient or wrong

address the notice cannot deemed to be served.


BANK CERTIFICATE ISSUE CASE NAME BENCH RATIO

Shriram EPC Limited

Vs

Rio Glass Solar Sa

NCLAT Bank Certificates from Bank which cannot be

classified as a Financial institution, not acceptable

by NCLT

Smart Timings Steel

Vs

National Steel & Agro Industries Ltd

NCLAT Filing of a Certificate from a Financial Institution as

per the Insolvency and Bankruptcy Code, 2016 is

mandatory

Magicrete Building Solutions

Vs

Prathiba Industries Limited

NCLT

Mumbai

Bank had refused to give Bank Certificate to an OC;

NCLT - “all citizens of the country are bound by the

statute governing the people of this country –

Banks are not exempted under this statute”


WORKMEN


Nitin Gupta

Vs

Electro Magnetic (P) Ltd

NCLT Delhi CIRP can be initiated if Co. has defaulted in paying employee

dues – approaching Labor Department does not bar an unpaid

employee to invoke IBC- NCLT not a forum to decide what

amount is due towards the Workmen and it was the duty of the

COC and the IRP to decide the same.

C.Ganapathy

Vs

Aruna Hotels

NCLT,

Chennai

The Corporate Debtor was admitted into CIRP, for not paying

the salary of the employee.

J.K.Jute Mills Mazdoor Morcha

Vs

Jugilal Kamalpat Jute Co.

NCLT,

Allahabad

The Union of workers cannot present an application nor

become an Operational Creditor on behalf of all its workers.


POSITION OF FLAT BUYERS CASE NAME BENCH RATIO

Nikhil Mehta

Vs

AMR Infra

NCLAT

Balance Sheet of Builder showed money due with committed

returns – hence OC- Flat Buyers not Operational Creditors (many

cases)

Col. Vinod Awasty

Vs

AMR Infrastructure Limited

NCLT,

Principal

bench

NCLT had ruled that, notwithstanding the presence of an assured

return clause, a purchaser of a flat cannot be treated as a provider

of 'goods' or 'services' to the builder and therefore, does not qualify

as an 'Operational Creditor' and cannot initiate Insolvency Process

in that capacity.

Rubina Chandra,

Sajive kanwar &

Mukesh Kumar

Vs

AMR Infrastructure Limited

NCLAT

Flat buyers cannot be treated as financial creditors since such debts

are not disbursed against the consideration for the time value of

money.

Claimed to be an operational creditor, the NCLT, held that a flat

purchaser cannot be treated as operational creditor as the debt has

not arisen out of provisions of goods, services or employment.

IDBI Bank Limited

Vs

Jaypee Infrastructure Limited

NCLT,

Allahabad

CD defaulted to IDBI Bank - Application for CIRP was admitted

against JIL u/s 7 - IRP appointed.


JAYPEE INFRA CASE- Supreme Court


On 16.08.2017 - IBBI came with a notification that apart from FC&OC – Flat

buyers can make claims and brought amendments to - CIRP Regulations 2016

04.09.2017

Chitra Sharma

v.

Union of India

Writ Petition - ground - proceedings under IBC would render the home-

buyers remediless. Prayer - S. 14 shall not curtail the rights of the flat buyers

as consumers under the Consumer Protection Act or alternatively declare

the flat buyers as secured creditor. SC stayed the NCLT order.

IA filed for vacating earlier order on ground that the stay of NCLT order

resulted in Management being restored to JIL. SC ordered (i) the IRP to take-

over the management of JIL; (ii) appointment of representative of buyers in

the CoC meeting; (iii) JAL to deposit Rs 2000 crores by 27.10.17; approval of

court for sale of any assets by JAL

11.09.2017

SC appoints amicus curiae to assist the court and open a web-portal to

collect details of flat buyers. Matter has been listed for 22.11.2017

13.11.2017

SETTLEMENT/WITHDRAWAL


Mother Pride Diary;

Lokhandwala Kataria

& Several other cases SC

SC has the power under Art 142 to entertain the

case. SC had accepted the settlement between the

parties and disposed of the order of the NCLT.

Consolidated Construction

Consortium Limited Vs

Va Tech Wabag Limited

Chennai

Application admitted – CD settled OC – Joint

Memo filed - CD stated it had not defaulted any of

its payments towards its Financial Creditors. IRP

submitted – no other claims received – NCLT

recalled its order


Aruna Chauhan & Ors.

Vs. M/s. BOP Projects

Delhi Financial Creditor arrived at a settlement with the respondent and withdrew the

petition. The NCLT dismissed the petition.

M/s. Dwarkesh Transport

Corporation

Ahmed. Operational Creditor sought permission to withdraw the petition on the ground of

settlement. The same was allowed by the NCLT.

Vedha Marketing Vs. G.K.

Shelters Private Limited

Bengaluru A joint memo was filed by the parties stating the settlement of the matter..

Mundhra Bright Steel Vs.

Gillanders Arbuthnot &

Co. Ltd.

Kolkata Operational Creditor and Corp Debtor prayed to withdraw the petition on the

ground of settlement.

Rotomac Global Pvt. Ltd.

Vs. Cane Agro Energy

India Ltd.

Mumbai Consent Terms were arrived at between the parties. The NCLT dismissed the

petition as withdrawn.

SETTLEMENT/WITHDRAWAL PRE- ADMISSION

Committee of Creditors and CIRP Issues APPLICANT Vs RESPONDENT BENCH RATIO

M/s Raj Oil Mills Ltd. Vs. M/s

Edelweiss Asset Reconstruction

Company Ltd.

Mumbai

Agenda to approve the continuance of IRP was voted only by

61.84% of voting share. Therefore, a viable solution is to give

the preference to the decision taken by the largest percentage

in voting rights of the FCs in COC voting.

BASF India Limited

Vs

Mosmetro India (P) Ltd

Chennai

The NCLT directed the Creditors not to make payments from

the account or dispose properties of the Corporate Debtor

without the prior permission of the Insolvency Resolution

Professional.

IOB

v.

IRP, Amtek

NCLAT Once moratorium declared it is not open to any person

including FCs and Appellant Bank to recover any amount from

the account of the Corporate Debtor, nor it can appropriate

any amount towards its own dues. The Bank has to file its

claims before IRP and can seek to be included in CoC

RESOLUTION PLAN/LIQUIDATION CASE NAME BENCH RATIO

VNR Infrastructure Hyderabad

NCLT ordered liquidation - after the borrowers and lenders failed to

come up with a plan to revive operations-independent valuation report

valued Rs 80 crore - loan Rs 1,000 crore.

Synergies Dooray Automotive

Limited

Hyderabad

NCLT had accepted the resolution plan which was accepted by more

than 90% of the Committee of Creditors

(Under challenge before NCLAT)

Prowess International Private

Limited

NCLT,

Kolkata

NCLT had accepted the resolution plan which was accepted by the

Committee of Creditors – OC paid in this plan

Anrak Aluminum Vs SBI Hyderabad

Application u/s 10 rejected - considering the case of public money

invested + total spend being Rs 5712 Cr; national interest – pursue with

State Govt & revive project. Liberty given to file afresh after exploring



Rolex Cycles V. Hero Steels

Limited

NCLT

Hyderabad

IRP faced resistance from CD , CA and Lenders. Tribunal held lenders

were totally non co-operative with IRP holding meetings of CoC and

directed CA to hand over the books.

R.S.Polychem V. Ekdantam

Infrastructure

NCLT,

Delhi

Ordered Police Protection to IP as the promoter was not co-operating

and there was possible threat to life.

Central Bank of India and

SBI V. Ashok Magnetics NCLT Chennai

Police assistance given; directed CD to furnish the book of account,

list of financial and operational creditors and assets to the IRP.

IDBI Bank Limited V. Lanco

Infratech Limited

NCLT

Hyderabad

IP must refrain from accepting too many assignments, if he is unlikely

to be able to devote adequate time to each of his assignment.

Sandeep Reddy & Anr Vs

Jaycon Infrastructure

NCLAT

Code does not empower the AA to suggest any name or appoint an

Interim Resolution Professional of its own choice (NCLAT left the

Question open)

IRPs

MORATORIUM PROTECTS GUARANTORS?


Veesons Energy NCLT

CHENNAI

Banks restrained from selling the assets of the

Personal Guarantor during the moratorium

period. (Pending in NCLAT)

Schwitzer Systemtek India

AND

Alpha & Omega Diagnostics (P) Ltd

NCLAT

Assets of the Personal Guarantor will not fall

within the ambit of Moratorium.


Anant Merathia , Advocate

[email protected]

Ph: +91 99405 20500

“Justice isn’t about fixing the past; it’s about healing the past's future.” ― Jackson Burnett

Documents

Anant Merathia, Advocate - ICSI · against IRPJIL u/s 7 - appointed. Anant Merathia, Advocate . ... valued Rs 80 crore - loan Rs 1,000 crore. Synergies Dooray Automotive Limited