Raj Singh Gehlot v. Vistra ITCL (India) Limited [Co. Appeal (AT) (Insolvency) No. 971/2019]
The
NCLAT observed that if a matter is being heard by 2 (two) members of the NCLT,
then the final order in the matter cannot be passed singly by one of the
members, in as much as, it violates Section 419 (3) of the Companies Act, 2013
and Rule 152 (4) of the NCLT Rules, 2016.
In
the said case, the matter was heard by 2 (two) members of the NCLT. However,
post final hearing of the matter, one of the members retired (in July 2019),
and it appears that final order had not been signed by such member. Subsequently,
in August 2019, the final order in the matter was passed singly by the other
member. Rule 152 (4) of the NCLT Rules, inter alia, provides for a fresh
hearing in a matter where a constituent member of the bench (which is
previously hearing the matter) retires, resigns or dies without signing the
final order in the said matter. The NCLAT observed that the act (of delivering
and pronouncing orders) in such manner violates Section 419 (3) of the
Companies Act, 2013 and Rule 152 (4) of the NCLT Rules.
Ajay Agarwal v. Shantanu T. Roy & Others [Co. Appeal (AT) (Insolvency) No. 406/2019]
The
NCLAT opined that the promoter of the Corporate Debtor [undergoing Corporate
Insolvency Resolution Process (“CIRP”)] who wishes to avail the benefit
of Section 12 A of the Code (and settle the matter) must put in best efforts in
a timely fashion.
Non
bona fide efforts on the part of the promoter of the Corporate Debtor
are to be disregarded. Further, any attempts to derail the CIRP in the garb of
an OTS proposal should be deprecated.
Pr. Commissioner of Income Tax (Central) 3, Mumbai v. Alok Industries [Co. Appeal (AT) (Insolvency) No. 1093/2019]
The
NCLAT reiterated its earlier position that it has no jurisdiction to condone
delay beyond 15 (fifteen) days after the conclusion of the 30 (thirty) day
filing period, in terms of Section 61 (2) of the Code. In other words, under
Section 61 (2) of the Code, the NCLAT is empowered to condone delay in
preferring appeal by not more than 15 (fifteen) days. A similar view has been
taken by the NCLAT in Premco Rail Engineers Ltd. v. Korba West Power Company
Ltd. [Co. Appeal (AT) (Insolvency) No. 1105-1106/2019] & Excise and
Taxation Department Haryana Panchkula v. Marmagoa Steel Ltd. [Co. Appeal
(AT) (Insolvency) No. 1077/2019].
Committee of Creditors v. Mrs. Sonu Jain, Resolution Professional of Marina Projects Private Limited & Others [Co. Appeal (AT) (Insolvency) No. 1115/2019]
The
NCLAT observed that the fee of the Interim Resolution Professional (“IRP”)
must be borne by the Committee of Creditors (“COC”) and the same can be
adjusted from the insolvency resolution process costs. The Corporate Debtor
(even with the consent of the Operational Creditor) cannot be permitted to bear
the fee of the IRP. Put differently, the COC cannot escape its liability (under
the Code) to pay the fee of the IRP under any circumstances.
NCC Limited v. Saptrishi Hotels Private Limited [Co. Appeal (AT) (Insolvency) No. 1032/2019]
The
NCLAT observed that invocation of any means of alternate dispute resolution
(provided under the business agreement executed between the Operational
Creditor and Corporate Debtor) including approaching the engineer-in-charge for
determining the dispute, would be sufficient to hold pre-existence of dispute,
in terms of Section 9 of the Code.
Shyson Thomas v. Skyways Technics A/S [Co. Appeal (AT) (Insolvency) No. 1033/2019]
The
NCLAT opined that, in the context of determination of an application under
Section 9 of the Code, the documents which were not relied upon by the
Corporate Debtor before the NCLT or in response to the demand notice (received
from the Operational Creditor in terms of Section 8 (1) of the Code) or brought
to the attention of the Operational Creditor, are to be disregarded.
Vijay Kumar Choudhary & Anr v. Educomp Infrastructure & School & Others [Co. Appeal (AT) (Insolvency) No. 766/2019]
The
NCLAT reiterated its previous position that, the NCLT, while disposing off any
proceedings, shall be guided by the principles of natural justice, as
enumerated under Section 424 of the Companies Act, 2013 (which also applies to
proceedings under the Code).
In
the present case, a determination by the NCLT, of an application under Section
19 of the Code [filed by the Resolution Professional (“RP”)], without
framing prima facie charges or granting an opportunity of hearing to the
Respondents (to explain the allegations against them), was held to be bad in
light of Section 424 of the Companies Act, 2013.
Gujarat Urja Vikas Nigam Ltd. v. Mr. Amit Gupta [Co. Appeal (AT) (Insolvency) No. 1045/2019]
In
the present case, Gujarat Urja Vikas Nigam Ltd. (“GUVN”), an exclusive
purchaser of electricity from the Corporate Debtor (a company engaged in the
generation and supply of electricity), sought to terminate the power purchase
agreement executed between itself and the Corporate Debtor (“PPA”), in
view of the Corporate Debtor slipping into insolvency.
The
NCLAT, in a bid to keep the Corporate Debtor as a going concern during the insolvency
process (including CIRP and liquidation stage, if any), interfered in the
contractual relationship between the parties and forbade GUVN from terminating
the PPA, merely on the pretext of the ongoing CIRP against the Corporate
Debtor, as long as there was no default in supply of electricity from the
Corporate Debtor to GUVN. Further, the NCLAT also directed GUVN to pay the dues
of the Corporate Debtor in connection with the supply of electricity.
Agarwal Coal Corporation Private Limited v. Sun Paper Mill Limited [Co. Appeal (AT) (Insolvency) No. 412/2019]
In
the present case, CIRP was initiated against the Corporate Debtor (under
Section 9 of the Code) on the basis of a claim of Rs. 2.39 crores (approx.)
made by the Operational Creditor. However, at the time of
verification/collation of the claim by the RP, the said claim amount was
reduced to Rs. 2,173/-. The question which arose for consideration is whether it
was proper for the NCLT to initiate CIRP on the basis of the claim of the
Operational Creditor which ultimately (during the course of collation of
claims) was found to be Rs. 2,173/- (much less than the threshold amount of Rs.
1,00,000/-).
The
NCLAT observed that at the stage of admission, the NCLT is only required to see
whether the record is complete, and that there exists a ‘debt’ and a ‘default’
(as per the judgment titled Innoventive Industries Ltd. v. ICICI Bank
(2018) 1 SCC 407). If a claim (albeit disputed) exceeds Rs. 1,00,000/-, then
the application may be admitted by the NCLT. The NCLT is not required to go
into the details of the verification of the claim (which is the responsibility
of the IRP). Subsequent collation or verification of a claim by the IRP will
have no impact on the prior initiation of CIRP by the NCLT on the basis of the
same claim.
Padmaiah Vuppu v. Reliance Capital AIF Trustee Company Private Limited [Co. Appeal (AT) (Insolvency) No. 1025/2019]
In
the said case, the legality of a corporate guarantee (issued by the Managing
Director of the Corporate Debtor) was questioned for having being issued in
violation of the provisions of the Companies Act, 2013.
The
NCLAT held that, in an application under Section 7 of the Code, the NCLT has no
jurisdiction to decide the issue of legality and propriety of a corporate
guarantee executed by the Corporate Debtor. While relying on Innoventive
Industries, the NCLAT reiterated that all that needs to be seen is whether there
exists a debt and a default.
Subodh Kumar Agrawal v. EIH Limited [Co. Appeal (AT) (Insolvency) No. 1122/2019]
The
NCLAT, while relying on K.S. Oils v. The State Trade Corporation of India
Limited & Anr [Co. Appeal (AT) (Insolvency) No. 284/2017] reiterated
its earlier position that no arbitration proceedings can be commenced or
continued against a Corporate Debtor post initiation of the moratorium period
(in terms of Section 14 of the Code). A similar view was taken by the NCLAT qua
a counter claim initiated by the Corporate Debtor in an arbitration. The NCLAT
once again, while relying on Section 238 of the Code, observed that the
provisions of the Code prevail over the Arbitration and Conciliation Act, 1996.
Rajiv Dhamija v. Alliance Broadband Services Private Limited & Anr [Co. Appeal (AT) (Insolvency) No. 1002/2019]
The
NCLAT, in the facts and circumstances of the case, and in view of the large
amounts of claims filed by various creditors against the Corporate Debtor, did
not permit a single/solo settlement between the Corporate Debtor and the
Operational Creditor (in whose matter the CIRP had been initiated). The
Tribunal instead directed the IRP to constitute the COC and further granted
liberty to the Corporate Debtor to attempt a settlement through the
instrumentality of Section 12A of the Code.
Saregama India Limited v. Home Movie Makers Private Limited [Co. Appeal (AT) (Insolvency) No. 359/2019]
The
NCLAT reiterated the principles required for determining whether a debt in
question qualifies to be a ‘financial debt’ under Section 5(8) of the Code.
Payments
made under a marketing agreement in connection with marketing and sale of Free
Commercial Time with respect to a television show was not held to be a
financial debt. It was observed that there was absence of the element of ‘time
value of money’ in the said transaction.
To
arrive at the above conclusion, the NCLAT placed reliance on its previous
judgement titled Neeraj Bhatia v. Davinder Ahluwalia & Others [Co.
Appeal (AT) (Insolvency) No. 142/2017]; Nikhil Mehta and Sons (HUF) v. AMR
Infrastructure Ltd. [Co. Appeal (AT) (Insolvency) No. 07/2017]; and Dr.
B.V.S Lakshmi v. Geometrix Laser Solutions Private Limited [Co. Appeal (AT)
(Insolvency) No. 38/2017]. The said judgements have extensively discussed the
concept of ‘consideration for time value of money’ in the definition of the
expression ‘financial debt’ under Section 5 (8) of the Code.
