Indian Insolvency Yearly Roundup 2021 - Insolvency/Bankruptcy

The year ended on a high note, with several noteworthy judgments being delivered by the Supreme Court, NCLATs and NCLTs across India in matters involving the Insolvency and Bankruptcy, Code 2016. We cover a few such decisions rendered in the year 2021 that discuss and set out the legal position concerning the interpretation and applicability of provisions of the Insolvency and Bankruptcy Code, 2016.

Manish Kumar v. Union of India (UoI) and Ors.
Supreme Court of India
Citation: 2021 SCC OnLine SC 30
Decided on: 19.01.2021

The minimum threshold prescribed in the Insolvency and Bankruptcy Code (Amendment) Act, 2020 for allottees wishing to file an insolvency petition against builders and real estate companies, is constitutionally valid and in line with the spirit of the Insolvency and Bankruptcy Code, 2016.

Brief Facts

The petitioners in the present case knocked on the doors of the Hon'ble Supreme Court, challenging the constitutional validity of Sections 3, 4 and 10 of the Insolvency and Bankruptcy Code (Amendment) Act, 2020 (Impugned Amendment). The Impugned Amendment, amongst other things, requires that there shall be at least 100 allottees or 10 per cent of the total allottees, whichever is less, to present an application under Section 7 of the IBC against a real estate company. The Impugned Amendment also requires such allottees to belong to the same project. The petitioners argued that once a right was conferred under the IBC to make an application, it could not be conditioned or limited as done through the Impugned Amendment. The petitioners contested the Impugned Amendment's constitutional validity since the homebuyers were deprived of the rights under Section 7 of the IBC in an arbitrary fashion.

The first respondent argued that the Impugned Amendment was a perfectly valid economic measure taken due to an expert committee's recommendations. The expert committee had held that the initiation of the Corporate Insolvency Resolution Process (CIRP) of similarly situated creditors should be done to represent their collective interests. The expert committee further observed that a CIRP should be initiated only when enough creditors form a "critical mass", indicating a large-scale agreement that the issues against a corporate entity need to be resolved. The first respondent also highlighted the fact that even if a homebuyer could not file an application for initiation of CIRP for having failed to reach the prescribed threshold under the Impugned Amendment, recourse could still be had to an alternative forum under the Real Estate (Regulation and Development) Act, 2016 (RERA) and the consumer protection laws. Hence, the present case.

Held

The Hon'ble Supreme Court noted that the new threshold had its basis in the recommendations in a report of an experts committee. The Hon'ble Supreme Court then turned to the rationale behind setting a minimum number of allottees and confining them to the same real estate project to initiate insolvency proceedings against real estate developers successfully. It was held that the new threshold was crucial to form the critical homogenous mass that the legislature had envisaged. If allottees from all projects were allowed to proceed against a real estate developer, the task of the applicants in the insolvency resolution process would become more cumbersome. This, in turn, would impact the timeliness of the entire insolvency resolution process. It was observed that allowing an individual allottee with a high level of subjectivity in decision-making would also defeat the object of balancing the interest of all stakeholders involved in the insolvency resolution process. The Hon'ble Supreme Court held that the requirement of the minimum number of allottees and such allottees being drawn from the same project stands to reason and does not suffer from any constitutional blemish.

While discussing the intelligible differentia in the Impugned Amendment, the Hon'ble Supreme Court held that the Allottees were distinguished from other financial creditors due to the sheer numerosity, heterogeneity, and individuality in decision making. There could be hundreds or even thousands of allottees in a real estate project. By imposing a threshold limit of a hundred allottees or one-tenth of the total, the problem of heterogeneity is sought to be resolved. Insisting on the similar treatment of such allottees as other financial creditors would lead to indiscriminate litigation, resulting in an uncontrollable docket explosion. It was noted that apart from proceedings under the IBC, some of the allottees may seek remedy under the RERA, and others may resort to the consumer protection laws or a civil suit. In such circumstances, if the legislature distinguishes the allottees from other financial creditors, the Hon'ble Supreme Court held that it is not for the Court to sit in judgment over the wisdom of such a measure.

The Hon'ble Supreme Court concluded that this is not a case without intelligible differentia. The law under scrutiny, i.e., the Impugned Amendment, was an economic measure taken to further the spirit of the IBC. The Hon'ble Supreme Court held that the legislature must have the freedom to experiment, particularly in economic laws. If problems emerged over time that necessitated a legislative intervention, the courts could not bar the legislature from coming up with an amendment. Hence, the Hon'ble Supreme Court upheld the constitutional vires of the Impugned Amendments.

Phoenix ARC Pvt. Ltd. v. Spade Financial Services Ltd.
Supreme Court of India
Citation: 2021 SCC OnLine SC 51
Decided on: 01.02.2021

Where a financial creditor ceases to be a related party with the sole intention of participating in the CoC and disrupting the CIRP, it would be appropriate to consider the party as debarred from the membership of the CoC given the object and purpose of the first proviso in Section 21(2) of Insolvency and Bankruptcy Code, 2016.

Brief Facts

The present matter deals with appeals that arise from the judgment of the National Company Law Appellate Tribunal (NCLAT) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) preferred by AAA Landmark Pvt. Ltd. (AAA Landmark) and Spade Financial Services Pvt. Ltd. (Spade).

Before the NCLAT, AAA Landmark and Spade had challenged the decision of the National Company Law Tribunal (NCLT), which held that AAA Landmark and Spade had to be excluded from the Committee of Creditors (CoC) in the Corporate Insolvency Resolution Process (CIRP) initiated against AKME Projects Limited (Corporate Debtor).

During the CIRP, the CoC of the Corporate Debtor was constituted on 22 May 2018. On 25 May 2018, the Interim Resolution Professional (IRP) rejected Spade's claim stating the same did not constitute a financial debt in terms of Section 5(8) of IBC. The IRP's rationale was that the claim lacked a consideration for the time value of money, i.e., the period of repayment of the claimed dues was not stipulated. The IRP also rejected the claim of AAA Landmark on the ground that its application was time-barred. Aggrieved by the claim's rejection as financial creditors, AAA Landmark and Spade filed their respective applications before the NCLT for getting included in the CoC. The NCLT vide its order dated 30 May 2018 allowed the applications filed by AAA Landmark and Spade to file their claims in the capacity of financial creditors.

On 1 June 2018, the meeting of the CoC was convened, which was attended by Phoenix ARC Pvt. Ltd. (Phoenix) and Yes Bank (other financial creditors in the present matter), AAA Landmark and Spade. Eventually, Yes Bank and Phoenix filed applications in the NCLT for the exclusion of AAA Landmark and Spade from the CoC, contending that they were related parties. The NCLT, in its order dated 19 July 2019, held that Spade and AAA Landmark did not qualify to be considered as financial creditors, thereby allowing the applications filed by Yes Bank and Phoenix. In the appeal, the NCLAT held that NCLT had rightly excluded both Spade and AAA Landmark from participation in the CoC since both the entities were a part of a web of corporations that were trying to gain a backdoor entry into the CoC through them.

Hence, before the Hon'ble Supreme Court in the present appeal, the moot point was whether AAA Landmark and Spade are related parties of the corporate debtor. If so, whether AAA Landmark and Spade have to be excluded from CoC.

Held

The Hon'ble Supreme Court held that the IBC had made provisions for identifying, annulling, or disregarding "avoidable transactions" that distressed companies may have undertaken to hamper recovery of creditors in the event of the initiation of CIRP. It was observed that for the success of an insolvency regime, the real nature of the transactions has to be unearthed to prevent any person from taking undue benefit of its provisions to the detriment of legitimate rights of creditors.

Upon dwelling into the factual matrix of the case, the Hon'ble Supreme Court believed that the commercial arrangement between Spade and AAA Landmark was collusive in nature and did not constitute any "financial debt". Consequently, Spade and AAA Landmark were not the financial creditors of the Corporate Debtor.

On the question of Spade and AAA Landmark being related parties, the Supreme Court noted that the facts of the case reflected a deep entanglement between AAA Landmark, Spade and the Corporate Debtor besides the transactions between them being collusive in nature. Consequently, the Hon'ble Supreme Court concluded that AAA Landmark and Spade were related parties of the Corporate Debtor under Section 5(24) of the IBC.

The Hon'ble Supreme Court then referred to Section 21(2) of the IBC, the first proviso to which states that a related party of the corporate debtor shall not have any right to participate or vote in a meeting of the CoC. The Hon'ble Supreme Court held that the objects and purposes of the IBC are best served when external creditors drive the CIRP to ensure that the CoC is not sabotaged by related parties of the corporate debtor. This is the intent behind the disqualification under Section 21(2) of the IBC.

The Hon'ble Supreme Court observed that the default rule is that a financial creditor who in the present is not a related party would not be debarred from being a member of the CoC under the first proviso to Section 21(2) of the IBC. However, where a financial creditor ceases to be a related party with the sole intention of participating in the CoC and disrupting the CIRP, it would be appropriate to consider such party as debarred from the membership of the CoC given the object and purpose of the first proviso in Section 21(2) of IBC.

The Hon'ble Supreme Court finally concluded that due to the collusive nature of their transactions, AAA Landmark and Spade could not be labelled as financial creditors under Section 5(7) of the IBC.

Phoenix ARC Private Ltd v. Ketulbhai Ramubhai Patel
Supreme Court of India
Citation: 2021 2 SCC 799
Decided on: 03.02.2021

A party will not become a financial creditor under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 by merely having shares pledged in its name if the pledgor does not specifically undertake to discharge the borrower's liability.

Brief Facts

In the present matter, a Facility Agreement (Agreement) was executed between Doshin Ltd. (Borrower) and L&T Infrastructure Finance Company Ltd. (Lender). Doshin Veolia Water Solutions Pvt. Ltd. (Corporate Debtor) was not a party to the Agreement. The Corporate Debtor's board of directors passed a resolution to give an undertaking in favour of the Lender to the effect that 100 per cent of the shareholding of the Corporate Debtor in Gondwana Engineers Ltd. (GEL) would not be disposed of so long as any amounts were outstanding and payable by the Borrower to the Lender under the Agreement.

Consequently, a Pledge Agreement (Pledge of Shares) was signed between the Corporate Debtor and the Lender through which the shares of the Corporate Debtor held in GEL were pledged as a security. Further, an undertaking (Undertaking) was also executed by the Corporate Debtor in favour of the Lender. By way of an assignment (Assignment), the Lender conveyed all rights, title, and interest in the financial facility, including the security and interest therein, to Phoenix ARC Pvt. Ltd. (Appellant).

The Borrower failed to repay the dues as agreed under the Agreement. The Bank of Baroda filed a petition before the National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) in respect of the Corporate Debtor. The NCLT admitted the application, and the Corporate Insolvency Resolution Process (CIRP) was commenced wherein the Appellant filed its claim for an amount of INR 83,49,85,667 with the respondent. The Resolution Professional (RP) rejected the Appellant's claim as a financial creditor noting that there was no separate deed of guarantee that was signed in favour of the Lender by the Corporate Debtor. Consequently, the NCLT passed on an order rejecting the Appellant's claim while holding that the Appellant's status as a financial creditor was not proved as prescribed under Section 5(8) of the IBC.

The Appellant then approached the National Company Law Appellate Tribunal (NCLAT) to appeal against the decision of the NCLT, which was dismissed. Aggrieved by the decision of the NCLAT, the Appellant approached the Hon'ble Supreme Court.

Held

Before the Hon'ble Supreme Court, the moot question was whether the Appellant was a financial creditor under Section 5(8) of the IBC based on the Pledge of Shares and Undertaking entered into with the Lender. At the outset, the Hon'ble Supreme Court examined the definition of financial debt contained in Section 5(8) of the IBC. It was held that financial debt means a debt that is disbursed against the consideration for a time value of money. Therefore, there was no dispute that the Lender's credit facility under the Agreement to the Borrower would be covered under Section 5(8)(b) of the IBC.

However, commenting upon the Pledge of Shares, the Hon'ble Supreme Court held that the same was only limited to the pledge of 40,160 shares of GEL held by the Corporate Debtor to the Lender. The Pledge of Shares did not contain any contract that the Corporate Debtor would undertake the promise which was made by the Borrower under the Agreement to discharge the dues. It was only the Borrower who had promised to repay the loan granted under the Agreement. In reference to the term "guarantee" employed in Section 5(i) of the IBC, it was held that the Pledge of Shares and the Undertaking signed between the Corporate Debtor and the Lender did not constitute a contract of guarantee within the meaning of Section 126 of the Indian Contract Act, 1872. At best, the Pledge of Shares was security favouring the Lender who will be secured qua the Corporate Debtor and not the financial creditor qua the corporate debtor. Hence, the Hon'ble Supreme Court upheld the RP's decision, which was further upheld by the NCLT.

Ramesh Kymal v. M/S Siemens Gamesa Renewable Pvt. Ltd.
Supreme Court of India
Citation: 2021 SCC OnLine SC 72
Decided on: 09.02.2021

The bar on initiation of the insolvency proceedings under Section 10A of the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020 shall include defaults committed by corporate debtors arising on or after 25 March 2020.

Brief Facts

The appellant in the instant matter claimed that a sum was due and payable to him by virtue of the entitlements receivable pursuant to his resignation. The appellant has submitted his resignation to the respondent along with the claim under Employment and Incentive Agreements (Employment Agreements). The respondent confirmed the payments which were due and payable to the appellant under the letter of resignation. However, a termination letter was addressed to the appellant by the respondent. Consequently, the appellant issued a demand notice dated 30 April 2020. Thereafter the appellant filed an application under Section 9 of the IBC dated 11 May 2020 on the ground that there was a default in payment of his operational dues under the Employment Agreements.

During the application's pendency, the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020 (Ordinance) was promulgated by the President of India on 5 June 2020. The Ordinance introduced Section 10A, which states that no application for initiating the Corporate Insolvency Resolution Process (CIRP) of a corporate debtor should be filed for any default arising on or after the 25 March 2020 until the period prescribed. The respondent filed an application seeking the dismissal of the appellant's application based on the newly inserted Section 10A of the IBC. The National Company Law Tribunal (NCLT) upheld the respondent's submission holding that a bar was created by Section 10A on initiation of insolvency proceedings. The appellant preferred an appeal before the National Company Law Appellate Tribunal (NCLAT), which affirmed the decision of the NCLT, holding that by the effect of Section 10A of the IBC, the application filed by the appellant under Section 9 was not maintainable. Hence, the present matter.

Held

In the instant case, the moot proposition outlined was whether Section 10A is attracted to an application under Section 9 of the IBC filed before 5 June 2020 (the date of enforcement of the Ordinance) concerning a default that occurred after 25 March 2020. The Hon'ble Supreme Court held that the financial distress caused by the Covid-19 global pandemic provided the backdrop to the insertion of Section 10A in the IBC. It was observed that the substantive part of Section 10A stipulates that for any default arising on or after 25 March 2020, no application for initiation of the CIRP would be admissible for six months or such further timeline not extending one year from the date of notification. It was further observed that applying the Ordinance prospectively would leave a whole class of corporate debtors where the default has occurred on or after 25 March 2020 outside the pale of protection because the application was filed before 5 June 2020.

The Hon'ble Supreme Court held that the legislature was cognizant that resolution applicants might not come forth to participate in insolvency resolution procedures leading to corporate debtors going under liquidation and no longer remaining a going concern. This would be antithetical to the very aim of the IBC as held in the case of Swiss Ribbons (P) Ltd. v. Union of India.¹ Therefore, the Hon'ble Supreme Court held that Section 10A shall include defaults committed by corporate debtors arising on or after 25 March 2020.

Mohanraj and Ors. v. M/s Shah Brothers Ispat Ltd.
Supreme Court of India
Citation: 2021 SCC OnLine SC 152
Decided on: 01.03.2021

An order of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cover proceedings under Sections 138 and 141 of the Negotiable Instruments Act, 1881.

Brief Facts

The respondent in the instant matter supplied steel products to the corporate debtor (Corporate Debtor), for which the Corporate Debtor was required to pay INR 24,20,91,054. The Corporate Debtor issued several cheques favouring the respondent, all of which were returned dishonoured for insufficient funds. The respondent issued multiple statutory demand notices under Section 138 of the NI Act. Since the Corporate Debtor failed to pay the due amounts, criminal complaints were filed by the respondent against the Corporate Debtor and the appellants under Section 138 of the NI Act.

Thereafter, an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was filed by the respondent against the Corporate Debtor before the National Company Law Tribunal (NCLT). The NCLT passed an order admitting the application. The NCLT directed for the commencement of the Corporate Insolvency Resolution Process (CIRP), and a moratorium under Section 14 of the IBC was brought into effect. In pursuance of the order passed, the NCLT stayed further proceedings in the criminal complaints filed under the NI Act. The National Company Law Appellate Tribunal (NCLAT), in an appeal, set aside the order of the NCLT holding that Section 138 being a criminal law proceeding could not be deemed to be a "proceeding" within the meaning of Section 14 of the IBC.

In the present appeal before the Hon'ble Supreme Court of India, the moot question was whether the institution or continuation of a proceeding under Section 138/141 of the NI Act could be covered by a moratorium provision under Section 14 of the IBC.

Held

The Hon'ble Supreme Court rendered its findings on the instant matter under several heads, the relevant portions of which are summarised as follows:

The object of Section 14 of the IBC

The Hon'ble Supreme Court referred to the Report of the Insolvency Law Committee of February 2020 to state that the object of moratorium provision under Section 14 of the IBC is to see that there is no depletion of corporate debtor's assets during the insolvency resolution process so that it can continue as a going concern while maximising its value. A reference was also made to the decision in Swiss Ribbons (P) Ltd. v. Union of India² , wherein it was held that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor and its management from a corporate death by liquidation. The Hon'ble Supreme Court held that proceedings under Section 138 of the NI Act would deplete the corporate debtor's assets, directly impacting the CIRP in the same manner as the institution, continuation, or execution of a decree of a civil court. Based on this analysis, the Hon'ble Supreme Court observed that it was impossible to discern any difference between a suit's impact and a Section 138 proceeding under the NI Act.

Nature of Proceedings under Chapter XVI of the NI Act

The Hon'ble Supreme Court referred to the decision in Goaplast (P) Ltd. v. Chico Ursula D'Souza³ to hold that the object of provisions under Chapter XVI is to introduce an atmosphere of faith and reliance on the banking system to regulate payments made through cheques. Similarly, reliance was placed upon the decision in Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Limited⁴ to hold that the provisions contained in Sections 138 to 142 of the NI Act were intended to discourage people from not honouring their payments.

The Hon'ble Supreme Court, while commenting upon the nature of the offence under Section 138 of the NI Act, referred to the decision in Kaushalya Devi Massand v. Roopikishore Khore⁵ to hold that an offence under Section 138 is almost in the nature of a civil wrong which has been given criminal overtones. Similarly, in Meters and Instruments (P) Ltd. v. Kanchan Mehta,⁶ it was held that an offence under Section 138 is primarily a civil wrong. The Hon'ble Supreme Court observed that it is clear that a Section 138 proceeding can be said to be a "civil sheep" in "criminal wolf's" clothing.

Therefore, the Hon'ble Supreme Court concluded that proceedings under Sections 138 and 141 of the NI Act against a corporate debtor are covered by Section 14(1)(a) of the IBC.

Navinchandra Steels Pvt. Ltd. v. SREI Equipment Finance Ltd.
Supreme Court of India
Citation: 2021 SCC OnLine SC 149
Decided on: 01.03.2021

Insolvency proceedings under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 are maintainable even when a winding-up proceeding is pending against the corporate debtor under the Companies Act, 1956, or the Companies Act, 2013.

Brief Facts

In the instant matter, the appellant is the operational creditor (Appellant) of the second respondent, namely Shree Ram Urban Infrastructure Limited (SRUIL). The Appellant had some time in 2015, filed a winding-up petition under the Companies Act, 2013 (Companies Act) against SRUIL, which remains pending as of date before the Bombay High Court (High Court). Another winding-up petition under the Companies Act was filed by the third respondent (Action Barter) against SRUIL, which stood admitted and was also pending before the High Court.

In the meantime, the first respondent, namely SREI Equipment Finance Ltd. (SREI), filed a petition under Section 7 of the IBC before the NCLT, which was admitted by the NCLT on 6 November 2019. Action Barter preferred an appeal against the aforesaid NCLT order dated 6 November 2019, which the NCLAT dismissed after placing reliance upon the decision in Forech (India) Ltd. v. Edelweiss Assets Reconstruction Co. Ltd.⁷ An appeal was then filed by Action Barter against the decision of the NCLAT before the Hon'ble Supreme Court. The Appellant also filed an appeal which was tagged with the appeal filed by Action Barter. Pursuant to a settlement, Action Barter withdrew its appeal. Thus, the only surviving appeal was the one filed by the Appellant. The Appellant buttressed its case by relying upon the case in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Limited.⁸ The Appellant contended that the insolvency proceedings were not maintainable since irreversible steps had been taken in the winding-up petition before the Bombay High Court which was already admitted.

Held

The Hon'ble Supreme Court observed that the IBC is a special statute dealing with the revival of companies in the red, winding up only being resorted to if all revival attempts fail. When compared to the Companies Act, which is a general statute dealing with companies, the IBC is not only a special statute that must prevail in the event of a conflict but has a non-obstante clause contained in Section 238, which makes it evident that in case of conflict, the provisions of the IBC will prevail.

The Hon'ble Supreme Court observed that on a conspectus a catena of decisions⁹, it is clear that a petition under Section 7 or Section 9 of the IBC is an independent proceeding unaffected by winding up proceedings that may be filed qua the same company. Given the object sought to be achieved by the IBC, it is clear that only where a company in winding up is near corporate death that no transfer of the winding-up proceeding would then take place to the NCLT to be tried as a proceeding under the IBC. The Hon'ble Supreme Court held where the Court is short of a conclusion that corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest. For the said reasons, the appeal was dismissed.

Gujrat Urja Vikas Nigam Ltd. v. Amit Gupta and Ors.
Supreme Court of India
Citation: 2021 SCC OnLine SC 194
Decided on: 08.03.2021

Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 endows a broad residuary jurisdiction upon the NCLT to decide all questions of law or fact arising out of or in relation to insolvency and liquidation of the corporate debtor.

Brief Facts

The present matter has its origin in a Power Purchase Agreement (PPA) entered into between Gujrat Urja Vikas Nigam Ltd. (GUVNL) and Astonfield Solar Gujrat Pvt. Ltd. (Corporate Debtor). As per the terms of the PPA dated 30 April 2010, GUVNL was required to purchase all power generated by the Corporate Debtor's solar power plant for 25 years. While the initial years of the PPA's operationalisation were relatively calm, the first significant issue arose between July to December 2015. The solar power plant was severely damaged due to floods, and the generation of electricity was temporarily paused. In similar circumstances, due to the harm caused by floods in June and July 2017, the solar power plant was only able to operate at 10 to 15 per cent of its original capacity. The financial distress caused by the disruption and damages led to the Corporate Debtor defaulting on its debt to the financing parties, i.e., the second respondent and Power Finance Corporation.

Consequently, the Corporate Debtor was declared as a Non-Performing Asset (NPA). Post the declaration of NPA, the Corporate Debtor approached the National Company Law Tribunal (NCLT) through a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP). The petition came to be admitted on 20 November 2018, and the NCLT appointed the Resolution Professional (RP) in February 2019.

The appellant issued two default notices (Default Notices) on 1 May 2019 stating that the Corporate Debtor undergoing CIRP under the IBC would amount to an event of default. The appellant called upon the Corporate Debtor to remedy this default failing which the appellant would terminate the PPA. On 21 May 2019, a meeting was scheduled between the Resolution Professional (RP) and the appellant wherein the RP emphasised that if the PPA were to be terminated, the Corporate Debtor's revival would be at stake since the prospective resolution applicants may not submit resolution plans. Declining to accede to this position, the appellant made it clear that it would be terminating the PPA.

In May 2019, the first and the second respondents filed applications under Section 60(5) of the IBC before the NCLT concerning the Default Notices sent by the appellant to the Corporate Debtor. On 29 August 2019, the NCLT issued its final order through which it allowed the applications filed by the first and the second respondents, thereby restraining the appellant from terminating the PPA. The NCLT held that the clauses of a PPA could not be placed above the provisions of the IBC. Moreover, the PPA was held to be an instrument as per the meaning of Section 238 of the IBC. Therefore, the clauses of the PPA, which are inconsistent with the provisions of the IBC, would stand overridden.

The NCLAT dismissed the appeal of the appellant filed against the NCLT order. It was noted that the appellant attempted to terminate the PPA on the sole ground that the CIRP has been initiated for the Corporate Debtor. Further, it restrained the appellant from terminating the PPA even in the event that the Corporate Debtor underwent liquidation. Aggrieved by the decision of the NCLAT, the appellant approached the Hon'ble Supreme Court on the ground that the NCLT and the NCLAT do not possess requisite jurisdiction under the IBC to adjudicate on a contractual dispute between the appellant and the Corporate Debtor. Hence, the present matter.

Held

The Hon'ble Supreme Court rendered its findings on several aspects as follows:

Jurisdiction of the NCLT and the NCLAT over contractual disputes

The Hon'ble Supreme Court observed that while construing Section 60(5), a starting point for the analysis must be to decipher parliamentary intent based on the object of the underlying enactment of the IBC. The decision in Swiss Ribbons (P) Ltd. v. Union of India¹⁰ was referred to highlight the problems that arose in the erstwhile regime due to the multiplicity of statutes and fora concerning corporate insolvency. The Supreme Court observed that the crucial objectives of IBC are to bring the insolvency law in India under a single unified umbrella with the object of speeding up the insolvency resolution process.

Keeping the objective of bringing IBC in mind, and while considering the text of Section 60(5)(c), it was observed that where matters pertaining to the corporate debtor's insolvency were concerned, no other forum has jurisdiction to entertain the same except the NCLT. Further, while interpreting Section 60(5)(c) in the current factual matrix, the Supreme Court observed that the PPA's termination had happened solely based on the initation of the insolvency proceedings against the Corporate Debtor. Thus, the present dispute "arises out of" and "relates to" the Corporate Debtor's insolvency, giving rise to the jurisdiction of NCLT and NCLAT.

Jurisdiction of NCLT and Gujarat Electricity Regulatory Commission (GERC)

The Hon'ble Supreme Court recognised that Section 86(1)(f) of the Electricity Act empowered the GERC to adjudicate the disputes between the power generating company (the Corporate Debtor in this case) and the distribution licensee. However, it was clarified that by virtue of Section 238, the IBC would override other laws, including an instrument such as the PPA.

Residuary jurisdiction of NCLT under Section 60(5)(c)

Commenting upon the residuary jurisdiction of the NCLT under Section 60(5)(c) of the IBC, the Hon'ble Supreme Court referred to a catena of decisions¹¹ to hold that the said section endows a broad residuary jurisdiction upon the NCLT to decide any question of law or fact arising out of or in relation to insolvency and liquidation under the IBC. It was also held that if the jurisdiction of the NCLT were confined to the actions mentioned under Section 14 of the IBC, there would be no requirement to enact Section 60(5)(c) of the IBC.

However, as a cautionary note, the Hon'ble Supreme Court clarified that the findings on the validity of the exercise of residuary power by the NCLT were premised on this case's facts and would not act as a general principle.

Thus, the Hon'ble Supreme Court held that the NCLT was empowered to restrain the appellant from terminating the PPA while dismissing the appeal.

Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. and Anr.
Supreme Court of India
Citation: 2021 SCC OnLine SC 220
Decided on: 15.03.2021

A person who is ineligible under Section 29A of the Insolvency Bankruptcy Code, 2016 to submit a resolution plan is also barred from proposing a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013.

Brief Facts

The instant matter decides three similar appeals. The first of the three appeals being decided is Civil Appeal No. 9664 of 2019. In the said case, the National Company Law Appellate Tribunal (NCLAT), by its judgment dated 24 October 2019, held that a person who is ineligible under Section 29A of the Insolvency Bankruptcy Code, 2016 (IBC) to submit a resolution plan is also barred from proposing a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 (Companies Act). The corporate debtor moved an application under Section 10 of the IBC before the NCLT, which came to be admitted. Mr. Arun Kumar Jagatramka submitted a resolution plan that was put to the vote in a meeting of the CoC. In the interim timeline, Section 29A was introduced into the IBC with retrospective effect providing a list of persons ineligible for becoming the resolution applicants. Mr. Arun Kumar Jagatramka became ineligible to submit a resolution plan. Mr. Arun Kumar Jagatramka then moved an application under Sections 230 to 232 of the Companies Act before the NCLT proposing a scheme of compromise and arrangement between the erstwhile promoters and creditors of the Corporate Debtor. The application was allowed by the NCLT, and a direction was issued for convening a meeting for approval of the scheme of compromise and arrangement. Jindal Steel and Power Ltd., an operational creditor of the corporate debtor, preferred an appeal against the order of the NCLT. The NCLAT allowed the appeal holding that promoters who are ineligible to propose a resolution plan under Section 29A of the IBC are not entitled to file an application for compromise and arrangement under Sections 230 to 232 of the Companies Act, 2013. The judgment and the order of the NCLAT are subject of the Civil Appeal No. 9664 of 2019.

The other two civil appeals being decided together with Civil Appeal No. 9664 of 2019 have the same moot question that is whether a promoter is eligible to file an application for compromise and arrangement in terms of Sections 230 to 232 of the Companies Act when he is ineligible under Section 29A of the IBC to submit a resolution plan.

Held

The Hon'ble Supreme Court referred to the Insolvency Law Committee's Report dated 3 March 2018, which states that the intent behind introducing Section 29A in the IBC was to prevent unscrupulous persons from gaining control over the affairs of the company. These persons include those who, by their misconduct, have contributed to the defaults of the company or are otherwise undesirable.¹² The Hon'ble Supreme Court observed that Section 29A was a crucial link in ensuring that the objects of the IBC are not defeated by allowing "ineligible persons", to return in the new avatar of resolution applicants.

The Hon'ble Supreme Court then referred to the judgment in Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors.¹³ to reiterate that Section 29A is a typical instance of a see-through provision so that one can arrive at ineligible persons who are in actual control of the Corporate Debtor, whether jointly or in concert with other persons. A reference was also made to the decision in Swiss Ribbons (P) Ltd. v. Union of India¹⁴ wherein the Hon'ble Supreme Court upheld the vires of Section 35(1)(f) of the IBC, which refers to ineligibility in case of liquidation. Section 35(1)(f) is placed in the same continuum when the Court observes that the erstwhile promoters of a corporate debtor have no vested right to bid for the property of the corporate debtor in liquidation.

It was observed that the purpose of the ineligibility under Section 29A is to achieve a sustainable revival and to ensure that a person who is the cause of the problem either by a design or a default cannot be a part of the process of solution. The Hon'ble Supreme Court further observed that where a company is in liquidation under the provisions of the IBC, the submission of a compromise or arrangement under Section 230 has the common intrinsic elements of the revival of company and of binding nature as compared to a resolution plan.

Based on the above discussion, the Hon'ble Supreme Court concluded that the Parliament's prohibition in Section 29A and Section 35(1)(f) of the IBC must also attach itself to a scheme of compromise or arrangement under Section 230 of the Companies Act.

Jaypee Kensington Boulevard Apartments Welfare Association and Ors. v. NBCC (India) Ltd. & Ors.
Supreme Court of India
Citation: 2021 SCC OnLine SC 253
Decided on: 25.03.2021

In the adjudicatory process concerning a resolution plan under the Insolvency and Bankruptcy Code 2016, there is no scope for interference with the commercial aspects of the Committee of Creditors' decision by the authority

If the adjudicating authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters under the Insolvency and Bankruptcy Code 2016, it would only send the resolution plan back to the Committee of Creditors for re-submission after satisfying such parameters.

Brief Facts

The present matter reached the Hon'ble Supreme Court after several bouts of litigation amongst various stakeholders involved in the insolvency resolution proceedings surrounding Jaypee Infratech Ltd. (Corporate Debtor). In the instant matter, a resolution plan submitted by NBCC (India) Ltd. was approved by the Committee of Creditors (CoC) on 17 December 2019 by a vast majority of over 97 per cent of voting share of the financial creditors. The interim resolution professional on 19 December 2019 moved an application before the National Company Law Tribunal (NCLT) for submission and approval of the resolution plan in terms of Section 30(6) read with Sections 31 and 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC). The NCLT vide order dated 3 March 2020 proceeded to approve the resolution plan with some modifications and certain directions. The resolution applicant NBCC preferred an appeal against the order of the NCLT before the National Company Law Appellate Tribunal (NCLAT), wherein in an interim order dated 22 April 2020, it was held that the approved resolution plan may be implemented subject to the outcome of the appeal. Subsequently, several parties whose appeals were pending before the NCLAT approached the Hon'ble Supreme Court and prayed that the appeals be withdrawn from the NCLAT to be heard by the Hon'ble Supreme Court along with other pending appeals of the associations and homebuyers to avoid the likelihood of further delay in the matter.

Held

The Hon'ble Supreme Court, commenting upon the scope of interference with the commercial wisdom of CoC held that the adjudicating authority had limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code.

It was held that in the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. If, within its limited jurisdiction, the adjudicating authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the CoC for re-submission after satisfying the parameters delineated by the IBC and exposited by the Hon'ble Supreme Court.

The Hon'ble Supreme Court held that the net result of the discussion and findings was that some of the terms and stipulations of the resolution plan of NBCC do not meet with approval. Although, barring such terms and stipulations, all other terms and propositions of the resolution plan stand approved.

The Hon'ble Supreme Court concluded that taking all the facts and circumstances into account and keeping with the spirit and purport of the orders passed in the past, it was inclined to exercise the powers under Article 142 of the Constitution of India. The Hon'ble Supreme Court decided to enlarge the time for completion of CIRP concerning the Corporate Debtor while extending the opportunity to the resolution applicants to submit modified resolution plans, which were compliant with the instant judgment, the requirements of the IBC and the allied regulations.

Laxmi Pat Surana v. Union Bank of India
Supreme Court of India
Citation: 2021 SCC OnLine SC 267
Decided on: 26.03.2021

Action under Section 7 of the Insolvency and Bankruptcy Code, 2016 will lie against the guarantor, which is a corporate person, even though the defaulting principal borrower may not be a corporate person.

In law, the guarantor's status, who is a corporate person, changes into a corporate debtor the moment the principal borrower (regardless of not being a corporate person) commits default in payment of a debt that had become due and payable.

Brief Facts

The first respondent (Financial Creditor) extended a credit facility to a proprietary firm of the appellant (Principal Borrower) through two loan agreements in 2007 and 2008. Surana Metals Ltd. (Corporate Debtor), of which the appellant is a promoter, had offered a guarantee to the two loan accounts of the Principal Borrower. The stated loan accounts were declared as Non-Performing Assets (NPA) on 30 January 2010. The Financial Creditor filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) against the Principal Borrower before the Debts Recovery Tribunal (DRT). During the pendency of the Financial Creditor's stated action, the Principal Borrower repeatedly assured to pay outstanding amounts. However, as the commitment remained unfulfilled, the Financial Creditor eventually wrote to the Corporate Debtor on 3 December 2018 in the form of a notice of payment under Section 4(1) of the Insolvency and Bankruptcy Code, 2016 (IBC). The Corporate Debtor clarified that it was not the Principal Borrower nor owed any financial debt to the Financial Creditor and had not committed any default in repayment of alleged outstanding amounts.

The Financial Creditor then proceeded with an application under Section 7 of the IBC before the National Company Law Tribunal (NCLT) to initiate the Corporate Insolvency Resolution Process (CIRP). The NCLT held that the action had been initiated against the Corporate Debtor being co-extensively liable to repay the Principal Borrower's debt. The appellant then moved an appeal to the NCLAT, which was again rejected. Aggrieved by the decision of the NCLAT, the appellant filed the instant appeal. Hence, the present matter.

Held

The Hon'ble Supreme Court, at the outset, reiterated the position in law that the guarantor's liability is coextensive with that of the principal borrower. The guarantor's status, who is a corporate person, transforms into that of a corporate debtor the moment the principal borrower commits default under the IBC.

The Hon'ble Supreme Court then took note of the term "corporate guarantor" as defined in Section 5(5A) of the IBC to hold that the principal borrower may or may not be a corporate person. However, if a corporate person extends a guarantee for the loan transaction concerning a principal borrower not being a corporate person, it would still be covered within the meaning of the expression "corporate debtor" in Section 3(8) of the IBC. If the legislature had intended to exclude a corporate person from being a guarantor in respect of a loan secured by a person not being a corporate person, from the expression "corporate debtor" occurring in Section 7, it would have provided so in the IBC. Hence, the Hon'ble Supreme Court upheld the decision of the NCLT further approved by the NCLAT in this case and dismissed the present appeal.

Ghanashyam Mishra and Sons Pvt. Ltd. through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Ltd. through the Director & Ors.
Supreme Court of India
Citation: 2021 SCC OnLine SC 313
Decided on: 13.04.2021

The resolution plan approved by the adjudicating authority under the Insolvency and Bankruptcy Code, 2016 shall bind the corporate debtor, its employees, members, creditors, guarantors and other stakeholders including the Central Government, State Government or any local authority to whom a debt is owed.

Brief Facts: The Hon'ble Supreme Court in the instant matter clubbed multiple matters together to decide upon certain common questions stated as follows:

Whether any creditor including the Central Government, State Government or any local authority is bound by the Resolution Plan once it is approved by an adjudicating authority under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC)?
Whether the amendment to Section 31 by Section 7 of Act 26 of 2019 is clarificatory/declaratory or substantive in nature?
Whether after approval of resolution plan by the Adjudicating Authority (AA) a creditor including the Central Government, State Government or any local authority is entitled to initiate any proceedings for recovery of any of the dues from the Corporate Debtor, which are not a part of the Resolution Plan approved by the adjudicating authority?

Held: The findings of the Hon'ble Supreme Court of India are summarised in an issue-wise manner.

On the first issue

The Hon'ble Supreme Court held that a bare reading of Section 31 of the IBC made it abundantly clear that once a resolution plan meets requirements stated under Section 30(2) and is approved by the AA, it shall bind the corporate debtor, its employees, members, creditors, guarantors and other stakeholders. The rationale behind having a provision like Section 31 is to ensure that the corporate debtor is able to stand back up on its feet post revival. The resolution plan is made binding on all stakeholders to ensure that post approval, no surprise claims are flung on the successful resolution applicant. If the claims were allowed to be taken into consideration after the approval of the resolution plan, the very basis of the plan would go haywire and be rendered unworkable. Thus, once a resolution plan is approved, it would also bind the Central Government, any State Government or a local authority.

On the second issue

The Supreme Court referred to the Statement of Objects and Reasons of the Amendment Bill for the amendment of Section 31 of the IBC. It was held that the legislative intent was to clarify that the resolution plan approved by the AA shall bind the Central Government, State Government or any local authority to whom a debt is owed. The mischief that was sought to be remedied by the Amendment was to prevent the State or the Central Government from leveraging the ambiguity to continue the proceedings in respect of the debts owed to them. It was noted that certain tax authorities were not abiding by the IBC's mandate. Thus, the 2019 Amendment was declaratory and clarificatory in nature and therefore, retrospective in its operation. The Apex Court concluded that the 2019 Amendment is effective from the date on which the IBC was brought into effect.

On the third issue

The Supreme Court held that after the 2019 Amendment of Section 31(1) of the IBC (2019 Amendment), any debt in respect of dues arising under the law for the time being in force including the ones owed to the Central Government, any State Government or any local authority which is not a part of the resolution plan gets extinguished. Thus, no person would be entitled to initiate or continue any proceedings in respect to a claim which does not form a part of the resolution plan.

Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal
Supreme Court of India
Citation: 2021 SCC OnLine SC 321
Decided on: 15.04.2021

The balance sheet entries of the corporate debtor can be used as an acknowledgment of debt under Section 18 of the Limitation Act, 1963.

Brief Facts: A bench of three members of the National Company Law Appellate Tribunal (NCLAT) vide its order dated 25 September 2020 questioned the correctness of the position in another decision of the NCLAT in V. Padmakumar v. Stressed Assets Stabilisation Fund & Anr.¹⁵ In V. Padmakumar, the NCLAT by way of a majority decision, held that entries in balance sheets would not amount to acknowledgement of debt for the purpose of extending limitation under Section 18 of the Limitation Act, 1963 (Limitation Act). Thus, the matter was referred to a larger bench for consideration. However, a bench of five members of the NCLAT abstained from deciding upon the merits of the matter while ruling that such a reference was incompetent. Accordingly, the appellant Asset Reconstruction Company (India) Ltd. (Appellant) filed an appeal against the NCLAT's refusal to adjudicate upon the matter. The appeal filed by the Appellant was heard with four other appeals that challenged the majority decision in V. Padmakumar.

Held: The Hon'ble Supreme Court relied upon the recent judgments to observe that the reason for introducing Section 238A of the Insolvency and Bankruptcy Code, 2016 (IBC) was to ensure that the Limitation Act applied onto IBC proceedings to the extent provided. Therefore, it was held that there was no reason to exclude the applicability of Section 18 of the Limitation Act on IBC proceedings, provided that the acknowledgment of a debt was made prior to the expiry of the limitation.

Thereafter, the Hon'ble Apex Court ruled that the balance sheet entries would amount to acknowledgment of debt under Section 18 of the Limitation Act. Reliance was placed upon the decision in Khan Bahadur Shapoor Freedom Mazda v. Durga Prasad¹⁶ to reiterate that there the intent of acknowledging a debt for the purposes of Section 18 of the Limitation Act in not required so long as the acknowledgement established a jural relation between debtor and creditor. The Hon'ble Apex Court further clarified that an admission of debt in balance sheets must be free from any caveats to establish liability. Further, a balance sheet must be appropriately approved by the shareholders and accompanied by a report of Directors to provide it legitimacy.¹⁷

Thus, the Hon'ble Supreme Court set aside the decision of the NCLAT in V. Padmakumar.

Sandeep Khaitan, Resolution Professional for National Plywood Industries Ltd. v. JSVM Plywood Industries Ltd. and Anr.
Supreme Court of India
Citation: 2021 SCC OnLine SC 338
Decided on: 22.04.2021

A moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 imposes a prohibition on transferring, encumbering, alienating or disposing of by the corporate debtor of any of its assets, which would also include all amounts lying to the credit in the bank accounts.

The words 'to secure the ends of justice' in Section 482 of the Code of Criminal Procedure, 1973 does not permit overlooking the statutory mandate under Section 14 and 17 of the Insolvency and Bankruptcy Code, 2016.

Brief Facts: The dispute before the Hon'ble Supreme Court traces its origins to proceedings under the IBC, before the National Company Law Tribunal, Guwahati (NCLT). The NCLT admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against one National Plywood Industries Limited (Corporate Debtor) resulting in passing of a moratorium under Section 14 of the IBC. Subsequently, Sandeep Khaitan (Appellant) was appointed as the interim resolution professional.

During pendency of the proceedings, the Appellant found that the former managing director of the Corporate Debtor had diverted a sum of INR 32,50,000 (Rupees Thirty-Two Lakhs Fifty Thousand) from the accounts of the Corporate Debtor to JSVM Plywood Industries Ltd. (First Respondent) in violation of the moratorium. An FIR was lodged by the Appellant in this regard, pursuant to which the bank accounts of the First Respondent and its creditors were frozen along with a lien being created on one such frozen account. The FIR was challenged by the First Respondent in a petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) before the High Court of Guwahati (High Court). By way of its order passed in an interlocutory application filed by the First Respondent (Impugned Order), the High Court allowed the First Respondent to operate its bank account maintained with ICICI Bank and to unfreeze the bank accounts of its creditors which were frozen and over which a lien was created pursuant to the FIR. This Impugned Order was subsequently challenged by the Appellant before the Supreme Court.

Held: The Supreme Court noted that with the declaration of moratorium by the NCLT, all prohibitions within the meaning of Section 14 of the IBC would instantly come into force. It observed that there was no dispute between the parties that the aforementioned amounts were in fact remitted into the account of the First Respondent, subsequent to the date of passing of NCLT's order under Section 14.

The Supreme Court observed that the IBC has neatly carved out the role of the insolvency professional. The management of the corporate debtor vest in the interim resolution professional from the date of appointment of the interim resolution professional and the powers of the board of directors or the partners of the corporate debtor automatically stand suspended. Section 17 of the IBC clarifies that the powers of the board of directors or partners of a corporate debtor are to be exclusively exercised by the interim resolution professional. The Supreme Court held that a moratorium under Section 14 of the IBC, imposes a prohibition on transferring, encumbering, alienating or disposing of by the corporate debtor of any of its assets, which would also include all amounts lying to the credit in the bank accounts.

The Supreme Court concluded that the High Court in passing the Impugned Order had overlooked the limits of its powers under Section 482 of the CrPC. It was held that the words, 'to secure the ends of justice' in Section 482, could not mean to overlook the statutory dictate under the provisions of Section 14 & 17 of the IBC. The Supreme Court therefore modified the Impugned Order, thus permitting the First Respondent to operate its bank account subject to it first remitting the sum of INR 32,50,000 (Rupees Thirty-Two Lakhs Fifty Thousand) into the bank account of the Corporate Debtor.

Basavaraj Koujalagi & Ors. v. Sumit Binani, Liquidator of Gujrat NRE Coke Ltd.
NCLT Kolkata Bench
Case Number: IA No.865/KB/2020 in CP (IB) No.182/KB/2017
Decided on: 03.05.2021

The liquidator is responsible for the affairs of the company in liquidation and if the decision is taken by him in the best interest of the company, then the matter should be left at that.

In absence of any allegation of fraud or bias in the decision of the liquidator, no order of a roving inquiry can be passed just on the basis of perceived loss of employment of workers.

Brief Facts: The applicants in the instant matter are the employees and workers of Gujrat NRE Coke Ltd. (Company) in employment for the last twelve years and working at the plant of the Company at Belur Industrial Area, Dharwad, Karnataka. The coal and coke industry suffered a major setback since 2012 due to various external factors, which impacted the performance of the Company. In spite of best efforts and due to continuous downturn in the industry, the Company could not manage to revive its operations. The Company filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC) which was admitted. In due course, the Company was sent into liquidation. This case deals with the application filed by the workers of the Dharwad unit of the Company wherein inter alia the following reliefs were sought:

An injunction order be passed against the respondent (Liquidator) restraining it from taking coercive steps for closing the operations of the Company's plant at Dharwad.
An injunction order be passed against the Liquidator restraining it from terminating, or taking any decision to terminate, the agreement between the Company and one Jeju Metals Pvt. Ltd.
A competent and independent agency be appointed to investigate the manner in which the Liquidator has been conducting the affairs of the Company and a report be called from such agency.

Held: The National Company Law Tribunal, Kolkata Bench (NCLT) rendered its findings on the aforementioned prayers as summarised below:

On the first prayer

The NCLT held that at some point, hard decisions are called for in the life of a company and such decisions must be taken. Unviable units could not be permitted to operate forever. The actions of the liquidator will have to measured up against the objectives of the IBC one of which is to free up resources of unviable units of a company. The NCLT ruled that unviable units cannot be kept afloat by some sleight of hand under the guise of keeping the company as a going concern, thereby defeating the objective of the IBC. Hence, the relief under the first prayer could not be granted.

On the second prayer

The NCLT held that it was not for the adjudicating authority to step into the shoes of the liquidator and examine the commercial viability of the contract. The liquidator is responsible for the affairs of the company in liquidation and if the decision is taken by him in the best interest of the company, then the matter should be left at that. The workers cannot be used as a thin edge of the wedge to revisit the termination of a contract. Thus, the relief under the second prayer could not be granted.

On the third prayer

The NCLT towards the end turned to the prayer of the applicants for an independent investigation to be conducted by an agency. In this regard, the NCLT held that in absence of any allegation of fraud or bias in the decision of the liquidator, no order of a roving inquiry could be passed just on the basis of perceived loss of employment of workers. To hold otherwise would have set a wrong precedent which would not let insolvency professionals take an independent decision leading to the failure of the entire system. The NCLT also observed that actions taken in good faith by a public servant enjoy protection under the law, and the IBC is no different, providing for the same under Section 233 of the IBC.

Based on the aforementioned findings, the NCLT dismissed the application.

Lalit Kumar Jain v. Union of India
Supreme Court of India
Case Numer: Transfer Case (Civil) No. 245/2020
Decided on: 21.05.2021

Personal guarantors to the corporate debtors are liable under the Insolvency and the Bankruptcy Code, 2016.

Brief Facts: On 15 November 2019, the Ministry of Corporate Affairs issued the Notification (Notification) vide which the personal guarantors were brought within the scope of the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The instant judgment pertains to the common question of law that arises in multiple legal proceedings preferred under Article 32 and the cases transferred from several High Courts filed under Article 139A of the Constitution of India. The common question in the instant matter relates to the vires and validity of the Notification.

The petitioners, in the capacity of directors, or promoters, or in some instances as chairman or managing directors, had furnished personal guarantees to the banks and financial institutions, which led to the release of advances to various companies. Presently, the petitioners are facing insolvency proceedings which are at different stages. The principal ground of attack of the petitioners is that the executive could not have selectively brought into force the IBC and applied some of its provisions to one sub-category of individuals, i.e., personal guarantors to corporate creditors. Hence, the present case.

Held: The Hon'ble Supreme Court took note of all the provisions introduced in the IBC at various stages. The Apex Court observed that it was pretty evident that the method adopted by the Central Government to bring into force different provisions of the Act had a specific design: to fulfil the objectives of the IBC having regarding to the priorities. Thus, the initial notifications were issued to introduce the necessary mechanism through which the insolvency processes were to be carried out and regulated. Thereafter, gradually the Central Governments kept issuing notifications on other subjects for which the insolvency framework was ready.

The Hon'ble Supreme Court then observed that the amendment of 2018 brought in the IBC was in furtherance of the object of extending the provisions of the IBC to personal guarantors of the corporate debtors to strengthen the insolvency resolution mechanism further. According to the Apex Court, it was interesting to note that even in the unamended IBC, the adjudicating authority for insolvency and liquidation for corporate persons, including corporate debtors and personal guarantors, was NCLT.

After extensive analysis of the judicial pronouncements relied upon by the parties and the legal provisions in question, the Hon'ble Supreme Court held that there was sufficient legislative guidance for the Central Government before the amendment of 2018 was made effective to distinguish and classify personal guarantors separately from other individuals. This was evident from a reading of Sections 5(22), 60, 234, 245 and unamended Section 60 of the IBC.

The Hon'ble Supreme Court opined that there appeared to be sound reasons why the forum for adjudicating insolvency processes must be common, i.e., through the NCLT. It was observed that the NCLT would then be able to consider the whole picture, as it were, about the nature of the assets available, either during the corporate debtor's insolvency process or even later. According to the Apex Court, a complete picture would facilitate the committee of creditors in framing realistic resolution plans, keeping in mind the prospect of realising some part of the creditor's dues from personal guarantors. Based on this discussion, the Apex Court held that the impugned notification was not an instance of the legislative exercise or amounting to impermissible and selective application of the provisions of the IBC.

The Hon'ble Supreme Court then referred to the petitioners' argument that the Notification took away the protection afforded by law to personal guarantors and looked over the co-extensive nature of the liability of a guarantor and principal borrower. The Hon'ble Supreme Court held that the sanction of a resolution plan and the finality imparted to it by Section 31 of the IBC did not per se operate as a discharge of the guarantor's liability. The Apex Court relied upon multiple decisions¹⁸ to hold that the release or discharge of the corporate debtor from the debt owed by it to its creditor, by an involuntary process, i.e., by the operation of law or due to liquidation or insolvency does not absolve the surety/ guarantor of his or her liability which arises out of an independent contract. As to the nature and extent of the liability of the personal guarantor, it was held that much would depend on the terms of the guarantee itself.

Therefore, the Notification was held legal and valid, and the writ petitions, transferred cases and transfer petitions in the instant matter were dismissed accordingly.

Dena Bank v. C. Shivakumar Reddy
Hon'ble Supreme Court
Citation: 2021 SCC Online SC 543
Decision dated: 04.08.2021

The non-payment of an amount awarded under a decree, judgment, or an arbitral award would be covered under the scope of "financial debt" and give rise to a fresh cause of action to initiate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.

There is no bar in law on amendment of pleadings, or on the filing of additional documents, in a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 at any time before the passing of the final order.

Brief Facts: On 23 December 2011, Dena Bank (Appellant) sanctioned a term loan (Loan) in favor of the second respondent (Corporate Debtor) which was to be repaid in 24 quarterly installments two years after the date of disbursement. The Corporate Debtor defaulted in repayment of its dues under the Loan in September 2013. The account of the Corporate Debtor was declared a Non-Performing Asset (NPA) in December 2013. In December 2014, the Appellant issued a legal notice to the Corporate Debtor calling it to make payment of INR 521.2 million. The Corporate Debtor did not make the repayment. On 1 January 2015, the Appellant initiated proceedings before the Debt Recovery Tribunal, Bangalore (DRT) for recovery of its outstanding dues of approximately INR 521.2 million. By a letter dated 5 January 2015, the Corporate Debtor requested the Appellant to restructure the loan. Similarly, on 3 March 2017, the Corporate Debtor proposed a one-time settlement of the Loan which was rejected by the Appellant.

In March 2017, the DRT passed an order against the Corporate Debtor for recovery of outstanding dues. Accordingly, on 25 May 2017, the DRT issued a recovery certificate in favour of the Appellant. Thereafter, on 19 June 2017, the Corporate Debtor once again proposed a one-time settlement to mutually settle the loan amount. The unpaid dues of the Corporate Debtor were also reflected under liabilities in the annual reports for financial years 2016-2017 and 2017-2018. In October 2018, the Appellant filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). Thereafter, in January 2019, the Appellant sought to place on record additional documents, including the final judgment and order of the DRT dated 27 March 2017 and the recovery certificate issued on 25 May 2017. This request of the Appellant came to be allowed. The Corporate Debtor in February 2019 filed its preliminary objection to the petition filed by the Appellant contending that the same was barred by limitation. In March 2019, the Appellant once again sought to place on record additional documents which included the proposals for one time settlement, and financial statements of the Corporate Debtor from 2016 to 2018 which was allowed.

By an order dated 21 March 2019, the National Company Law Tribunal (NCLT) admitted the petition under Section 7 of the IBC. The objection of Corporate Debtor on grounds of limitation was heard at length but was rejected by the NCLT. The first respondent filed an appeal before the National Company Law Appellate Tribunal (NCLAT) against the decision of the NCLT. The NCLAT allowed the appeal and dismissed the petition filed by the Appellant under Section 7 of the IBC holding that the said application was barred by limitation. The matter eventually reached the Hon'ble Supreme Court where the moot questions were identified as follows:

Whether a petition under Section 7 of the IBC would be barred by limitation on the sole ground that it was filed 3 years from the date of declaration of the loan account as NPA even though the Corporate Debtor might subsequently have acknowledged its liability?
Whether the passing of a final judgment or decree of the DRT or issuance of a recovery certificate in favour of the financial creditor would give rise to a fresh cause of action to the financial creditor to initiate proceedings under Section 7 of the IBC?
Whether there is any bar in law on amendment of pleadings in a petition under Section 7 of the IBC or on the filing of additional documents?

Held: At the outset, the Hon'ble Supreme Court in the instant matter referred to the object of the IBC. It was observed that the IBC is a beneficial legislation aimed at promoting inter alia investments and also resolution of insolvency of corporate persons. Reliance was placed on the decision in Swiss Ribbons Private Limited v. Union of India¹⁹ to reiterate that unlike coercive recovery litigation, the Corporate Insolvency Resolution Process (CIRP) under the IBC is not adversarial to the interests of the Corporate Debtor. Thus, the Apex Court held that the provisions of the IBC must be construed liberally in a purposive fashion to further the object of the IBC and not be given a narrow, pedantic interpretation which defeats the very purpose of the statute.

It was noted that a financial creditor was required to apply under Section 7 of the IBC, under statutory "Form 1" which allowed the applicant to fill only the specified particulars. Therefore, there was no scope for elaborate pleadings as in case of plaints in a suit. Consequently, the Hon'ble Supreme Court observed that a Section 7 petition could not be viewed through the same lens as a plaint in a suit. The provisions under Sections 7(2) to 7(5) were then referred to hold that the adjudicating authority is obligated to ascertain the existence of the default on the basis of the records of an information utility or evidence furnished by the financial creditor. It was clarified that the 14-day period stipulated in Section 7(4) to ascertain the existence of a default was only directory in nature and not mandatory. Based on these observations, the Hon'ble Supreme Court held that on a careful reading of the provisions of the IBC specifically Sections 7(2) to 7(5) with the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules), 2016, there was no bar on filing of documents at any time until a final order either admitting or dismissing the application was passed. However, it was clarified that where there was an inordinate delay, the adjudicating authority may at its discretion decline the request to file additional pleadings or documents and proceed to pass a final order.

The Apex Court then clarified that the decision in Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Limited²⁰ was not an authority for the proposition that there can be no amendment of pleadings at the fag end of the NCLT proceeding. Moreover, it was observed that in the instant matter, the amendments were made within 2-3 months of the initiation of the proceedings before the admission of the Section 7 petition.

On limitation, it was observed by the Hon'ble Supreme Court that as per Section 18 of Limitation Act, 1963 (Limitation Act) an acknowledgement of a subsisting liability made in writing had the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired. The Hon'ble Supreme Court relied on the decision in Sesh Nath Singh v. Baidyabati Sheoraphuli Cooperative Bank Ltd.²¹ to reiterate that the IBC does not exclude the application of the Limitation Act. Therefore, there was no reason to suppose that Section 18 of the Limitation Act would not apply to proceedings under Section 7 or 9 of the IBC. Further, the Apex Court observed that it was well settled that entries in books of accounts and/or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of the Limitation Act.

The Hon'ble Supreme Court concluded that the finding of the NCLAT was not sustainable in law. The Apex Court relied upon the statement of accounts, balance sheets, and offer for one time settlement to hold that the petition under Section 7 was well within the limitation period of three years. Moreover, it was also noted that the Corporate Debtor had failed to pay the dues in terms of the recovery certificate issued by DRT in the instant matter which also gave a fresh cause of action to the Appellant. Resultantly, the Apex Court held that a final judgment, and/ or decree of any court or tribunal, or any arbitral award for money, if not satisfied would fall within the ambit of a financial debt enabling a financial creditor with a fresh cause of action to initiate proceedings under Section 7 of the IBC.

The Hon'ble Supreme Court concluded that the decision of the NCLT to allow the request of the Appellant for filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal. Accordingly, the appeal was allowed and the order of the NCLAT was set aside.

Anjali Rathi and Ors. v. Today Homes & Infrastructure Pvt. Ltd. and Ors.
Hon'ble Supreme Court
Citation: 2021 SCC OnLine SC 729
Decision dated: 08.09.2021

A moratorium declared under Section 14 of the Insolvency and Bankruptcy Code, 2016 applies only to proceedings in respect of the corporate debtor and not its directors or management.

Brief Facts: Homebuyer agreements (Agreements) were entered into between the eleven petitioners and the first respondent. The Agreements envisaged that the possession of the apartments would be delivered within a period of 36 (thirty-six) months. The petitioners in the instant matter were aggrieved as the developer abandoned the project. As a result, several rounds of litigation ensued amongst the parties, including insolvency proceedings initiated by an operation creditor against the respondent. The National Company Law Tribunal (NCLT) admitted the petition under Section 9 of the IBC, following which the Corporate Insolvency Resolution Process (CIRP) was initiated and a moratorium was declared under Section 14 of the IBC. Thereafter, the petitioners participated in the proceedings before the resolution professional (RP) and the Committee of Creditors (CoC). The CoC approved the resolution plan submitted by the consortium of homebuyers, and the proceedings were pending before the NCLT awaiting further approval under Section 31(1) of the IBC. The petitioners urged that the Hon'ble Supreme Court should direct that the personal properties of the promoters be attached given the provisions contained in the resolution plan. Hence, the present matter.

Held: The Hon'ble Supreme Court, at the outset, held that the resolution plan is still to be approved by the NCLT under Section 31(1) of the IBC. Hence, at this stage, when the resolution plan awaited approval, it would not be appropriate to issue a direction allowing the personal properties of the promoters to be attached. Accordingly, the NCLT was directed to dispose of the approval of the application within six weeks from the receipt of a certified copy of the present order. Further, the Hon'ble Supreme Court held that since the moratorium under Section 14 of the IBC was declared in respect of the corporate debtor, no new proceedings could be undertaken or pending ones could be continued against the corporate debtor. However, the Apex Court clarified that the petitioners had the right to move against the promoters of the corporate debtor, even though a moratorium had been declared under Section 14 of IBC.

The Hon'ble Supreme Court referred to the judgment in P. Mohanraj v. Shah Bros. Ispat (Pvt.) Ltd.²² wherein it was held that the moratorium under Section 14 of the IBC was only in relation to the corporate debtor and not in respect of its directors and management, against whom proceedings could continue. However, as held earlier, the Apex Court could not issue such a direction relying on the resolution plan, given that it is still pending before the NCLT. The petitioners were granted the liberty to take recourse to the remedies available in law after the decision of the NCLT on the approval of the application under Section 31(1), and subject to the consequences thereafter.

JayeshSanghrajka erstwhile R.P. of Ariisto Developers Pvt. Ltd. v. Monitoring Agency nominated by Committee of Creditors of Ariisto Developers Pvt. Ltd.
Hon'ble Supreme Court
Case Number: Company Appeal (AT) (Insolvency) No. 392 of 2021
Decision dated: 20.09.2021

A resolution professional is not be entitled to a 'success fees' that is based upon certain contingency and is speculative in nature.

A success fee for a resolution professional is not covered by the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) or the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (Regulations).

Brief Facts

The appeal in the instant matter before the NCLAT was filed by the RP (Appellant) of Ariisto Developers Pvt. Ltd. (Corporate Debtor). The respondent, monitoring agency of the Corporate Debtor is a formal party to the matter. The appeal was filed against the observations and findings of the National Company Law Tribunal, Mumbai Bench (NCLT/ Adjudicating Authority). By the impugned order, the Adjudicating Authority while approving the resolution plan of the successful resolution applicant denied the success fee of INR 30 million to the Appellant as decided by the Committee of Creditors (CoC). The Appellant being aggrieved with the order of the Adjudicating Authority, filed an appeal before the NCLAT. The Appellant contended that the approval of success fee was a commercial decision of the CoC and the NCLT could not have interfered with the same while approving the resolution plan and directing distribution of the amount set apart for success fees. The NCLAT appointed an advocate for assisting the court as Amicus Curiae (Amicus Curiae). The issue in the present matter was whether the Appellant could charge a success fee, more specifically in the manner that it was sought to be charged.

The Amicus Curiae referred to the chart of Corporate Insolvency Resolution Process (CIRP) expenses prepared for the CoC. The CIRP expenses carried an entry namely 'success fees' with an asterisk and a fine print footnote stating the amount of success fees was to be decided by the CoC. The Appellant in his appeal referred to various efforts made by him during the course of the CIRP. It was argued by the Appellant that the assets of the Corporate Debtor were worth INR 10.89 billion and the same were handled and safeguarded by the Appellant. The Appellant also stated that there were more than 20 hearings conducted before the NCLT, NCLAT, and the Hon'ble Supreme Court involving hundreds of financial creditors and homebuyers. The Appellant emphasized that he successfully convened CoC meeting and got the CoC's approval on the resolution plan. At most, the Appellant submitted that the issue could only be of reasonableness of success fees which could only be considered by the CoC.

The Appellant then placed reliance on a circular dated 12 June 2018 in which the IBBI invited suggestions for fee and expenses incurred for CIRP (Circular). Annexure B of the Circular stated that an insolvency professional may use, inter alia, a success or contingency fee to charge fee for carrying out different duties. The Appellant relied on the multiple decisions²³ to contend that the NCLT or the NCLAT could not interfere with the commercial decisions of the CoC.

The Amicus Curiae submitted that in the IBC and the Regulations, there is no express provisions for grant of success fee. The Amicus Curiae submitted that an insolvency resolution professional could only charge renumeration in a transparent manner and such renumeration should be a reasonable reflection of the work performed and services rendered. It was against the principle of transparency if an insolvency resolution professional at the last moments of approval of a resolution plan squeezed a hidden fee into the resolution plan. Moreover, according to the Amicus Curiae, the Circular relied upon by the Appellant did not provide prescribe, recommend, promote, endorse, or sanctify the payment of success fee. In any case, the Circular could not be equated with the Rules and Regulations framed under the provisions of the IBC. The Amicus Curiae argued that the fee of an insolvency resolution professional had to be directly related to the acts done or expenses incurred which are necessary for the CIRP.

Held

The NCLAT, at the outset, observed that while approving the fee to be provided to the resolution professionals, the CoC must ensure that the same is reasonable under the provisions of the IBC and the Regulations, and it is justiciable. The NCLAT agreed with the submissions of the Amicus Curiae in this regard. It was observed that pushing in a big amount of fee at the last moment in the name of success fee and making it a part of CIRP costs does not make the same a commercial decision of the CoC. The NCLAT approved of the Amicus Curiae's reliance on the decision in Alok Kaushik v. Bhuvaneshwari Ramanathan & Ors.²⁴ where the Apex Court held that the NCLAT had the powers to determine the fee and expenses payable to a professional. In view of the arguments presented by the Amicus Curiae, and the reasons recorded by the NCLAT, it was held that the success fee could not be charged in the instant matter. The NCLAT observed that even if it is said to be chargeable, the manner of approving the fee of INR 30 million at the last moment was held to be improper and incorrect. Accordingly, the appeal was dismissed.

Orator Marketing Pvt. Ltd. v. Samtex Desinz Pvt. Ltd.
Hon'ble Supreme Court of India
Citation: 2021 SCC OnLine SC 513
Decision dated: 26.07.2021

Interest free loans fall within the definition of 'Financial Debt' as defined under Section 5(8) of the Insolvency and Bankruptcy Code, 2016.

Brief Facts

In the instant matter, an interest free term loan of INR 16 million was disbursed to the corporate debtor for a two-year period. During the pendency of the loan, it was assigned to Orator Marketing Pvt. Ltd. (Appellant). According to the Appellant, the loan was due to be repaid in full by the corporate debtor within 1 February 2020. However, the corporate debtor failed to repay the loan payments and a total of INR 15.6 million remained outstanding. The Appellant filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The petition came to be rejected by a judgment and an order of the National Company Law Tribunal (NCLT) dated 23 October 2020. The NCLT referred to two cases²⁵ and held that the loan disbursed by the Appellant to the corporate debtor was in nature of an interest free loan and was not covered by the Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 (IBC). Aggrieved by the decision of the NCLT, the Appellant filed appeal before the National Company Law Appellate Tribunal (NCLAT) under Section 61 of the IBC. The appeal was dismissed by NCLAT which upheld the findings of the NCLT. The order of the NCLAT was then appealed before the Hon'ble Supreme Court. The moot question before the Hon'ble Supreme Court was whether interest free loans would fall within the ambit of a financial debt under Section 5(8)(f) of the IBC.

Held

The Hon'ble Supreme Court at the outset held that the NCLAT and NCLT misconstrued the definition of financial debt in Section 5(8) of the IBC, by reading the same in isolation and out of context. The Apex Court observed that in construing/ or interpreting any statutory provision, one must look into the legislative intent of the statute. The decisions in Innoventive Industries Ltd. v. ICICI Bank Ltd.²⁶ and Swiss Ribbons Pvt. Ltd. v. Union of India and Ors.²⁷ were referred to discuss the scheme of the IBC. It was reiterated that the scheme of the IBC was to ensure that when a default takes place, in the sense a debt becomes due and is not paid, the insolvency resolution begins. Default under Section 3(12) is defined in very wide terms as meaning non-payment of debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. The primary focus of the IBC is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from a corporate death by liquidation. The IBC therefore is a beneficial legislation.

The Hon'ble Supreme Court observed that the definition of financial debt under Section 5(8) of the IBC means "a debt along with interest if any which is disbursed against the consideration of time value of money and includes money borrowed against the payment of interest", as per Section 5(8)(a) of the IBC. The Apex Court opined that the NCLT and NCLAT overlooked the words "if any" which could not have been intended to be otiose. It was also noted that the NCLAT and NCLT failed to take notice of clause (f) of Section 5(8) in terms whereof financial debt includes any amount raised under any other transaction, having the commercial effect of borrowing. Furthermore, the Apex Court observed that sub-clauses (a) to (i) of Section 5(8) of the IBC were apparently illustrative and not exhaustive.

The Apex Court at the cost of reiteration held that the trigger for initiation of the Corporate Insolvency Resolution Process by a financial creditor under Section 7 of the IBC was the occurrence of a default by the corporate debtor. 'Default' means non-payment of debt in whole or part when the debt has become due and payable and debt means a liability or obligation in respect of a claim which was due from any person and includes financial debt and operational debt. The definition of 'debt' is also expansive and the same includes inter alia financial debt. The definition of 'Financial Debt' in Section 5(8) of IBC does not expressly exclude an interest free loan. 'Financial Debt' would have to be construed to include interest free loans advanced to finance the business operations of a corporate body.

Accordingly, the appeal was allowed. The judgment and order of the NCLAT were set aside. The petition under Section 7 was revived and left to be decided afresh in accordance with law and in light of the findings of the Apex Court.

Footnotes

1. Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.

2. Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.

3. Goaplast (P) Ltd. v. Chico Ursula D'Souza, (2003) 3 SCC 232.

4. Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305.

5. Kaushalya Devi Massand v. Roopikishore Khore, (2011) 4 SCC 593.

6. Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560.

7. Forech (India) Ltd. v. Edelweiss Assets Reconstruction Co. Ltd., (2019) 18 SCC 549.

8. Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd., Civil Appeal No. 4041 of 2020.

9. Allahabad Bank v. Canara Bank, (2000) 4 SCC 1; Bakemans Industries (P) Ltd. v. New Cawpore Flour Mills, (2008) 15 SCC 1.

10. Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.

11. Essar Steel India Limited v. Satish Kumar Gupta, (2020) 8 SCC 531; Remdeo Chauhan v. Bani Kant Das, (2010) 14 SCC 209; D.R. Kohli v. Atul Products Ltd., (1985) 2 SCC 77; Johri Lal Soni v. Bhanwari Bai, (1977) 4 SCC 59.

12. Chitra Sharma v. Union of India, 2018 18 SCC 575; Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors., 2019 2 SCC 1.

13. Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors., 2019 2 SCC 1.

14. Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.

15. V. Padmakumar v. Stressed Assets Stabilisation Fund & Anr., 2020 SCC OnLine NCLAT 417.

16. Khan Bahadur Shapoor Freedom Mazda v. Durga Prasad, 1962 1 SCR 140.

17. Pandam Tea Co. Ltd, In re, 1973 SCC OnLine Cal 93.

18. Industrial Finance Corpn. of India Ltd. v. Cannanore Spg. & Wvg. Mills Ltd., 2002 5 SCC 54; Punjab National Bank v. State of U.P., 2002 5 SCC 80.

19. Swiss Ribbons Private Limited v. Union of India, 2019 4 SCC 17.

20. Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Limited, 2020 SCC OnLine SC 647.

21. Sesh Nath Singh v. Baidyabati Sheoraphuli Coop. Bank Ltd., 2021 SCC OnLine SC 244.

22. P. Mohanraj v. Shah Bros. Ispat (Pvt.) Ltd., 12 (2021) 6 SCC 258.

23. Authorised Signatory v. Satish Kumar Gupta & Ors., Civil Appeal No. 8766-67 of 2019; K. Sashidhar v. Indian Overseas Bank and Ors, 2019 SCC OnLine SC 257.

24. Alok Kaushik v. Bhuvaneshwari Ramanathan & Ors., 2015 5 SCC 787.

25. Dr. B.V.S. Lakshmi v. Geometrix Laser Solutions Private Ltd., 2017 SCC OnLine NCLT 458; Shreyans Realtors Pvt. Ltd. and Anr. v. Saroj Realtors & Developers Pvt. Ltd., 2018 SCC OnLine NCLAT 945.

26. Innoventive Industries Ltd. v. ICICI Bank Ltd., 2018 1 SCC 407.

27. Swiss Ribbons Pvt. Ltd. v. Union of India and Ors., 3 (2019) 4 SCC 17.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

India: Indian Insolvency Yearly Roundup 2021

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