Dispute Resolution Insolvency Legal Alerts Real Estate Sector

IBC Brief – October, 2022

Welcome back to our updates on the Insolvency and Bankruptcy Code, featuring developments in the month of October 2022.

Welcome back to our updates on the Insolvency and Bankruptcy Code, featuring developments in the month of October 2022.

From the Docket

If a company transfers assets amongst ‘Group Companies’ then it won’t be considered fraudulent trading, as per section 66 (1) of the Insolvency & Bankruptcy Code, 2016, ruled NCLAT in Renuka Devi Rangaswamy v. Regen Powertech

In RMY Industries LLP v. Apple Industries , the NCLAT held that any application submitted by the liquidator that pertains to the terms and conditions of an auction sale or a sale as a going concern in accordance with the Liquidation Regulation can be taken into consideration by the Adjudicating Authority.

The NCLAT in Sreedhar Tripathy v. Gujarat State Financial Corporation  has held that any decision on Liquidation of Corporate Debtor is open to judicial review by Appellate Authority.

In case of Subrata Maity v. Mr. Amit C. Poddar , the NCLAT has held that Adjudicating Authority is well within its power to replace the Liquidator to do substantial justice.

In case of Punjab National Bank v. Mr. Ashish Chhawchharia  NCLAT whilst pointing out that Resolution Professional incorrectly reduced the Punjab National Bank’s admitted claim, directed Jet Airways’ Resolution Applicant to bear the liability to pay extra amount to PNB.

The NCLAT in the case of Trafigura India v. TDT Copper , has upheld the decision made by the Adjudicating Authority, dismissing the Appellant’s S. 9 application under the IBC.  It was done on the grounds that the Settlement Agreement’s unpaid sums do not constitute “operational debt” under section 5(21) of the IBC and that the NCLT’s authority under sections 7, 9, and 10 of the Code is limited, making it impossible for it to refer the dispute to arbitration under section 8 of the Arbitration & Conciliation Act.

The NCLAT has provided instructions for calculating the limitation for filing appeals before NCLAT in an order dated 21.10.2022. According to Rule 22 of the 2016 NCLT Rules, the statute of limitations shall be calculated as of the day on which the appeal is presented.

In Rajratan Babulal Agarwal v. Solartex India ., the Supreme Court said that the purpose of determining whether there is a pre-existing dispute under the IBC, the factum of the suit’s filing cannot be taken into consideration. According to SC, the test used in a situation of a pre-existing dispute under the IBC cannot be compared to the Principle of Preponderance of Probability.

In Chandrani Banerjee v. R. K. Arora., the Supreme Court ordered Interim Resolution Professional of Supertech builder to deposit 1 Crore with Registry and refund the applicant homebuyers on pro-rata basis.

Thank you for reading.

The NCLAT, in Jagdish Kumar Parulkar v. Vinod Agarwal, held that the timeline of 135 days prescribed under Regulation 35-A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for filing an application in relation to preferential and fraudulent transactions is directory and not mandatory. Non-compliance with such timelines will not render the application non-maintainable.

Further, the following transactions conducted by the suspended management during the look back period were held to be preferential and fraudulent transactions:

  • repayment of personal loan;
  • transfer of funds for meeting emergent medical needs of an erstwhile director after a period of one year of the transfer;
  • reimbursement of business tour expenses where no documents were submitted for substantiating the expenditure; and
  • fraudulent sale of stocks and siphoning of funds.

Thank you for reading.

– Sarthak Advocates & Solicitors