IBC | Supreme Court Accepts Apology Of Tax Authorities For Asking Successful Resolution Applicant To Pay Dues Not Covered By Approved Plan

Giving the benefit of doubt and accepting their unconditional apology, the Supreme Court today disposed of a contempt petition filed against Chhattisgarh tax authorities for raising demand notices against a successful resolution applicant over claims in respect of a period prior to the approval of the resolution plan."we have no hesitation in holding that the demands raised by the respondents/authorities for a period prior to the date on which the learned NCLT has approved the Resolution Plan...

IBC | Once Resolution Plan Approved, Dues Not Part Of It Get Extinguished : Supreme Court Rejects Post-Resolution Income Tax Demand

The Supreme Court today (March 20) declined a claim raised by the Income Tax Department to include a tax demand in a Resolution Plan after it was approved by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC).Citing the case of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021) 9 SCC 657, which held that all claims not included in the resolution plan are extinguished upon its approval, the bench comprising Justices Abhay S. Oka...

No S.138 NI Act Case Against Ex-Director Of Company When Cause Of Action Arose After IBC Moratorium Was Declared: Supreme Court

The Supreme Court held that if the cause of action for the offence of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) has arisen after the declaration of moratorium with respect to the company as per the Insolvency & Bankruptcy Code, 2016 (IBC), then the proceedings under S.138 NI Act cannot be continued against the ex-director of the company. The Court reasoned that upon imposition of the moratorium, the board of directors' powers are suspended, and...

Supreme Court Wonders Why NCLAT Wrote Long Order On Delay Condonation Application Despite High Pendency

The Supreme Court recently expressed surprise that the National Company Law Appellate Tribunal (NCLAT), despite having a high pendency of cases, devoted extensive time and effort to writing a 17-page order on a delay condonation application.A bench of Justice Abhay Oka and Justice Ujjal Bhuyan remarked that lengthy submissions and pleadings by members of the Bar often contribute to unnecessarily verbose orders.“We wonder why the NCLAT which has a high pendency should devote so much of time and...

IBC Moratorium Does Not Bar Execution Of Penalties Imposed Under Consumer Protection Act : Supreme Court

In a significant development, the Supreme Court today (March 4) ruled that an interim moratorium under Section 96 of the Insolvency & Bankruptcy Code, 2016 (“IBC”) does not apply to penalty proceedings under Section 27 of the Consumer Protection Act, 1986 (“CP Act”). The Court explained that Section 79(15) of the IBC excludes certain liabilities, such as fines and penalties, from the moratorium's effect. As a result, penalties imposed by Consumer Redressal Forums under the regulatory...

Supreme Court Disapproves Of High Court Interdicting Insolvency Process Against Personal Guarantor At Threshold Stage In Writ Jurisdiction

The Supreme Court while deciding an appeal pertaining to insolvency proceedings initiated against a personal guarantor, observed that the High Court should not have prohibited such proceedings by holding that the guarantor's liability has been waived. “It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review.,” the...

IBC | For Resolution Plan Involving Combination, Prior Approval Of Competition Commission Mandatory Before CoC Examination : Supreme Court

The Supreme Court on January 29, by 2:1 majority, observed that a resolution plan under the Insolvency and Bankruptcy Code, containing a proposed combination(a merger or amalgamation of entities), should only be placed before the Committee of Creditors (CoC), after it has been approved by the Competition Commission of India (CCI).In this regard, the Court referred to Section 31(4) proviso of the IBC. This proviso talks about the approval of the resolution plan and its proviso reads as:“Provided...

Supreme Court Dismisses Builder's Plea To Confine Insolvency Process To Single Real Estate Project

The Supreme Court recently dismissed an appeal seeking to confine Corporate Insolvency Resolution Process (CIRP) of Spaze Towers Pvt. Ltd. (Corporate Debtor) to a single real estate project of the company located in Gurugram.A bench of Justice Abhay Oka and Justice Augustine George Masih dismissed an appeal against the decision of National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi rejecting an application to confine the CIRP of the corporate debtor to a single...

'IBC A Complete Code' : Supreme Court Disapproves Of High Court Exercising Writ Jurisdiction To Interdict CIRP

Disapproving a High Court's order interdicting a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), the Supreme Court recently observed that the IBC is a complete code in itself, having sufficient checks and balances, and thus, the exercise of supervisory and judicial review powers by High Courts demands rigorous scrutiny and judicious application.Allowing the appeal of a successful resolution applicant against Karnataka High Court's interdicting of...

IBC | Moratorium Does Not Extinguish Claim : Supreme Court

The Supreme Court has held that a moratorium declared under Section 14 of the Insolvency and Bankruptcy Code, 2016 will not extinguish a claim. The Court stated that Section 14 bars the institution/continuation of legal proceedings against the corporate debtor, transfer of assets, enforcement of security interest etc."If the argument that the claims of all the creditors of the Corporate Debtor are extinguished once the moratorium comes into force is accepted, no creditor would be able to file a...

IBC | Financial Creditor Can Submit Claim Even If There Is No Default Of Debt : Supreme Court

The Supreme Court has observed a default is not necessary for a debt to become a financial debt under the Insolvency and Bankruptcy Code, 2016. A bench comprising Justice Abhay S Oka and Justice Augustine George Masih held that under Section 5(7) of the IBC, any person to whom financial debt is owed becomes a Financial Creditor even if there is no default in payment of debt. "Therefore, for submitting the claim by a Financial Creditor, there is no requirement of actual default," the Court...

Timely Implementation Of Resolution Plan Is Crucial To Achieve IBC's Objective Of Protecting Assets Dissipation: Supreme Court

The Supreme Court bench comprising Chief Justice of India DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra held that unnecessary delay caused in implementation of the Resolution Plan would also lead to the assets of the corporate debtor diminishing in value. Therefore, there is no doubt that the timely implementation of the Resolution Plan is also one of the underlying objectives of the IBC, 2016. Importance Of Timely Implementation Of The Resolution Plan The IBC was...