Plea To Shift Hindustan National Gas's Registered Office Can Proceed Despite Pending Appeal: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi recently clarified that an application filed by insolvent Hindustan National Gas & Industries Limited for changing its registered office from Kolkata to Mumbai can be considered by the Regional Director in accordance with law, despite an appeal challenging approval of the resolution plan being pending before it.A coram comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra observed, “We only observe and...

Oppression And Mismanagement Plea Not Maintainable Without Company Membership On Filing Date: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Chennai recently reaffirmed that a petition alleging oppression and mismanagement under Sections 241 and 244 of the Companies Act, 2013, cannot be entertained unless the person filing it establishes that he was a “member” of the company on the date the petition was filed. While setting aside an order of the National Company Law Tribunal (NCLT) at Bengaluru, the Appellate Tribunal said that the tribunal failed to examine this basic...

Borrower's Debt Acknowledgment Extends Limitation Against Guarantors Too: NCLAT Reaffirms

The National Company Law Appellate Tribunal at Delhi has reiterated that acknowledgment of debt by a principal borrower extends the limitation period for initiating insolvency proceedings against its corporate guarantors.Quoting apex court's ruling in Laxmi Pat Surana vs. Union Bank of India, (2021), the tribunal observed,"There is no quarrel with the proposition that the acknowledgement made by the principal borrower will tantamount to be an acknowledgment made by the guarantor and any...

CoC Cannot Modify Distribution Mechanism After Approving Resolution Plan: NCLAT Dismisses Bank of Baroda's Appeal In RCIL CIRP

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has held that once a resolution plan is approved by Committee of Creditors under section 30(4) of the Insolvency and Bankruptcy Code, 2016 (IBC) and the CoC is itself bound by the plan, it cannot subsequently alter or modify the distribution mechanism provided therein. A Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Member–Technical) dismissed an appeal filed by Bank of Baroda, an assenting...

IBC Cannot Be Used As Recovery Mechanism To Resolve Contractual Disputes: NCLAT Reaffirms

The National Company Law Appellate Tribunal (NCLAT) at Delhi has reiterated that insolvency proceedings under the Insolvency and Bankruptcy Code cannot be used as a recovery mechanism to settle disputed contractual claims. A coram comprising of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra dismissed an appeal filed by FTI Consulting India Pvt. Ltd. against the rejection of its CIRP plea against MGF Developments Ltd. The appellate tribunal held that insolvency proceedings...

NCLT's Power To Order Forensic Audit Is Self-Ordained, No Separate Application Needed: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Chennai on Tuesday held that the National Company Law Tribunal can direct a forensic audit on its own even if no party has filed a separate application seeking such relief. A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Indevar Pandey dismissed an appeal filed by Able Automobiles Private Limited and its directors, challenging the June 30, 2022 order of the NCLT, Kochi Bench appointing an independent chartered...

Reconstituted CoC Cannot Reopen Resolution Plan Approved By Earlier CoC: NCLAT Reiterates

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently reaffirmed that a mere reconstitution of the Committee of Creditors does not invalidate or reopen a resolution plan that has already been approved by the earlier CoC and placed before the adjudicating authority for approval. A bench led by Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra set aside the National Company Law Tribunal's order remanding the plan for reconsideration. The tribunal relying...

NCLAT Dismisses Tamil Nadu State Tax Dept's Belated Claim In Sri NagaNanthana Mills Liquidation

The National Company Law Appellate Tribunal (NCLAT) at Chennai has dismissed an appeal filed by the Tamil Nadu State Tax Department, holding that belated tax claims cannot be entertained once liquidation proceedings have attained finality. A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain reiterated that timelines are strict under the insolvency law and a belated claim cannot be entertained. "When the liquidation process of the Corporate...

Covid-Era Insolvency Protection Applies Only To Companies, Not Personal Guarantors: NCLAT Reaffirms

The National Company Law Appellate Tribunal (NCLAT) at New Delhi, has recently reiterated that that the Covid-era suspension under the Insolvency and Bankruptcy Code does not protect personal guarantors from insolvency proceedings. The appellate tribunal ruled that the suspension applies only to companies and does not bar creditors from initiating insolvency proceedings against individuals who have furnished personal guarantees A bench comprising Chairperson Justice Ashok...

Amendment Of Date Of Default Allowed Before Final Adjudication: NCLAT Reiterates

The National Company Law Appellate Tribunal at New Delhi has recently held that amendment of the date of default in insolvency proceedings against a personal guarantor is permissible before final adjudication. It ruled that limitation must be examined when the insolvency application is decided on merits. A bench comprising Chairperson Justice Ashok Bhushan, Chairperson, and Technical Member Barun Mitra upheld an order of the NCLT, Mumbai allowing such amendment. It observed, “It is well settled...

Asset Transfers After SARFAESI Notice Void, NCLAT Upholds Order Against Aaj Ka Anand Ex-Directors

The National Company Law Appellate Tribunal (NCLAT) at New Delhi on Friday held that agreements transferring a company's business after issuance of a bank recovery notice under the SARFAESI law are void and unenforceable. A bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra upheld the order passed by the National Company Law Tribunal, Mumbai, which had cancelled a Leave and Licence Agreement and a Usage Deed executed by Aaj Ka Anand Papers Limited and directed...

Refusal Of Demand Notice at MCA-Registered Office Amounts To Valid Service: NCLAT

The National Company Law Appellate Tribunal at New Delhi has ruled that a demand notice sent by an operational creditor and returned with the postal endorsement “refused” from the corporate debtor's MCA-registered office amounts to valid service under the insolvency rules. A bench of Justice Mohd Faiz Alam Khan and Technical Member Indevar Pandey set aside an order of the National Company Law Tribunal that had rejected an insolvency plea on the ground of defective service. The appellate...