INSOLVENCY AND BANKRUPTCY CODE, 2016

Facts: The National Company Law Appellate Tribunal was held that the time of seven days prescribed in proviso to Sub-section (5) of Section 9 of the Insolvency and Bankruptcy Code, 2016 was mandatory in nature and if the defects contained in the application filed by the operational creditor for initiating corporate insolvency resolution against a corporate debtor were not removed within seven days of the receipt of notice given by the adjudicating authority for removal of such objections, then such an application filed under Section 9 of the Code was liable to be rejected. Hence, present appeal.

Held: The judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority had to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to Sub-section (5) of Section 7, Section 9 or Sub-section (4) of Section 10 as well. After all, the applicant did not gain anything by not removing the objections inasmuch as till the objections were removed, such an application would not be entertained. Therefore, it was in the interest of the applicant to remove the defects as early as possible.

Facts: National Company Law Tribunal admitted Company Petition and resolution professional was appointed. The resolution professional invited expressions of interest from all interested resolution applicants to present resolution plans for rehabilitating the corporate debtor. The resolution plans were submitted and NCLT, allow resolution plan filed by company. Appeal was filed against said order of NCLT. The Appellate Tribunal held that in a resolution plan there could be no difference between a financial creditor and an operational creditor in the matter of payment of dues, and that therefore, financial creditors and operational creditors deserve equal treatment under a resolution plan.

Held: In the public announcement of the CIRP, Under Section 15(1), information as to the last date for submission of claims, as may be specified, is to be given; details of the interim resolution professional, who shall be vested with the management of the corporate debtor and be responsible for receiving claims, shall also be given, and the date on which the CIRP shall close is also to be given-see Section 15(1)(c), (d) and (f) of the Code.

Facts: Adjudicating Authority, passed an order under Section 7 the Insolvency and Bankruptcy Code, 2016 at the behest of financial creditors, admitting a petition filed under the Code for financial debts owed to them by the corporate debtor and appointed the Interim Resolution Professional. Resolution Professional published advertisement, seeking expression of interest from potential resolution applicants who wished to submit resolution plans for the revival of company. Appellant and one company submitted their resolution plans. Resolution Professional found both companies to be ineligible under Section 29A of Code. On appeal, the Company Tribunal found that there was no patent illegality in the decision of the RP for declaring ineligible to applicants. Appeals were filed by both companies against said order which was dismissed.

Held: Under Section 22, the first meeting of the Committee of Creditors is to be held within 7 days of its constitution in order to appoint a Resolution Professional. The Committee of Creditors either continues the Interim Resolution Professional or replaces the Interim Resolution Professional by a majority vote of 66%. The application to replace the Interim Resolution Professional is then to be sent to the Adjudicating Authority, who is to forward the same to the Insolvency and Bankruptcy Board of India (hereinafter referred to as the "IBBI") for confirmation. Upon such confirmation, the Adjudicating Authority then appoints the Resolution Professional. In case the IBBI does not confirm the name of the proposed Resolution Professional within 10 days of receipt of the same, the Adjudicating Authority is then to direct the Interim Resolution Professional to continue to function as the Resolution Professional until such time as the IBBI confirms the appointment of the Resolution Professional.

Facts: Summons for judgement filed by Plaintiff for seeking judgment against Defendants jointly and severally to pay to Plaintiffs sum of Rs. 3,22,25,615/- with further interest @ 23% per annum from date of filing of suit till payment and/or realization.

Held: a. It was absolutely clear from provisions of code that for guarantor there was no automatic protection was available when moratorium order passed in favour of corporate debtor. It was only once insolvency resolution process had been initiated either by or against guarantor only then benefit of moratorium would be available to guarantor subject of-course to other provisions of code. Therefore reliance placed by Defendants on Section 60 of code to establish that guarantor automatically gets benefit of moratorium order passed in favour of corporate debtor under Section 14, was wholly misplaced. So far as merit of case was concerned defences raised by Defendants on merits was totally moonshine and illusory. There was no real dispute on merits of case. However, purely out of mercy, leave was granted to Defendants to contest suit subject to condition that Defendants jointly and/or severally depositing in court sum of Rs. 3.22 Crores within period of Twelve weeks from today. Summons for judgement disposed of.
b. Part III deals with Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms (other than Limited Liability Partnerships). Chapter III of Part III deals with the Insolvency Resolution Process. Chapter III (which deals with Insolvency Resolution Process) consists of Section 94 to Section 120. Section 94 deals with an application filed by the debtor to initiate the insolvency resolution process subject to what is stated in Section 94. Section 95 on the other hand deals with an application filed by a creditor to initiate the insolvency resolution process of the debtor (who may be an individual or a partnership firm). This too is subject to what is further stated in Section 95. Thereafter, Section 96 provides for an interim-moratorium and clearly stipulates that when an application is filed under section 94 or section 95, the interim moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application. During the interim-moratorium period, any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed and the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. Sub-section 2 of Section 96 further shows that where the application has been made in relation to a firm, the interim-moratorium under subsection 1 shall operate against all the partners of the firm as on the date of the application.

Facts: With the introduction of Section 238A into the Code, the provisions of the Limitation Act apply to applications made under the Code, winding up petitions filed before the Code came into force are now converted into petitions filed under the Code.

Held: If such petition is found to be time-barred, then Section 238A of the Code will not give a new lease of life to such a time-barred petition. On the facts of this case, it is clear that as the Winding up Petition was filed beyond three years from August, 2012 which is when, even according to IL & FS, default in repayment had occurred, it is barred by time.