IBC Cases PDF

Series 2
Judicial Pronouncements
under
Insolvency and Bankruptcy Code, 2016

Judicial Pronouncements under
ISBN : 978-81-8441-000-0
Insolvency and Bankruptcy Laws Group under

Corporate Laws & Corporate Governance Committee
and
Indian Institute of Insolvency Professionals of ICAI
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
www.icai.org New Delhi
January/2019/P0000 (New)
Series 2
Judicial Pronouncements
under
Insolvency and Bankruptcy Laws Group under

Corporate Laws & Corporate Governance Committee
and
Indian Institute of Insolvency Professionals of ICAI
The Institute of Chartered Accountants of India

(Set up by an Act of Parliament)
New Delhi
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Published in : January, 2019
Committee/Department : Insolvency and Bankruptcy Laws Group

under Corporate Laws & Corporate
Governance Committee
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Message
One of the significant developments in recent times is the evolution of
Insolvency Professionals as a new professional opportunity with defined
roles and responsibilities. The Insolvency Professionals are regulated by
Insolvency and Bankruptcy Board of India as well as by the Insolvency
Professional Agency.
Since maximisation of value of assets, availability of credit and balancing the
interests of all the stakeholders are the major objectives of the Code, the
Insolvency Professionals (IPs) in their different roles as Interim Resolution
Professional/ Resolution Professional/ Bankruptcy Trustee/ Liquidator have
to timely, efficiently and effectively discharge their duties under the
insolvency resolution process.
Indian Institute of Insolvency Professionals of ICAI (IIIPI) which is the
Insolvency Professional Agency (IPA) as formed by The Institute of
Chartered Accountants of India, is taking various initiatives for developing the
profession of IPs.
I am happy for the joint initiative taken by the Insolvency and Bankruptcy
Laws Group under Corporate Laws & Corporate Governance Committee of
ICAI and Indian Institute of Insolvency Professionals of ICAI in bringing out
the second series of the publication “Judicial Pronouncements under
Insolvency and Bankruptcy Code, 2016” to help the professionals in getting
clarity on the issues under the Code.
I would like to sincerely thank the Insolvency and Bankruptcy Laws Group
(under CL & CGC) of ICAI under the Convenorship of CA. Nihar Niranjan
Jambusaria and CA. Ranjeet Kumar Agarwal, Deputy Convenor of the
Insolvency and Bankruptcy Laws Group under CL& CGC and also thank the
members of the Board of IIIPI, Shri I.Y.R.Krishna Rao, Shri Biswamohan
Mahapatra, Shri Ashok Haldia for this joint initiative. I would specially thank
CA. Naveen N. D. Gupta, CA. Nilesh S. Vikamsey, CA. Devaraja Reddy M
and CA. Dhinal A. Shah - the Directors of IIIPI, for their support in this effort.
I would like to extend my appreciation for the efforts put in by Shri Sunil Pant,
CEO, IIIPI and by Ms. S. Rita and CA. Sarika Singhal of the ICAI team in
bringing out this publication.
iii
I am sure that this series of the publication also would be of great help to the
professionals and other stakeholders.
Justice Anil R. Dave (Retd.)

Chairman, Indian Institute of Insolvency Professionals of ICAI
Date: 9th January, 2019

Place: New Delhi
iv
Foreword
It has been two years now since the Insolvency and Bankruptcy Code, 2016,
the new legal framework for resolving matters of insolvency was enacted and
implemented in a fast pace in the debt resolution space in the country.
The Code has been amended twice during this period to address the issues
arising from the functioning of the Code and time to time Regulations under
the Code were also amended for smooth implementation of the Code.
Several judgements have been pronounced under the Code, which are
helping in interpretation and in providing clarification on important issues.
I welcome the Insolvency and Bankruptcy Laws Group under Corporate Laws
& Corporate Governance Committee (CL&CGC) and Indian Institute of
Insolvency Professionals of ICAI (IIIPI) in taking this initiative of bringing out
the publication “Judicial Pronouncements under Insolvency and Bankruptcy
Code, 2016” in the form of a Series to facilitate professionals in clear
understanding of the provisions of the Code. The Series 1 of the publication
was published earlier by the Group and now the Series 2 is being brought out
by the Group.
I congratulate the entire Group and extend my sincere appreciation to CA.
Nihar Niranjan Jambusaria, Convenor of the Insolvency and Bankruptcy
Laws Group under CL&CGC in continuing with the efforts for initiating the
second series of this publication. I extend my appreciation to CA. Ranjeet
Kumar Agarwal, Deputy Convenor of the Insolvency and Bankruptcy Laws
Group under CL&CGC and CA. Dhinal A Shah, Central Council Member and
CA. K. Sripriya, Central Council Member - the members of the Group and
CA. (Dr.) Debashis Mitra, Chairman, Corporate Laws & Corporate
Governance Committee for bringing out this Series 2 of the publication.
I am sure that this Series 2 of the publication would also be immensely
helpful to the members and other stakeholders.
CA. Naveen N.D. Gupta

President ICAI
Director IIIPI
Place: New Delhi
vi
Preface
The country has already started to witness the results of the implementation
of The Insolvency and Bankruptcy Code, 2016 (IBC). As per the World Bank
Doing Business Report (DBR, 2019), India is at 77 Rank out of 190 countries
in World Bank’s Doing Business Report and India has improved its rank by
53 positions in last two years and 65 positions in last four years. The legal
framework under IBC which provides for resolving insolvency, is one of the
important factors that has impacted the ranking of the economy for doing
business.
Further, as per the RBI Financial Stability Report, December 2018, the asset
quality of banks showed an improvement with the gross non-performing
assets (GNPA) ratio of Scheduled Commercial Banks declining from 11.5 per
cent in March 2018 to 10.8 per cent in September 2018.
But, the implementation of the Code at such speed had been possible only
because of the judgements being pronounced by Supreme Court of India,
High Courts, NCLAT and NCLT benches across the country. The issues
under the Code are better understood by these judicial pronouncements.
The Insolvency and Bankruptcy Laws Group under Corporate Laws &
Corporate Governance Committee (CLCGC), through its various initiatives
creates awareness about the Code and the professional opportunities
therein.
As part of its continuous endeavour towards enrichment of knowledge, The
Insolvency and Bankruptcy Laws Group jointly with Indian Institute of
Insolvency Professionals of ICAI (IIIPI) had decided to bring out a publication
on Judicial Pronouncements under Insolvency and Bankruptcy Code, 2016 in
the form of a series. The Series 1 of the publication was brought out by the
Group earlier and now the Series 2 of the publication is being brought out.
This series of the publication also covers important Case Analysis based on
the decisions by Supreme Court, High Courts, NCLAT and NCLT on issues
under the Code.
We would like to thank the President of ICAI and Director IIIPI, CA. Naveen
N. D. Gupta and Vice President of ICAI, CA. Prafulla Premsukh Chhajed for
their continued support and encouragement in all the initiatives of the Group.
We express our sincere gratitude towards the Board of IIIPI comprising of
Hon’ ble Mr. Justice Anil R. Dave (Retd.), Chairman of the Board and other
Directors, Shri I.Y.R Krishna Rao, Shri Biswamohan Mahapatra, Shri Ashok
Haldia, CA. Nilesh S. Vikamsey, Immediate Past President, ICAI and CA. M.
Devaraja Reddy, Past President, ICAI for joining in this endeavour.
We would like to thank CA. (Dr.) Debashis Mitra, Chairman, Corporate Laws
& Corporate Governance Committee for his support in this initiative. We
would like to sincerely thank all the Group Members for their support and
would like to specially thank CA. Dhinal A Shah, Central Council Member
ICAI and Director, IIIPI and CA. K. Sripriya, Central Council Member ICAI in
bringing out this Series 2 of the publication.
We would like to sincerely appreciate and thank CA. Snehal Kamdar, CA.
Apoorva Bookseller, CA. Prasad Dharap, CA. Devang P Sampat, CA.
Siddharth Mathur, CA. Viral Doshi, CA. Tejas Jatin Parikh and CA. Ankit
Sanghavi, who were involved in summarising and analysing the Cases.
We extend our appreciation to the Group Secretariat and the Committee
Secretariat comprising of Ms. S. Rita, CA. Sarika Singhal and CA. Choshal
Patil and to Shri Sunil Pant, CEO, IIIPI for their contribution and efforts in
putting together the Case Analysis.
We sincerely believe that the members of the profession, industries and
other stakeholders will find the Series 2 of the publication also very useful.
CA. Nihar Niranjan Jambusaria

Convenor
Insolvency and Bankruptcy Laws Group, CLCGC, ICAI
CA. Ranjeet Kumar Agarwal

Deputy Convenor
Insolvency and Bankruptcy Laws Group, CLCGC, ICAI

Place: New Delhi
viii
Contents
1. Orders passed by Supreme Court of India
S. No Case Page No
1. Transmission Corporation of Andhra Pradesh 1-2
Limited (Appellant) Vs .Equipment Conductors and
Cables Limited (Respondent)
2. B. K. Educational Services Private Limited 3-4
(Appellant) Vs. Parag Gupta and Associates
(Respondent)
3. Bank of New York Mellon London Branch 4-5
(Appellant) Vs. Zenith Infotech Limited
(Respondent)
4. K. Kishan (Appellant) Vs.M/s Vijay Nirman 6-7
Company Pvt. Ltd. (Respondent)
5. Chitra Sharma and Others (Petitioners) Vs. Union 8-11
of India and Others (Respondent)
6. Uttara Foods & Feeds Private Limited (Appellant) 12-13
Vs. Mona Pharmachem (Respondent)
2. Orders passed by High Courts

S. No Case Page No
1. Sanjeev Shriya (Petitioner) Vs. State Bank of 14-17
India and 6 others (Respondents)
2. Dr. Vidya Sagar Garg (Petitioner) Vs. Insolvency 17-18
and Bankruptcy Board of India (Respondent)
3. Jotun India Private Limited (Petitioner) Vs. PSL 18-22
Limited (Corporate Debtor) Respondent Applicant
(org. respondent)
3. Orders passed by National Company Law Appellate
Tribunal
S. No Case Page No
1. AVON Capital, (Appellant) Vs. Tattva & Mittal 23-24
Lifespaces Pvt. Ltd. (Respondent/ Corporate
Debtor)
2. Export Import Bank of India (Appellant) Vs. 24-27
Resolution Professional JEKPL Private Limited
(Respondent)
3. Jagmohan Bajaj (Appellant) (one of the 27-28
shareholders of Respondent No. 1 - ‘Shivam
Fragnances Pvt. Ltd.’ (Corporate Debtor) Vs.
Shivam Fragrances Private Limited (Respondents/
Corporate Debtor)
Amiga Informatics Pvt. Ltd. (Financial Creditor)
4. Ajay Chaturvedi (Appellant/ Shareholder of 29-30
Corporate Debtor) Vs. JM Financial Asset
Reconstruction Co. Ltd. & Anr. (Respondents/
Financial Creditor)
5. M/s Asset Advisory Services India Pvt. Ltd. 30-32
(Appellant/ Financial Creditor) Vs. M/s VSS Projects
Pvt. Ltd., (Respondents/ Corporate Debtor)
6. Indian Overseas Bank (Appellant) Vs. Mr Dinkar T. 33-34
Venkatsubramaniam (Respondent) (Resolution
Professional for Amtek Auto Ltd)
7. O.A.A Ananthpadmanaban Chettiar (Appellant) Vs. 34-35
Sri. Mahalakshmi Textiles (Respondents)
8. Pravinbhai Raninga (Appellant) Vs. The Kotak 36-37
Resources (Respondent 1), M/s Raninga Ispat
Private Limited (Respondent 2)
9. M/s. Subasri Realty Private Limited (Appellant) Vs. 37-38
Mr. N. Subramanian & Anr. (Respondents)
x
10. International Road Dynamics South Asia Private 39-41
Limited (Appellant) Vs. Reliance Infrastructure
Limited (Respondent)
International Road Dynamics South Asia Private
Limited (Appellant) Vs. D.A. Toll Road Private
Limited (Respondent)
11. Mr. Suresh Padmanabhan & Anr. (Appellant) 41-42
Vs.Tata Steel Ltd. & Ors. (Respondents)
12. G. M. Lingaraju (Appellant) Vs.Gurudatt Sugars 43
Marketing Private Limited & Anr. (Operational
Creditor/Respondent)
13. Era Infra Engineering Ltd. (Appellant/ Corporate 44-45
Debtor) Vs. Prideco Commercial Projects Pvt. Ltd.
(Respondent)
14. Sudhi Sachdev (Appellant - Promoter) Vs. APPL 45-47
Industries Limited (Respondent -Operational
Creditor)
15. Jaya Patel (Appellant) Vs. Gas Jeans Pvt. Ltd. & 47-48
Ors. (Respondents)
16. Anil Nanda (Appellant) Vs Hari Kishan Sharma & 48-49
Ors (Respondents)
17. Sudhir Sales & Services Ltd. (Appellant/ 49-52
Operational Creditor) Vs D-Art Furniture Systems
Pvt. Ltd (Respondent)
18. Praveen Arjun Patel (Appellant) Vs JK Lakshmi 52-53
Cement Ltd. (Respondents/ Corporate Debtor)
19. Binani Industries Limited (Appellant/ Corporate 54-57
Debtor) Vs Bank of Baroda & Anr. (Respondents)
20. Mr. Devendra Padamchand Jain, Resolution 57-60
Professional (Appellant) Vs. State Bank of India,
State Bank of Hyderabad, Indian Overseas Bank,
Punjab National Bank, Bank of India, Bank of
Baroda, IFCI Limited, IFCI Factors Limited
xi
(Financial Creditors), VNR Infrastructure Ltd
(Corporate Debtor), Insolvency and Bankruptcy
Board of India (Board) (Respondents)
21. Amandeep Singh Bhatia & Ors (Appellant/ 60-61
Operational Creditor) Vs. Vitol S.A. & Anr
(Respondents/ Corporate Debtor)
22. Neelkanth Township and Construction Private 61-63
Limited (Appellant) Vs.Urban Infrastructure Trustee
Limited (Respondents)
4. Orders passed by National Company Law Tribunal

S. No Case Page No
1. Small Industries Development Bank Of India Vs. 64-65

Alps Leisure Holidays Pvt. Ltd.
2. Asset Reconstruction Company (India) Limited Vs 65-66

M/S Sri Srivathsa Paper Mills Private Limited
3. Stanbic Bank Ghana Limited Vs. Rajkumar Impex 66-68

Private Limited
4. Manohar Karamchandani Vs. Balajidham 68-69

Buildestates Pvt. Ltd.
5. Venus Furniture Vs. AUM Structbuild Pvt. Ltd 69-70
6. Bhagwati Kripa Paper Mills Pvt. Ltd.,Vs. A.P. 70-72

Enterprises Private Limited
7. Deevya Shakti Paper Mills (P) Ltd Vs. Borkar 72-74

Colour Packs Private Limited
8. Indian Bank, Oriental Bank of Commerce, 74-75

Allahabad Bank, Indian Overseas Bank, Karur
Vysya Bank, Central Bank of India, Andhra Bank,
Bank of Maharashtra Vs. Kamineni Steel & Power
India Pvt. Ltd
9. Allahabad Bank Vs. SBM Paper Mills Ltd 75-80
xii
10. State Bank of India Vs. Adhunik Metaliks Limited 80-82
11. Oasis Agro Infra Ltd, Amandeep Singh, Resolution 83-84
Professional. Vs. Mandeep Singla & Ors.
(Suspended Board of Directors)
12. State Bank of India Vs. Electrosteel Steels Ltd 84-85
13. State Bank of India Vs. Bhushan Steel Limited 85-91
14. Pratik Ramesh Chirania Vs Trinity Auto 91-93
Components Limited
15. Reliance Commercial Finance Limited Vs. Ved 93-95
Cellulose Limited
16. RBL Bank Ltd.Vs. MBL Infrastructure Ltd 95-99
17. Mr. Sunil Gopichand Teckchandani & Others Vs. 99-101
Metallica Industries Limited (Through IRP)
18. IDBI Bank Ltd.Vs. Jaypee Infratech Limited 101-104
19. Takkshill Enterprises Vs. IAP Company Private 105-107
Limited
xiii
xiv
Chapter 1
Orders passed by Supreme Court of
India
SECTION 9
CASE NO. 1
Transmission Corporation of Andhra Pradesh Limited (Appellant)
Vs.
Equipment Conductors and Cables Limited (Respondent)
Civil Appeal No. 9597 OF 2018
Date of Order : 23-10-2018
Section 9 – Application for Initiation of Corporate Insolvency Resolution
Process by Operational Creditor
Facts:
The appellant is a Transmission Corporation of Andhra Pradesh Government
and is successor of Andhra Pradesh State Electricity Board (for short,
‘APSEB’) and is in the activities relating to transmission of electricity. It had
awarded certain contracts to the respondent herein for supply of goods and
services.
The respondent initiated arbitration proceedings and filed as many as 82
claims before Haryana Micro and Small Enterprises Facilitation Council
(hereinafter referred to as ‘Arbitral Council'). These proceedings culminated
into Award dated June 21, 2010. The Arbitral Council came to the conclusion
that the claims made on the basis of Invoice Nos. 1-57 were barred by law of
limitation and, therefore, no amount could be awarded against the said
claims. In respect of Invoice Nos. 58-82, the award was passed in favour of
the respondent.
Against the aforesaid award rejecting claims in respect of Invoice Nos. 1-57
as time barred, the respondent filed an application under Section 34 of the
Arbitration and Conciliation Act, 1996 before the Additional District Judge,
Chandigarh. The Additional District Judge passed the order dated August 28,
Judicial Pronouncements under Insolvency and Bankruptcy Code, 2016
2014 in the said application thereby remanding the case back to the Arbitral
Council for fresh decision.
Against this order, the appellant filed the appeal before the High Court of
Punjab and Haryana at Chandigarh. This appeal was allowed by the High
Court by its order dated January 29, 2016 thereby setting aside the direction
of the Additional District Judge remanding the matter to Arbitral Council for
fresh consideration.
Against the order dated January 29, 2016 of the Punjab and Haryana High
Court setting aside the order of the Additional District Judge remanding back
the matter to the Arbitral Council is concerned, the appellant herein had filed
an application for clarification of the said order under Section 151 of the
Code of Civil Procedure, 1908. The High Court vide its order dated
November 08, 2016 allowed the said Revision Petition holding that there was
no award in respect of claim towards Invoice Nos. 1-57 and, therefore, it was
not permissible for the respondent to seek the execution.
When the things rested at that, the respondent approached the NCLT by
means of a Company Petition under Section 9 of IBC, 2016 read with Rule 6
of Insolvency and Bankruptcy (AAA) Rules, 2016. But this petition was
dismissed by the NCLT vide its order dated April 09, 2018 stating that the
Company Petition filed by the respondent was not maintainable as the claims
which were preferred by the respondent against the appellant and on the
basis of which respondent asserts that it has to receive monies from the
appellant are not tenable and in any case these are not disputed claims. This
assertion is based on the fact that these very claims of the respondent were
subject matter of arbitration and the award was passed rejecting these claims
as time barred.
Against this order, the respondent has filed appeal before the NCLAT in
which impugned orders dated September 04, 2018 have been passed stating
that ‘Transmission Corporation of Andhra Pradesh Ltd.’, the government
undertaking may face trouble. Therefore, by way of last chance we grant one
opportunity to respondents to settle the claim with the Appellant, failing which
this Appellate Tribunal may pass appropriate order on merit.
Decision:
The NCLAT order was then challenged in Supreme Court. The Court has
gone into merits and found that order of the NCLT is justified and no purpose
would be served in remanding the case back to the NCLAT. The appeal was
allowed and the impugned order dated September 04, 2018 passed by the
NCLAT was set aside.
2
Orders passed by Supreme Court of India
SECTION 238A
CASE NO. 2
B. K. Educational Services Private Limited (Appellant)
Vs.
Parag Gupta and Associates (Respondent)
Civil Appeal no. 23988 of 2017
With
Civil Appeal no.439 of 2018
Date of Order: 11-10-2018

Section 238A – Applicability of provisions of the Limitation Act, 1963
Facts:
The question raised by the appellants in these appeals is as to whether the
Limitation Act, 1963 will apply to applications that are made under Section 7
and/or Section 9 of the Code on and from its commencement on 01.12.2016
till 06.06.2018.
Decision:
The question raised by the appellants in these appeals is as to whether the
Limitation Act, 1963 will apply to applications that are made under Section 7
and/or Section 9 of the Code on and from its commencement on 01.12.2016
till 06.06.2018. In all these cases, the Appellate Authority has held that the
Limitation Act, 1963 does not so apply. Even on the assumption that Article
3
137 of the Limitation Act, 1963 is attracted to such applications, in any case,
such applications being filed only on or after commencement of the Code on
01.12.2016, since three years have not elapsed since this date, all these
applications, in any event, could be said to be within time.
The Insolvency Law Committee Report, March 2018 has also thought about
the aspect that the law is a complete Code and the fact that the intention of
such a Code could not have been to give a new lease of life to debts which
are time-barred.
The Limitation Act has in fact been applied from the inception of the Code, it
is unnecessary to go into the arguments based on the doctrine of laches. The
appeals are therefore remanded to the NCLAT to decide the appeals afresh
in the light of this judgment.
EFFECT OF STATUTORY ENACTMENTS

THAT HAVE COME AFTER THE HEARING
OF THE CASE HAS BEEN CONCLUDED
CASE NO. 3
Bank of New York Mellon London Branch (Appellant)
Vs.
Zenith Infotech Limited (Respondent)
(Arising out of S.L.P. (C) No. 1587 of 2015)
Facts:
The only question arises for consideration in this appeal is that whether it is
necessary to take note of the relevant statutory enactments and changes that
have come about after the hearing of the case has been concluded?
Decision:
The first question was whether the dismissal of the application for Reference
by the Registrar, Secretary and Chairman of the Board for Industrial and
Financial Reconstruction (BIFR) was within the jurisdiction of the said
4
authorities. The second question, which was implicit if there was to be a

positive answer to the first, is whether in view of the order of winding up
passed by the Company Court, and affirmed by the Division Bench of the
Bombay High Court, there is any further scope for registration of the
Reference sought for by the respondent No. 1 company under the provisions
of the SICA if the order declining registration by the aforesaid authorities is to
be understood to be non-est.
The Hon’ble Supreme Court observed that, High Court was correct in
concluding that the refusal of registration of the reference sought by the
respondent Company by the Registrar, Secretary/Chairman of the Board for
Industrial and Financial Reconstruction (BIFR) was non-est in law. The
reference must, therefore, understood to be pending before the Board on the
relevant date attracting the provisions of Section 252 of the Insolvency and
Bankruptcy Code, 2016.
The second question arising before the High Court, namely, whether the
reference before the Board stood foreclosed by the order of winding up of the
respondent Company and the appointment of liquidator was answered in the
negative relying on Real Value Appliances Ltd. (supra) and Rishabh Agro
Industries Ltd. (supra). The core principles laid down in the said decisions of
the Court, namely, that immediately on registration of a reference under
Section 15 of the erstwhile SICA, the enquiry under Section 16 is deemed to
have commenced and that the winding up proceedings against a company
stood terminated only after orders under Section 481 of the Companies Act,
1956, are passed, will have to be noticed to adjudge the correctness of the
said view of the High Court. In any event, the aforesaid question becomes
redundant in view of the conclusion that the reference sought by the
respondent Company must be deemed to have been pending on the date of
commencement of the Insolvency and Bankruptcy Code, 2016, particularly,
Section 252 thereof (effective 1.11.2016).
The appeal is disposed by holding that it would still be open to the
respondent Company to seek its remedies under the provisions of Section
252 of the Code read with what is laid down in Sections 13, 14, 20 and 25.
5
WHETHER IBC CAN BE INVOKED WHERE

ARBITRAL AWARD HAS BEEN PASSED
CASE NO. 4
K. Kishan (Appellant)
Vs.
M/s Vijay Nirman Company Pvt. Ltd. (Respondent)
With
Whether the Insolvency and Bankruptcy Code, 2016 can be invoked in
respect of an operational debt where an Arbitral Award has been
passed against the operational debtor, which has not yet been finally
adjudicated upon.
Facts:
M/s Vijay Nirman Company Pvt. Ltd.(Respondent) entered into a sub-
Contract Agreement with one M/s Ksheerabad Constructions Pvt. Ltd. (for
short ‘KCPL’) on 01.02.2008 for work of ‘Construction and widening of the
existing two lane highway’. Besides above, a separate agreement of the
same date was entered into between the said KPCL and one M/s SDM
Projects Private Limited, Bangalore, as a result of which, a tripartite
Memorandum of Understanding was entered.
During the course of the project, disputes and differences arose between the
parties and the same were referred to an Arbitral Tribunal, which delivered its
Award on 21.01.2017. One of the claims that was allowed by the said Award
was in favour of the respondent for a sum of Rs.1,71,98,302/- which arises
out of certain interim payment certificates. Another claim that was allowed
related to higher rates of payment in which a sum of Rs.13,56,98,624/- was
awarded. Three cross claims that were made by the Respondent were
rejected. A Section 34 (Arbitration Act) petition challenging the said Award
filed.
6
According to the NCLT, the fact that a Section 34 petition was pending was
irrelevant for the reason that the claim stood admitted, and there was no stay
of the Award. For these reasons, the Section 9 petition was admitted as the
fact that the Award which was challenged under Section 34 specifically
stated that learned counsel for the first Respondent (i.e. the Corporate
Debtor) was fair enough to admit that the claimant is entitled to the said sum
of Rs.1,71,98,302/-.
An appeal filed to the Appellate Tribunal had the same result, as according to
the Appellate Tribunal, the non- obstante clause contained in Sec 238 of the
Code would override the Arbitration Act, 1996. The appeal was dismissed.
Decision:
The filing of a Section 34 petition against an Arbitral Award shows that a pre-
existing dispute which culminates at the first stage of the proceedings in an
Award, continues even after the Award, at least till the final adjudicatory
process under Sections 34 & 37 has taken place.
With regard to the submission of learned counsel for the respondent, that the
amount of Rs.1.71 Crores stood admitted as was recorded in the Arbitral
Award, suffice it to say that cross-claims of sums much above this amount
has been turned down by the Arbitral Tribunal, which are pending in a
Section 34 petition challenging the said Award. The very fact that there is a
possibility that the appellant may succeed on these cross-claims is sufficient
to state that the operational debt, in the present case, cannot be said to be
an undisputed debt. Section 238 of the Code would apply in case there is an
inconsistency between the Code and the Arbitration Act and in the present
case there is no such inconsistency. On the contrary, the Award passed
under the Arbitration Act together with the steps taken for its challenge would
only make it clear that the operational debt, in the present case, happens to
be a disputed one. The judgment of the Appellate Tribunal needs to be set
aside and is therefore reversed.
Case Review: Order dated Nov 20, 2017 of NCLAT in M/s. Ksheeraabd
Constructions Pvt. Ltd. (Appellant) Vs. M/s. Vijay Nirman Company Pvt. Ltd.
(Respondent), Company Appeal (AT) (Insolvency) No. 167 of 2017, arising
out of Order dated 29th August, 2017 passed by the Adjudicating Authority
(National Company Law Tribunal), Hyderabad Bench, Hyderabad in
Company Petition (IB) No. 100/9/HDB/2017), set aside.
7
ARTICLE 32 OF THE CONSTITUTION

CASE NO. 5
Chitra Sharma and Others (Petitioners)
Vs.
Union of India and Others (Respondent)
Writ Petition (Civil) No 744 of 2017
With
Writ Petition (Civil) No 782 of 2017
With
WRIT PETITION (CIVIL) NO 783 OF 2017
With
SPECIAL LEAVE PETITION (CIVIL) NO 24001 OF 2017
With
With
With
With
With
With
With
SPECIAL LEAVE PETITION (CIVIL) D NO 33267 OF 2017
AND
WITH
8

Grievance under Article 32 was that the CIRP ignores the interests of
vital stakeholders in building projects, chief among whom are
individuals who have invested their wealth in pursuit of the human
desire to own a home. The IBC recognized only three categories or
classes namely (i) Corporate Debtors; (ii) Financial Creditors and (iii)
Operational Creditors. Not being protected by the IBC, the petitioners
contended that the rights conferred upon them by special enactments
including the Consumer Protection Act 1986 and by RERA could not be
divested. Suspension of the right to seek redressal before an
adjudicatory forum under Section 14(1)(a) of IBC, 2016 would, it was
asserted, leave the home buyers without a remedy. Section 238 of the
IBC, 2016 gives it an overriding effect over other laws in existence.
Facts:
The National Company Law Tribunal, Allahabad (NCLT) admitted a petition
filed by IDBI Bank Limited (IDBI Bank) under the IBC to initiate CIRP with
respect to Jaypee Infratech Limited (JIL), upon the latter’s default in
repayment of dues. The NCLT vide its order August 09, 2017 commenced
CIRP against JIL, whereby it imposed a moratorium which prohibited the
institution or continuation of any suits or proceedings against JIL and an
Interim Resolution Professional (IRP) was appointed.
Aggrieved by the NCLT’s Order, various homebuyers who had invested their
money in numerous residential projects of JIL and its parent company
Jaiprakash Associates Limited (JAL) came before the Supreme Court by way
of multiple Writ Petitions and Special Leave Petitions. Their main grievance
was that despite being vital stakeholders they had no locus in the CIRP,
therefore the provisions of the IBC should be declared ultra vires. They also
wanted equal status as Financial Creditors as their claims were not covered
under any of the provisions of the pre-amended IBC.
The Supreme Court was sympathetic to the cause and interest of the
homebuyers, stayed the NCLT Order vide its order dated September 04,
2017 (Stay Order). However, upon an application filed by IDBI Bank, the
Supreme Court was apprised of the unintended consequences of the Stay
Order such as the transfer of control of JIL to its promoters, who had already
failed in delivering the flats and repayment of loans. The Supreme Court
vacated the stay and allowed the CIRP to continue and directed the IRP to
take over the management of JIL. JAL was directed not to alienate any asset
9
without permission of the Bench and to deposit a sum of Rs. 2000 crores
before it.
Further, the Supreme Court nominated a senior counsel to represent the
cause of the homebuyers in the Committee of Creditors (CoC) to ensure that
homebuyers are protected. The Bench directed the Resolution Professional
to finalise the Resolution Plan, but not to implement the same without leave
of the Supreme Court.
Over the course of the proceedings, JAL made several applications before
the Supreme Court such as seeking an extension of time to comply with the
direction to deposit money before the Supreme Court, transferring
concession agreements, alienating specific assets, and to participate as one
of the intending bidders in the resolution plan that was being formulated by
the IRP, etc. In the meantime, in light of JAL’s huge debts, the Reserve Bank
of India (RBI) filed an application seeking the Supreme Court’s permission to
initiate CIRP against it.
Several Resolution Applicants submitted Resolution Plans to the Resolution
Professional for JIL, out of which four Resolution Plans that complied with
the IBC were placed before the CoC for its consideration. Even JAL
submitted a Resolution Plan, but, it was rejected under Section 29A of the
IBC. The CoC did not approve any of the Resolution Plans that were placed
before it within the statutory time frame of 270 days.
As the possibility of liquidation of JIL became real, a number of stakeholders
made submissions before the Supreme Court that liquidation would not serve
the interest of any of the stakeholders, especially the homebuyers, and that
CIRP should be extended so that new/revised resolution plans may be
considered and the best plan approved. On the other hand, JAL requested
the Supreme Court to hand over management of JIL to them as they were
willing to construct flats. This was opposed by all stakeholders in view of
JAL’s non-compliance with the Supreme Court’s order to deposit even
Rs.2000 crores, as well as the statutory restrictions imposed under Section
29A of the IBC.
Further to that, the status of the home buyers which had not been recognised
prior to 6 June 2018 has now been expressly recognised as a result of the
amendment Ordinance.
Decision:
The Supreme Court in its judgement passed significant directions, in effect
10
re-commencing the CIRP. In order to do justice to the interests of all the

concerned stakeholders in the CIRP of JIL, and to prevent it from going into
liquidation, the Supreme Court exercised its power vested under Article 142
of the Constitution and directed that the initial period of 180 days be revived
with effect from August 09, 2018 (extendable by a further period of 90 days
under the provisions of IBC, if required), and a new CoC be constituted in
accordance with the amended provisions of the IBC to enforce the statutory
status of the homebuyers as Financial Creditors.
The Supreme Court has also directed that the IRP would have the option of
inviting fresh bids so that there is a wider field of choice provided to the CoC,
and in this entire process JIL and JAL along with their promoters would
remain ineligible to participate in the CIRP in light of the bar under Section
29A of the IBC. The Court also acceded to the request of the RBI to initiate
CIRP against JAL in order to address the financial distress of JAL. The
money deposited by the JAL is to be transferred to NCLT to take an
appropriate decision with regard to the same.
The Supreme Court has given primacy to the IBC, and the processes and
institutions under it. It has in unequivocal terms rejected JAL’s proposal in
light of the restriction under Section 29A of the IBC to ensure that persons
responsible for insolvency of the Corporate Debtor do not participate in the
resolution process as their participation would undermine the salutary object
and purpose of the IBC.
The Supreme Court observed that the enactment of the IBC has created a
paradigm shift in the way the entire CIRP is regulated and governed, which
has led to change in the basic premise of a “debtor in possession” to a
“creditor in possession”. The Jaypee Case has captured the essence of the
Resolution as being a market driven one, wherein primacy is given to the
commercial decisions. The Supreme Court also noted that the IBC at its time
of enactment did not capture and recognise the interests of the homebuyers,
which have now been safeguarded by way of the Ordinance.
The Supreme Court while recognising the homebuyers as Financial
Creditors, has left the question open as to whether the homebuyers are
secured or unsecured creditors. An important aspect of the judgment is that
the Supreme Court did not accede to payment of amounts deposited by the
promoter to homebuyers on the ground that it would be a preferential
payment to one class of creditors. The IBC is a legislative framework that is
well-equipped to deal with the concerns of all stakeholders. Keeping that in
mind, the Supreme Court has upheld the processes to be followed under it.
11
ARTICLE 142 OF THE CONSTITUTION

CASE NO. 6
Uttara Foods And Feeds Private Limited (Appellant)
Vs.
Mona Pharmachem (Respondent)
(Arising out of SLP (C) no. 26824 of 2017)
Facts:
In the present ruling, the Apex Court had been approached after the refusal
of the National Company Law Appellate Tribunal (NCLAT) to grant it any
relief, citing lack of authority to do so. It must be noted that the IBC and the
Rules made thereunder only permit withdrawal.
Decision:
The Hon’ble Supreme Court was hearing an Appeal filed under Article 142 by
Corporate Debtor, Uttara Foods and Feeds Private Limited, bringing to the
notice of the Court its settlement with its Operational Creditor Mona
Pharmachem.
For the sake of brevity, article 142 of the Constitution of India reproduced as
follows:
Enforcement of decrees and orders of Supreme Court and unless as to
discovery, etc (1) The Supreme Court in the exercise of its jurisdiction may
pass such decree or make such order as is necessary for doing complete
justice in any cause or matter pending before it, and any decree so passed or
orders so made shall be enforceable throughout the territory of India in such
manner as may be prescribed by or under any law made by Parliament and,
until provision in that behalf is so made, in such manner as the President
may by order prescribe.
(2) Subject to the provisions of any law made in this behalf by Parliament,
the Supreme Court shall, as respects the whole of the territory of India, have
all and every power to make any order for the purpose of securing the
attendance of any person, the discovery or production of any documents, or
the investigation or punishment of any contempt of itself.
12
Taking note of such appeals, the Bench then observed, “We are of the view
that instead of all such orders coming to the Supreme Court as only the
Supreme Court may utilize its powers under Article 142 of the Constitution of
India, the relevant Rules be amended by the competent authority so as to
include such inherent powers. This will obviate unnecessary appeals being
filed before this Court in matters where such agreement has been reached”.
It may be noted that previously there was no provision under the Code
enabling the withdrawal of the application after admission by the NCLT.
Under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, the NCLT could only permit the withdrawal of an
application on a request by the applicant before its admission.
Now, as per IBBI (Second Amendment) Act, 2018, w.e.f. 06.06.2018, for
permitting the withdrawal of an application for initiation of the insolvency
resolution process, once the application has been admitted by the NCLT, the
threshold has been kept at 90% of the voting share of the CoC. (Section 12A
read with Regulation 30A)
13
Chapter 2
Orders passed by High Courts
SECTION-14
CASE NO. 1
HIGH COURT AT ALLAHABAD
Sanjeev Shriya (Petitioner)
Vs.
State Bank of India and 6 others (Respondents)
WRIT - C No. - 30285 of 2017
Connected with
Deepak Singhania and another (Petitioner)
Vs.
State Bank of India (Respondent)
WRIT - C No. - 30033 of 2017

Facts:
Present ruling arises in a writ petition filed by erstwhile directors of the
Corporate Debtor challenging an order of a DRT. In accordance of the order
challenged, DRT permitted proceedings against the directors, while staying
the proceeding against the Company (DRT Order). The High Court, in
exercise of its writ jurisdiction, by the present order under analysis, however,
set aside the order of the DRT and has stayed proceedings against the
directors as well.
In Sanjeev Shriya v. State Bank of India & Ors., the Allahabad High Court
(“Court”) has held that the proceedings against a guarantor of the Corporate
Debtor before a Debt Recovery Tribunal (“DRT”) must be stayed considering
on-going proceedings against the Corporate Debtor before the National

Company Law Tribunal.
In 2005, the petitioners, who are also directors of M/s L.M.L. Limited, Kanpur
(“Company/Corporate Debtor”), executed a deed of guarantee in favour of
State Bank of India (“SBI”) for a loan granted by SBI to the
Company/Corporate Debtor.
The said Corporate Debtor declared as 'Sick Industrial Company' by the
Board for Industrial and Financial Reconstruction on 08.05.2007.
In 2017, SBI filed an application under the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 before the DRT in Allahabad for the
recovery of Rs. 72 Crores approx. against the Corporate Debtor as the
Principal borrower and the petitioners in their capacity as guarantors.
On March 30, 2017, the DRT passed an interim order requiring the
guarantors to disclose particulars of assets as specified by SBI.
Subsequently, the Corporate Debtor approached the NCLT under Section 10
of the Insolvency and Bankruptcy Code, 2016 (“Code”) to initiate a Corporate
Insolvency Resolution Process. The NCLT, vide its order in May 2017,
admitted the application and, among other things, declared a moratorium on
the institution or continuation of suits and/or proceedings against the
Corporate Debtor.
Based on the NCLT Order, the Guarantors sought stay of the proceedings
before DRT. It was contended that since the matter was pending before
NCLT and NCLT had exclusive jurisdiction and further considering the
moratorium in terms of the NCLT Order, proceedings before DRT apropos
the guarantors should also be stayed by DRT.
In the month of June 2017, the DRT passed an order whereby it kept the
proceedings against the Company in abeyance but proceeded against the
petitioners as guarantors. The DRT Order was challenged in a writ petition as
guarantors contended that DRT had exceeded its jurisdiction.
Issues:
The issue before the Allahabad High Court was whether a Financial Creditor
could be allowed to pursue proceedings under the 1993 Act before the DRT
against the guarantors, when the NCLT had already declared a moratorium
under S. 14 of the Code vis-à-vis the Company.
15
Arguments:
The Petitioners argued that:
• the proceedings before the DRT were without jurisdiction considering
the moratorium under the Code, and that provisions of the Code
(Section 238) would prevail over the provisions of the 1993 Act;
• the DRT could not realistically arbitrate claims against the guarantor
when the claim in relation to the debt was itself to be determined;
• the action by the DRT would be contradictory to the object of the
Code, which seeks to consolidate proceedings and avoid multiple
proceedings before different forums;
On the other side, the Respondents submitted that:
• the IBC does not place any restriction on proceedings against the
guarantor independently, as the rights of the Respondents flow directly
from the Deed of Guarantee;
• there is no edge between DRT proceedings for recovery of debt and
NCLT proceedings;
In the case of Schweitzer Systemtek India Pvt. Ltd. v. Pheonix ARC Pvt. Ltd.
& Ors., the criticism of the appellant was whether personal property that was
given as security to the creditor-banks would fall within the scope of the
moratorium under the Code. The NCLAT referred to earlier judgments of the
Tribunal and held that the moratorium under the Code is only applicable to
the property of the Corporate Debtor.
Decision:
The Court opined that two split proceedings i.e. before the DRT as well as
before the NCLT, should be avoided, if possible. The Court also went on to
stay the proceedings against the guarantors before the DRT. Furthermore, it
was held that sufficient safeguards have been provided under the Code; and
the liability of the Company has not yet crystallized against either the
principal debtor or the guarantors.
With the aforesaid directions/observations, both the writ petitions are
disposed of.
16
Putting to rest various conflicting views, the IBC (Second Amendment) Act,
2018 w.e.f 6.6.2018 has settled the issue of whether the provisions of
Section 14 relating to the moratorium are to apply to the Corporate Debtor
and its assets alone or to the assets of guarantors of the Corporate Debtor
as well.
The amendment has categorically clarified that the assets of guarantors are
outside the purview of Section 14 and no moratorium would be applicable on
such assets.
The provisions of the Section 14 sub-section (1) shall not apply to —
(a) such transaction as may be notified by the Central Government in
consultation with any financial regulator;
(b) a surety in a contract of guarantee to a Corporate Debtor.
Henceforth the moratorium under the Code is only applicable to the property
or assets of the Corporate Debtor.
REGULATION 6 OF THE IBBI (IP) REGULATIONS

CASE NO. 2
HIGH COURT OF DELHI AT NEW DELHI
Dr. Vidya Sagar Garg (Petitioner)
Vs.
Insolvency and Bankruptcy Board of India (Respondent)
W.P. (C) 9520/2017, CM APPL. 38726-38727/2017
Regulation 6 of the Insolvency and Bankruptcy Board of India
(Insolvency Professional) Regulations, 2016 seeking registration as an
Insolvency Professional
Facts:
Application under Regulation 6 of the Insolvency and Bankruptcy Board of
India (Insolvency Professional) Regulations, 2016 (in short "2016
Regulation") seeking registration as an Insolvency Professional (I.P.) has
been rejected on the grounds that he is not a fit and proper person under
Regulation 4(g)(i) of the 2016 Regulation.
17
FIR bearing No.RC/219/2012, dated 3.7.2012, has been registered against

the petitioner. - followed by the prosecution filing a charge sheet in the
matter, on 17.02.2014.
Writ petition which is directed against the order dated 12.10.2017, passed by
the Insolvency and Bankruptcy Board of India by the petitioner saying that
the petitioner has no role in the alleged infraction of law, as reflected in the
aforementioned FIR and/ or the charge sheet. It is also contended that an
application for discharge has been filed before the concerned Trial Court.
However discharge application filed by the petitioner not yet allowed by the
concerned Trial Court.
Decision:
Writ petition is disposed of as the discharge application filed by the petitioner
is not yet allowed by the concerned Trial Court.
Writ petition is pre-mature. The petitioner, therefore, was given liberty to
approach the Hon’ble High Court, once the discharge application is disposed
of by the concerned Trial Court.
Concerned Trial Court is requested to take up the application for adjudication
and dispose of the same at the earliest.
WHETHER THE COMPANY COURT HAS ANY

JURISDICTION TO STAY THE PROCEEDINGS
FILED UNDER IBC
CASE NO. 3
HIGH COURT OF JUDICATURE AT BOMBAY
Jotun India Private Limited (Petitioner)
Vs.
PSL Limited (Corporate Debtor) Respondent Applicant (org.
respondent)
Company Application No. 572 of 2017 in
Company Petition 434 of 2015 with Company Petition No. 1048 of 2015,
878 of 2015, 256 of 2016 and 392 of 2016
18
Whether the Company Court has any jurisdiction to stay the

proceedings filed by a Corporate Debtor under Section 10 of Insolvency
and Bankruptcy Code, 2016 (“IBC”) before National Company Law
Tribunal (“NCLT”) even though a previously instituted company petition
by a creditor may have been admitted (and therefore does not get
transferred to NCLT) but where a provisional liquidator has not been
appointed.
Facts:
On 10th March, 2015 Company petition were filed by petitioner against
respondent applicant (org. respondent) under Sections 433 and 434 of the
Companies Act, 1956, claiming an outstanding sum with interest in respect of
unpaid invoices for goods supplied.
On 19th June 2015, respondent applicant made a reference to Board of
Industrial and Financial Reconstruction (BIFR) under Sick Industrial
Companies (Special Provisions) Act, 1985 (SICA).
On 9th March 2017, order admitting the present company petition no.434 of
2015 was passed.
On 29th May 2017 respondent applicant filed an application before NCLT,
Ahmedabad under Section 10 of IBC, being C.P (IB) No.
37/10/NCLT/AHM/2017 (“IBC Application”), i.e., within the window of 180
days prescribed by the Repeal Act, for the commencement of the Corporate
Insolvency Resolution Process.
On 18th July 2017, IBC Application made by respondent applicant was taken
up for hearing by NCLT, Ahmedabad, and the secured creditors to whom
notice of IBC Application was given, were also heard. After hearing the
parties, NCLT, Ahmedabad, reserved the matter for orders and directed the
same to be listed on 20th July, 2017. On the same day, Jotun India Private
Limited (petitioner) herein, filed company application (lodging) no.333 of
2017 seeking the appointment of a Provisional Liquidator.
On 19th July 2017, petitioner herein, mentioned the company application
(lodging) No.333 of 2017 before the High Court for the appointment of a
provisional liquidator where an order was passed restraining the Hon’ble
NCLT, Ahmedabad, from continuing with IBC Application and placed the
company application (lodging) No.333 of 2017 to be heard on 26th July 2017.
This order for convenience is hereinafter referred to as “impugned order
dated 19th July 2017”.
19
On 20th July 2017 appeal (lodging) no.280 of 2017 was filed by Corporate
Debtor challenging the order dated 19th July 2017.
On 1st August 2017 order was passed by the Division Bench of this Court in
the said appeal clarifying that the question whether the Learned Single
Judge, acting as the Company Court, had the jurisdiction to pass the
impugned order would expressly be kept open and left for determination.
Upon this express liberty, Corporate Debtor withdrew the appeal.
On 15th September 2017 the present application was filed for
recalling/vacating the impugned order dated 19th July 2017. This impugned
order dated 19th July 2017, according to Corporate Debtor, is an order in
excess of jurisdiction conferred upon a company court and hence is liable to
be recalled/vacated.
The Companies Act, 2013 (“Act of 2013”) was passed with the object of
consolidating and amending the law of corporations in India. Before the
passage of the Act, the winding-up of a Corporate Debtor on the ground of
‘inability to pay debts’ was governed by the provisions of Sections 433(e) and
434 of Companies Act, 1956 (“Act of 1956”), where the relevant High Court
having territorial jurisdiction over a company was the Adjudicating Authority
in respect of winding-up proceedings. However, the Act of 2013 shifted the
jurisdiction to adjudicate cases of winding-up due to inability to pay debts
from the High Court to the National Company Law Tribunal (“NCLT”) under
the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”), a
law to consolidate and amend laws related to resolution of insolvency,
liquidation, and bankruptcy of corporate persons.
The Central Government notified the Companies (Transfer of Pending
Proceedings) Rules, 2016 (“Transfer Rules 2016”) providing for, inter alia,
transfer of pending cases of winding-up from the High Courts to the NCLT
under the Code. However, only those cases in which winding-up petitions
were not served as per Rule 26 of the Companies (Court) Rules, 1959 (“CC
Rules”) were transferable to NCLT (“Saved Petitions”), while others were to
be continued to be heard and adjudicated by the High Court itself.
This resulted in a situation where certain petitions against a company were
served as per Rule 26 of the CC Rules while at the same time some of the
petitions were un-served against the same company and before the same
High Court. However, this was clarified by way of a notification dated June
29, 2017 by inserting the third proviso to rule 5 of the Transfer Rules, 2016
which provided that if some of the winding-up petitions are admitted against
20
a company before the High Court as on December 15, 2016, other connected
petitions against the same company shall together be heard and adjudicated
by the High Court.
The issue for consideration was that, is there any bar on the NCLT to trigger
insolvency resolution process on an application filed under Sections 7, 9 and
10 of the Code when a winding up petition is pending or admitted before the
High Court and an official liquidator has been appointed and a winding up
order is passed.
Decision:
The Hon’ble Bombay High Court held that once a petition has been served
by the applicant to the respondent company as contemplated under rule 26
of the CC Rules read with rule 5 of the Transfer Rules 2016, the High Court
becomes seized of the matter and the matter cannot be transferred to the
NCLT.
The Transfer Rules and more specifically the second amendment specifically
provide that those winding-up petitions which have been served to the
respondent shall be adjudicated by the High Court only, while others shall be
transferred to the NCLT. It is submitted that had the intention of the
legislature been to allow initiation of fresh insolvency proceedings before the
NCLT, it would have specifically provided so in the Transfer Rules.
NCLT is not a court subordinate to the High Court and hence as prohibited
by the provisions of Section 41 (b) of the Specific Relief Act, 1963 no
injunction can be granted by the High Court against a Corporate Debtor from
institution of proceedings in NCLT.
It may also be noted that apart from there being no provision in the
Companies Act, 1956 to injunct proceedings before NCLT instituted under
IBC, petitioner cannot take recourse under the inherent powers of the High
Court to support the impugned order.
Besides, there is an express bar contained in Section 64 (2) of IBC which
prevents any court, Tribunal or Authority from granting any injunction in
respect of any action taken, or to be taken, in pursuance of any power
conferred on NCLT under IBC.
Further to that, as per rule 6 of the Companies (Court) Rules, 1959 and Rule
9 of the Companies (Court) Rules, 1959, a combined reading will show that
the Company Court has ample powers to recall any order previously passed
by it [Dr. Writers Food Products Private Limited (supra)].
21
The Hon’ble Supreme Court of India has held that an order may be recalled
by a Court or Tribunal if there was an inherent lack of jurisdiction to pass
such an order [Budhia Swain &Ors v. Gopinath Deb &Ors].
In such circumstances, there is no bar on NCLT, Ahmedabad from
proceeding with IBC application. This application, therefore, has to succeed.
The impugned order dated 19th July 2017 is recalled/vacated.
22
Chapter 3
Orders passed by National Company
Law Appellate Tribunal (NCLAT)
SECTION-5
CASE NO. 1
AVON Capital, (Appellant)
Vs.
Tattva & Mittal Lifespaces Pvt. Ltd. (Respondent/ Corporate Debtor)
Company Appeal (AT) (Insolvency) 256 of 2017
Section 5(20) r/w 5(21) of the Insolvency and Bankruptcy Code, 2016 –
whether the appellant comes within the meaning of ‘Operational
Creditor’ & ‘existence of dispute’ between the ‘appellant’ and the
‘Corporate Debtor’
Facts:
The ‘Corporate Debtor’ engaged the appellant to provide services in lieu of
which retainer fee was chargeable; for advisory and ancillary services
separate fees were chargeable on receipt of the term-sheet from the
investor. The appellant was also entitled for success fee once the funds were
remitted into the accounts of the appellant by the parties. Respondent
submitted that merely production of invoices will not suggest that the
appellant has provided services to the respondent. Dispute raised after
Demand notice issued under the Code.
Decision:
The dispute raised on imaginary facts and circumstances while replying to
the demand notice cannot be treated to be an ‘existence of dispute’ for
rejecting the application under Section 9. In absence of any evidence relating
to pre-existence dispute i.e. prior to issuance of notice dated 14th January,
2017 under Section 8(1) of the I&B Code, it was held that there was no
dispute in existence. Further, in view of letter of engagement and terms and
condition of engagement it was held that the appellant comes within the
meaning of ‘Operational Creditor’ as defined under Section 5. There being a

‘debt’ due to the appellant and in absence of any evidence of payment,
impugned order dated 11th July, 2017 passed in C.P. No.
37/I&BP/NCLT/MB/MAH/2017 was set aside and remitted the case to the
Adjudicating Authority, Mumbai Bench to admit the application and pass
appropriate order in presence of the parties. It will be open to the respondent
to settle the claim before admission of the application under Section 9.
Case Review: Order dated 11th July, 2017 by NCLT, Mumbai Bench,
Mumbai in Case No. CP No. 37/I&BP NCLT/MB/MAH/2017 set aside.
CASE NO. 2
Export Import Bank of India (Appellant)
Vs.
Resolution Professional
JEKPL Private Limited (Respondent)
Company Appeal (AT) (Insolvency) No. 304 of 2017
with
Export Import Bank of India (Appellant)
Vs.
Resolution Professional
JEKPL Private Limited (Respondent)
And
Axis Bank Limited (Appellant)
Vs.
Edu Smart Services Private Limited (Respondent)
DBS Bank Limited (Respondent)
Section 5(7) r/w 5(8)(h) of the Insolvency and Bankruptcy Code, 2016
Facts:
Two appeals preferred by ‘Export Import Bank of India’ (hereinafter referred
24
Orders passed by National Company Law Appellate Tribunal (NCLAT)
to as ‘EXIM Bank’) relates to Corporate Insolvency Resolution Process

initiated against ‘JEKPL Private Limited’, whereas appeal preferred by ‘Axis
Bank Limited’ relates to Corporate Insolvency Resolution Process against
‘Edu Smart Services Private Limited’.
The JEKPL Pvt. Ltd. filed an application under Section 10 of Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) for initiation of
Corporate Insolvency Resolution Process against itself. It was admitted by
the Adjudicating Authority (National Company Law Tribunal), Allahabad
Bench and the IRP was replaced.
Pursuant to the advertisement, the creditors including ‘Financial Creditors’
and ‘Operational Creditors’ filed their respective claim including EXIM Bank.
However, the EXIM Bank was not treated to be the ‘Financial Creditor’.
EXIM Bank filed an application under Section 60 (5) of the Code, before the
Adjudicating Authority for direction to the Resolution Professional to treat its
claim as ‘Financial Debt’ and to include the EXIM Bank in the ‘Committee of
Creditors’ with voting share proportionate to its amount of claim. It was
alleged that the Resolution Professional through its email dated 04.08.2017
communicated decision rejecting claim of EXIM Bank as a ‘Financial
Creditor’ without calling for any explanation including the
objections/comments from it.
Case of the EXIM Bank is that it disbursed Dollar Loan to the tune of US$ 50
Million to a Netherland based company, namely, Jubilant Energy N.V.,
(‘JENV’ for short) (Principal Borrower) by its Letter dated 13.04.2011 as
modified by letter dated 18.05.2011 for which ‘Corporate Guarantee’ was
executed by the Jubilant Enpro Private Limited (‘JEPL’ for short) on
01.08.2011 in favour of the EXIM Bank. Contractual obligation of ‘JEPL’
(Corporate Guarantor) was further secured by the execution of ‘Corporate
Guarantor Guarantee’ with ‘Counter Corporate Guarantee’ by JEKPL
(Corporate Debtor) on 01.08.2011 in favour of the EXIM Bank.
The Exim Bank invoked its Counter Corporate Guarantee on 30.03.2017
which led to the present dispute and its claim to treat it as a Financial
Creditor has not been accepted by the Resolution professional.
The EXIM Bank declared the amount of loan advanced to Principal Borrower
(JENV, Netherlands) as Non-Performing Asset (NPA) on 17.05.2016.
25
Therefore, the EXIM Bank recalled the loan facilities advanced to JENV by
letter dated 30.03.2017. Consequently, it had invoked its ‘Corporate
Guarantee’ as well as the ‘Counter Corporate Guarantee’ against the JEPL
and JEKPL by its letters dated 30.03.2017. Thus, according to EXIM Bank
Principal Borrower having defaulted and the liability of Corporate Guarantee
as ‘Counter Corporate Guarantee’ being joint and co-extensive with Principal
Borrower, the EXIM Bank comes within the meaning of ‘Financial Creditor’ of
JEKPL (Corporate Debtor), in terms of Section 5(7) r/w Section 5(8)(h) of I&B
Code.
The Adjudicating Authority by the impugned order dated 27.11.2017 taking into
consideration the objection raised by the ‘Resolution Professional’ and the
‘Committee of Creditors’, affirmed the decision of the Resolution Professional
and rejected the claim of EXIM Bank.
The main question of law under consideration was whether the EXIM Bank,
which has been provided with ‘Counter Corporate Guarantee’ by JEKPL
(Corporate Debtor) comes within the meaning of ‘Financial Creditor
Decision:
In the present ruling Hon’ble NCLAT decided that a claim whether matured or
unmatured ought to be admitted by resolution professional in terms of
definitions u/s Sections 3(6) and 3(11) of the Code. It has further stated that
maturity of claim or default of claim or invocation of guarantee for claiming
the amount has no nexus with filing of claim.
It is not necessary that all the claims as are submitted by the Creditors
should be a claim matured on the date of initiation of Resolution
Process/admission, even in respect of debt, which is due in future on its
maturity, the ‘Financial Creditor’ or ‘Operational Creditor’ or ‘Secured
Creditor’ or ‘Unsecured Creditor’ can file such claim.
Therefore, the definition of ‘Claim’ as defined under Section 3(6) is to be read
along with Section 13 read with Section 15 of the ‘I&B Code.
The only thing which is to be ascertained is whether the person who claimed
to be ‘Financial Creditor’, whether debt owed to him come within the meaning
of ‘Financial Debt’ as defined under Section 5(8) of the ‘I&B Code.
The Hon’ble Nation Company Law Appellant Tribunal also drew attention on
the definition of the claim as defined under the IB Code 2016.
26
Admittedly, JEKPL has given the ‘Counter-Indemnity Obligation’ by way of

Guarantee (Counter Guarantee) and thereby it falls within clause (h) of
Section 5(8). Such ‘Counter-Indemnity Obligation’ in respect of Counter
Guarantee has been given by JEKPL as the EXIM Bank disbursed the debt
against the consideration for the time value of money in favour of the
Principal Borrower (JENV).
In view of the said provision it was held that EXIM Bank come within the
meaning of ‘Financial Creditor’ as defined under Section 5(7) r/w Section 5(8)
of the I&B Code, 2016.
In view of finding aforesaid, the claim of EXIM Bank having been wrongly
rejected by the Adjudicating Authority by impugned order dated 27.11.2017
in CA No. 159/2017 in CP No.24/ALD/2017, the said order is set aside.
SECTION-7
CASE NO. 3
Jagmohan Bajaj (Appellant)
(one of the shareholders of Respondent No. 1 - ‘Shivam Fragnances
Pvt. Ltd.’ (Corporate Debtor)
Vs.
Shivam Fragrances Private Limited (Respondents/ Corporate Debtor)
Amiga Informatics Pvt. Ltd. (Financial Creditor)
Section 7 of the Insolvency and Bankruptcy Code, 2016 – Application
for Initiation of Corporate Insolvency Resolution Process by Financial
Creditor and Section 241 and 242 of the Companies Act, 2013
Facts:
The ‘Financial Creditor’ granted financial assistance of Rs.1.02 Crores in the
form of a loan to the ‘Corporate Debtor’ in the year 2016. The said amount
was repayable with interest calculated @1.5% per month. On failure to pay
loan, Financial Creditor took recourse to arbitration in terms of agreement
executed inter-se the Financial Creditor and the Corporate Debtor on
24.09.2016. The arbitral proceedings culminated in passing of award
27
favouring the Financial Creditor. There was no compliance with the terms of
arbitral award and the Corporate Debtor continued with the default. Hence,
resulting in CIRP by Financial Creditor.
The Corporate Debtor did not dispute the existence of arbitral award in
favour of the Financial Creditor but pleaded that the Corporate Debtor was
prevented from effecting transfer of its property to satisfy the award due to
internal dispute of the Directors which were under adjudication before
National Company Law Tribunal, New Delhi Bench and an interim direction
had been passed therein to maintain status quo.
Decision:
The Appellant has neither disputed the factum of owing debt to the ‘Financial
Creditor’ nor assailed the order of admission of petition under Section 7 of
I&B Code on the ground that the debt was not payable. Admittedly, Appellant
is one of the Shareholders of Respondent No.1 – ‘Shivam Fragrances Pvt.
Ltd.’ (Corporate Debtor) and seeks to question the legality of initiation of
Corporate Insolvency Resolution Process at the hands of Financial Creditor
on the sole ground of there being an inter-se dispute amongst the Directors
of Corporate Debtor.
Triggering of Insolvency Resolution Process cannot be defeated by taking
resort to pendency of internal dispute between Directors of Corporate Debtor
on allegations of oppression and mismanagement. The statutory right of a
Financial Creditor satisfying the requirements of Section 7 of the I&B Code to
trigger Insolvency Resolution Process cannot be made subservient to
adjudication of an application under Section 241 and 242 of the Companies
Act, 2013.
Appeal is frivolous and the Appellant has encroached upon the precious time
of this Appellate Tribunal on flimsy grounds. It lacks merit. Admission is
accordingly refused and appeal is dismissed. Appellant is saddled with costs
of Rs.1 lakh (Rupees One Lakh Only), which shall be deposited with the
Registrar, NCLAT within 15 days.
Case Review: Order dated 11th June, 2018 passed by the Adjudicating
Authority (National Company Law Tribunal), New Delhi Bench in Company
Petition No. (IB) 553 (ND)/2017 upheld.
28
CASE NO. 4
Ajay Chaturvedi (Appellant/ Shareholder of Corporate Debtor)
Vs.
JM Financial Asset Reconstruction Co. Ltd. & Anr. (Respondents/
Financial Creditor)
Section 7 of the Insolvency and Bankruptcy Code, 2016
Facts:
The Appeal has been preferred by Mr. Ajay Chaturvedi, Shareholder of ‘Yes
Power & Infrastructure Ltd.’-(‘Corporate Debtor’) against the order dated 11th
May, 2018 passed by the Adjudicating Authority (National Company Law
Tribunal), Mumbai Bench, Mumbai, whereby and where under, the
application under Section 7 of the ‘Insolvency and Bankruptcy Code, 2016
(‘I&B Code’ for short) preferred by the Respondent JM Financial Asset
Reconstruction Company Ltd.’- (‘Financial Creditor’) has been admitted.
The main plea taken by the counsel for the Appellant is that in spite of the
order passed by the Adjudicating Authority no ‘substituted service’ has been
made by the Respondent- ‘JM Financial Asset Reconstruction Company
Ltd.’- (‘Financial Creditor’) and they sent the notice by Speed Post, which
was never received by the Appellant. Therefore, according to Appellant, the
admission order dated 11th May, 2018 is bad having been passed ex parte
by misleading the Adjudicating Authority.
Learned counsel for the Appellant submitted that there was no provision for
filing an application under Section 7 of the ‘I&B Code’ against the ‘Corporate
Guarantor’ except against the ‘Personal Guarantor’. However, in view of the
definition of ‘Financial Creditor’ as defined in Section 5(7) read with Section
5(8) of the ‘I&B Code’, the submission was not accepted.
Clause (i) of sub-section (8) of Section 5 shows that any liability in respect of
any ‘guarantee’ or ‘indemnity’ for any of the items referred to in sub-clauses
(a) to (h) comes within the meaning of ‘Financial Debt’. The ‘Corporate
Debtor’ having given ‘guarantee’ on behalf of the principal borrower for the
items referred to in sub-clause (a), guarantor company will also come within
29
the meaning of ‘Corporate Debtor’ qua the ‘Financial Creditor’ in whose

favour the guarantee has been given.
Decision:
In so far as the service of notice of admission is concerned, even if it is
accepted that it was not served, Adjudicating Authority said that they are not
inclined to remit the case on such ground as it will be mere formality, as
admittedly debt is payable by the ‘Corporate Debtor’ and the ‘Corporate
Debtor’ defaulted to pay. It is not the case of the Appellant that if the notice
would have been served before admission of the application under Section 7,
the ‘Corporate Debtor’ would have cleared the debt amount. In view of the
aforesaid facts and findings, no relief was granted. In absence of any merit,
the appeal was dismissed
CASE NO. 5
M/s Asset Advisory Services India Pvt. Ltd. (Appellant/ Financial
Creditor)
Vs.
M/s VSS Projects Pvt. Ltd., (Respondents/ Corporate Debtor)
Section 7 read with Sections 65 of the Insolvency and Bankruptcy Code,
2016 – Application for Initiation of Corporate Insolvency Resolution
Process by Financial Creditor
Facts:
The Adjudicating Authority dismissed the case on two grounds i.e. existence
of dispute and malicious intent.
Learned counsel appearing on behalf of the Appellant submitted that the
Adjudicating Authority cannot dismiss an application under Section 7 under I&B
Code on the ground of existence of dispute. It was further submitted that
question of malicious intent to file application cannot be a ground to reject an
application under Section 7, except for the ground as mentioned in Section 65 of
the I&B Code, which has not been pleaded by the Respondent nor held by the
Adjudicating Authority.
30
Learned counsel appearing on behalf of the Respondent submitted that the

application was preferred by the Appellant as a ‘Financial Creditor’ whereas
factual matrix prima facie reveals that the Appellant is a ‘Operational Creditor’
and was under legal obligation to issue notice under Section 8(1) of the I&B
Code, but no such notice was issued. It was also submitted that the Company
has not granted ‘any loan security facility’ and therefore cannot be treated to be a
‘Financial Creditor’.
It is not in dispute that the Appellant had extended a “short loan of Rs.25 Crore to
the Corporate Debtor and in pursuant to which a promissory note was issued by
the Corporate Debtor to repay the loan on or before 30th June, 2016 together
with interest @24% p.a. payable in advance monthly instalments. Aforesaid fact
has also been noticed by the Adjudicating Authority. In view of such admitted
position, NCLAT hold that the Appellant comes within the meaning of ‘Financial
Creditor’, as defined in Section 5(7) of the I&B code, which is also accepted by
the Adjudicating Authority at Para 9 and quoted above.
In that view of the fact that the Appellant is a ‘Financial Creditor’, the question of
issuance of any demand notice under Section 8(1) of the Code, does not arise, it
being not applicable for filing application under Section 7 of the Code.
Decision:
The Learned Justice considered the decision by the Hon’ble Supreme Court
in “Innoventive Industries Ltd. Vs. ICICI Bank and Ors.” – (2018)1 SCC 407,
has observed as follows :-
“28. When it comes to a Financial Creditor triggering the process,
Section 7 becomes relevant. Under the explanation to Section 7(1), a
default is in respect of a financial debt owed to any Financial Creditor
of the Corporate Debtor - it need not be a debt owed to the applicant
Financial Creditor. Under Section 7(2), an application is to be made
under sub-section (1) in such form and manner as is prescribed, which
takes us to the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016. Under Rule 4, the application is made by a
Financial Creditor in Form 1 accompanied by documents and records
required therein. Form 1 is a detailed form in 5 parts, which requires
particulars of the applicant in Part I, particulars of the Corporate
Debtor in Part II, particulars of the proposed interim resolution
professional in part III, particulars of the financial debt in part IV and
documents, records and evidence of default in part V. Under Rule 4(3),
31
the applicant is to dispatch a copy of the application filed with the

Adjudicating Authority by registered post or speed post to the
registered office of the Corporate Debtor. The speed, within which the
Adjudicating Authority is to ascertain the existence of a default from
the records of the information utility or on the basis of evidence
furnished by the Financial Creditor, is important. This it must do within
14 days of the receipt of the application. It is at the stage of Section
7(5), where the Adjudicating Authority is to be satisfied that a default
has occurred, that the Corporate Debtor is entitled to point out that a
default has not occurred in the sense that the “debt”, which may also
include a disputed claim, is not due. A debt may not be due if it is not
payable in law or in fact. The moment the Adjudicating Authority is
satisfied that a default has occurred, the application must be admitted
unless it is incomplete, in which case it may give notice to the
applicant to rectify the defect within 7 days of receipt of a notice from
the Adjudicating Authority. Under sub- section (7), the Adjudicating
Authority shall then communicate the order passed to the Financial
Creditor and Corporate Debtor within 7 days of admission or rejection
of such application, as the case may be.”
In the current case, the Appellant had given loan and a debt due to the
Appellant has not been repaid and there is a default on the part of the
Corporate Debtor, the Adjudicating Authority was wrong in holding that the
application was not maintainable due to existence of dispute (pendency of a
suit) and that no notice under Section 8(1) was issued or that the
application was filed by the Appellant with malicious intent.
Accordingly, the impugned order was set aside and the case was remitted
back to the Adjudicating Authority for admission of the application filed by
the Appellant under Section 7, the Form 1 being complete. However, before
the admission of the application, it will be open to the Respondent to settle
the claim with the Appellant to enable the Appellant to withdraw the
application. The appeal is allowed with aforesaid observations and
directions. No costs.
Case Review: Order dated 8th September 2018, passed by NCLT,
Hyderabad Bench, in M/s. Asset Advisory Services India Pvt. Ltd. Versus
M/s. VSS Projects Pvt. Ltd. (CP(IB) No.96/7/HDB/2017), set aside and remit
back to Adjudicating Authority.
32
CASE NO. 6
Indian Overseas Bank (Appellant)
Vs.
Mr Dinkar T. Venkatsubramaniam (Respondent)
(Resolution Professional for
Amtek Auto Ltd)
for Initiation of Corporate Insolvency Resolution Process by Financial
Creditor
Facts:
The only question arises for consideration in this appeal is whether the
Financial Creditor is liable to transfer any amount to the Corporate Debtor
before appropriating it towards own dues?
Decision:
As per Section 17 (1) (d) of the 'l&B Code', the financial institutions
maintaining the accounts of the 'Corporate Debtor' have to act on the
instructions of the 'Interim Resolution Professional' in relation to such
accounts and furnish all information relating to the 'Corporate Debtor'
available with them to the 'Interim Resolution Professional'. The Appellant is
one of the 'Financial Creditor' of the 'Corporate Debtor'.
The 'Corporate Debtor' is maintaining an account with the Appellant. In view
of initiation of 'Corporate Insolvency Resolution Process', the 'Interim
Resolution Professional' by letter requested the Appellant to transfer the
amount through RTGS to the bank account of the 'Corporate Debtor'
maintained with the Corporation Bank.
It appears that in spite of reminder to the Appellant, amount has not been
transferred. The Appellant opposed the application and stated that the
amount available in the current account of the 'Corporate Debtor' is neither a
security interest nor an asset of the 'Corporate Debtor' and therefore, it is not
liable to release the amount to the 'Corporate Debtor' and the amount
33
available in the said current account is to be appropriated towards the dues

payable to the Appellant. The stand taken by the Appellant having been
rejected by the Adjudicating Authority and the Appellant having been directed
to transfer the amount to the bank account of the 'Corporate Debtor’, present
appeal has been preferred.
Also, Learned counsel for the Appellant has taken similar plea as was taken
before the Adjudicating Authority, but as per Section 7, once moratorium has
been declared it is not open to any person including 'Financial Creditors' and
the appellant bank to recover any amount from the account of the 'Corporate
Debtor, nor it can appropriate any amount towards its own dues.
If the Appellant come within the definition of 'Financial Creditor' as defined in
Section 5(7), it is always open to the Appellant to file its claim before the
'Interim Resolution Professional' for getting the amount back.
No merit was found in this appeal and it is disposed of with the observation
that the Appellant will transfer the amount to the Corporation Bank Account
of the Corporate Debtor.
CASE NO. 7
O.A.A Ananthpadmanaban Chettiar (Appellant)
Vs.
Sri. Mahalakshmi Textiles (Respondents)
Company Appeal (AT)(Insolvency) No.520 of 2018

Section 7 of the Insolvency and Bankruptcy Code, 2016 – Initiation of
Corporate Insolvency Resolution Process by Financial Creditor
Facts:
The only question arises for consideration in this appeal is what comes under
the purview of Financial Creditor under Section 5(7) read with Section 5(8) of
the 'I & B Code'?
34
Decision:
In Section 5(7) read with Section 5(8) of the 'I & B Code 'Financial Creditor"
means any person to whom a financial debt is owed and includes a person to
whom such debt has been legally assigned or transferred to and "financial
debt" means a debt alongwith interest, if any, which is disbursed against the
consideration for the time value of money.
In this proceeding, Learned Counsel appearing on behalf of the Appellant
submitted that the Respondent does not come within the meaning of
‘Financial Creditor’. Also reliance has been placed on ‘Memorandum of
Understanding’ which states that the Second Part (Converter) agreed to pay
a sum of Rs. 45,00,000/- to the ‘Corporate Debtor’ as an Interest Free
Advance in the manner as mentioned. From the plain reading of
‘Memorandum of Understanding’, it is evident that loan was completely
Interest free and, therefore, the Respondent cannot be treated to be a
‘Financial Creditor’.
The ‘Agreement for Conversion’ shows that the said arrangement made to
make the ‘Corporate Debtor’ a ‘Start-up’ w.e.f. 9th August, 2006. The
Respondent (Converter) in its term is entitled to receive and take delivery of
the yarn by making their own arrangements for transport to any of their
destinations. All those provisions show that there is ‘disbursement’ of money
by the Respondent for which the ‘consideration is time value of money’ which
the Respondent is entitled to receiving the yarn as a Converter.
In view of the aforesaid specific provision, it is held that the Respondent
comes within the meaning of ‘Financial Creditor’ and the Adjudicating
Authority has rightly admitted the application under Section 7, the learned
counsel for the Appellant submitted that pursuant to agreement dated 3rd
August, 2006, a letter of exchange for appointment of Arbitrator of
Respondent was issued on 5th February, 2008, but such ground cannot be
taken in defeating an application under Section 7, though it is permissible to
take such ground to get an application, under Section 9 of the ‘I&B Code’
rejected.
The I & B Code having come into force from May, 2016, it was held that the
application under Section 7 is well within the time in terms of Article 137 of
the Limitation Act, 1963 and is not barred by limitation.
So, no merit was found in the appeal and accordingly is dismissed. No Cost
35
CASE NO. 8
Pravinbhai Raninga (Appellant)
Vs.
The Kotak Resources (Respondent 1)
M/s Raninga Ispat Private Limited (Respondent 2)
Section 7 – Application for Initiation of Corporate Insolvency Resolution
Facts:
The only question arises for consideration in this appeal is whether the
material evidences produced by the respondent are sufficient to record
satisfaction of default or not?
Decision:
The Appellant has challenged the order passed by the Adjudicating Authority
(NCLT) Ahmedabad Bench. Learned Senior Counsel for the Appellant
submitted that the Corporate Debtor made payment to Navis Multi trade
Private Limited (referred as ‘Navis’) for purchase of Iron Ore. ‘Navis’ could
not arrange to supply Iron Ore to ‘Corporate Debtor’. Therefore, Navis
returned back the amounts to the ‘Corporate Debtor’. Normally the
Adjudicating Authority is not required to go into the claim or counter claim
made by the parties except to find out whether the record is complete or not
and whether there is a debt and default committed by the Corporate Debtor.
The speed, within which the Adjudicating Authority is to ascertain the
existence of a default from the records of the information utility or on the
basis of evidence furnished by the Financial Creditor, is important.
It is at the stage of Section 7(5), where the Adjudicating Authority is to be
satisfied that a default has occurred, that the Corporate Debtor is entitled to
point out that a default has not occurred in the sense that the debt, which
may also include a disputed claim, is not due. The moment the Adjudicating
Authority is satisfied that a default has occurred, the application must be
36
admitted unless it is incomplete, in which case it may give notice to the

applicant to rectify the defect within 7 days of receipt of a notice from the
Adjudicating Authority. It is open to the Corporate Debtor or its Directors to
point out that the debt is not payable by Corporate Debtor in law and also
and/or in fact.
In view of record of repayment by Corporate Debtor, it was held that the
appellant has made out a case that the default has not occurred in the sense
that the debt, which also includes a disputed claim, is not due and is not
payable by Corporate Debtor to the Respondent in law as also in fact. For
the reasons recorded above, the impugned order passed by the Adjudicating
Authority (NCLT) Ahmedabad Bench was set side. The appeal is allowed
with observations and directions.
Case Review: Order dated 21st February 2017 passed by NCLT,
Ahmedabad Bench, in Pravinbhai Raninga Vs. The Kotak Resources and M/s
Raninga Ispat Private Ltd (C.P.(IB) No.200/7/NCLT/AHM/2017), set aside.
SECTION-9
CASE NO. 9
M/s. Subasri Realty Private Limited (Appellant)
Vs.
Mr. N. Subramanian & Anr. (Respondents)
Section 9 read with Sections 5, 7 & 8 of the Insolvency and Bankruptcy
Code, 2016 – Application for Initiation of Corporate Insolvency
Resolution Process by Operational Creditor & existence of dispute’ and
the claim also is barred by limitation and there is delay and laches;
therefore, the application was not maintainable
Facts:
Application preferred by Mr. N. Subramanian- (‘Operational Creditor’) under
Section 9 of the Insolvency and Bankruptcy Code, 2016 - Grounds of Appeal
37
- ‘existence of dispute’ and the claim also is barred by limitation and there is
delay and laches; therefore, the application was not maintainable.
Admittedly, the Respondent- (‘Operational Creditor’) was an employee of
‘M/s. Aruna Hotels Limited’- (‘Corporate Debtor’). He claimed arrears in
salary from 1998 till his retirement in 2013.
‘Employees Provident Fund Organisation’, Chennai by letter dated 13th April,
2016 intimated the ‘Corporate Debtor’ that the claim of the Respondent-
(‘Operational Creditor’) has already been settled.
The Respondent- stated that the salary is due since 1998 which was not paid
but delay of raising claim of arrears of salary for the period 1998 to 2016 has
not been explained.
Decision:
In the present case Appellate Authority found that there is an ‘existence of
dispute’ about arrears of salary and the Respondent has also failed to explain the
delay in making claim of arrears alleged to be done since 1998 to 2016 (delay of
about 18 years), it was held that the application under Section 9 preferred by the
Respondent was not maintainable.
Adjudicating Authority order appointing ‘Resolution Professional’, declaring
moratorium, freezing of account, and all other order (s) passed by the
Adjudicating Authority pursuant to impugned order and action, if any, taken
by the ‘Interim Resolution Professional’, including the advertisement,
published in the newspaper calling for applications all such orders and
actions are declared illegal and are set aside. The application preferred by
Respondent under Section 9 of the ‘I&B Code’ is dismissed. Learned
Adjudicating Authority will now close the proceeding. The ‘Corporate Debtor’
(company) is released from all the rigour of law and is allowed to function
independently through its Board of Directors. Adjudicating Authority will fix
the fee of ‘Resolution Professional’, and the ‘Corporate Debtor’ will pay the
fees of the ‘Interim Resolution Professional’, for the period he has functioned.
Case Review: Order dated order dated 17 th November, 2017 passed by the
Adjudicating Authority in CP/597/(IB)/CB/2017 set aside.
38
CASE NO. 10
International Road Dynamics South Asia Private Limited (Appellant)
Vs.
Reliance Infrastructure Limited (Respondent)
International Road Dynamics South Asia Private Limited (Appellant)

Vs.
D.A. Toll Road Private Limited (Respondent)
and Company Appeal (AT) (Insolvency) 77 of 2017
Date of Order: 01.08.2017
for Initiation of Corporate Insolvency Resolution Process by
Operational Creditor.
As both the appeals have been preferred by the appellant - International
Road Dynamics South Asia Private Limited, National Company Law
Appellate Tribunal (NCLAT) heard it together and disposed of by
common judgment.
Facts:
The following questions arose in this appeal which have been decided by
NCLAT with reference to Section 9 of the Insolvency and Bankruptcy Code,
2016:
 Whether existence of arbitration clause in agreement can be ground to
reject application under Section 9.
 Whether application can be rejected on the ground that the Corporate
Debtor is solvent.
 If a delay beyond period prescribed under Limitation Act is not
explained whether CIRP process can be initiated.
39
 Whether different claims arising out of different agreements or work

orders, having different amounts and different dates of default, can be
clubbed together for alleged default of debt.
 Whether reconciliation statement between creditor and debtor
company included a note that certain payments are put on hold can be
considered as doubtful and disputed.
Decision:
In case of Reliance Infrastructure Limited (Corporate Debtor)
NCLT held that the Operational Creditor (Appellant) can initiate arbitration
proceedings and the facts of the case do not warrant to invoke Section 9 of
the Insolvency and Bankruptcy Code, 2016 and hence appeal has been
preferred before NCLAT.
The counsel for appellant submitted the following:
— There is no dispute in existence.
— Arbitration clause in agreement or that the Corporate Debtor is
solvent, application cannot be rejected.
The counsel for respondent (Corporate Debtor) submitted the following:
— There are existing disputes and application under Section 9 is not
complete. Claim with regard to three different projects arising out of
three different agreements have been mingled together to show
outstanding dues without explaining the date of default. Accordingly,
some of the claims are time barred.
NCLAT decided the matter in this case as follows:
1. Alternative remedy of arbitration' cannot be a ground to reject an
application under Section 9 and no application under Section 9 can be
rejected on the ground that 'Corporate Debtor' is solvent.
2. Different claim(s) arising out of different agreements or work order,
having different amount and different dates of default, cannot be
clubbed together for alleged default of debt, the cause of action is
being separate. For the said reasons, NCLAT held that the joint
application preferred by appellant under Section 9 is defective, as
distinct from incomplete and hence appeal was not maintainable.
40
3. In absence of any document showing dispute raised prior to issuance

of Section 8 notice, NCLAT did not decide on this issue.
4. NCLAT did not give specific finding on the question as to whether
Limitation Act, 1963 is applicable or not in filing application for
Corporate Insolvency Resolution Process under the I&B Code, but
observe that claimant (Appellant) is required to explain the delay and
laches of more than four years.
In case of D A Toll Road Private Limited (Corporate Debtor)
The NCLT noticed that the 'Corporate Debtor' - DA Toll Pvt. Ltd. was making
part payment from time to time in respect to invoices of the creditors; in the
process of which last payment was made on 26-09-2013. Ever since, no
further payment was made by the 'Corporate Debtor' towards alleged claimed
amount of Rs. 65,22,971 which alleged to be outstanding. NCLT noticed that
cause of action took place on 26-9-2013 and a reconciliation between
creditor and Corporate Debtor was made on 13-8-2015 stating that
outstanding amount due to creditor was Rs. 25.04 lakhs and beneath said
reconciliation statement, a note was entered by an employee of debtor
company stating that bills on hold would come to Rs. 40.19 lakhs and said
bills were not brought forward into books of debtor company to show that
total amount due was Rs. 65.23 lakhs. As a result, NCLT held that there is a
dispute of claim and some part of such claim is hit by limitation, it needs
elaborate enquiry and not permitted under I&B Code, 2016.
NCLAT decided that both the Appeals stand disposed off with the
observations as made above.
CASE NO. 11
Mr. Suresh Padmanabhan & Anr. (Appellant)
Vs.
Tata Steel Ltd. & Ors. (Respondents)
Resolution Process by Operational Creditor
41
Facts:
The Adjudicating Authority (NCLT) Kolkata Bench, Kolkata by impugned
Order dated 22.12.2017, rejected the application on one of the ground that
the matter has not been referred within 180 days from the date of abatement
of reference in terms of sub-clause (b) of Section 4 of the ‘Sick Industrial
Companies (Special Provisions) Repeal Act, 2003’ (‘SICA Repeal Act, 2003’
for short) as substituted by the ‘Eighth Schedule’ of the ‘I&B Code’.
Another application was filed under Section 9 by Mr. Suresh Narayan Singh,
as an Authorised Representative of 284 workers of ‘Tayo Rolls Limited’-
(‘Corporate Debtor’) which was initially rejected but later by the learned
Appellant Authority was remitted back to Adjudicating Authority with
observations and directions to admit the case.
Decision:
On plain reading of the provision aforesaid and decision of Appellate
Tribunal, it is clear that 180 days’ time period provided in sub-clause (b) of
Section 4 of the ‘SICA Repeal Act, 2003’ (by Eighth Schedule) relates to
reference if made to the National Company Law Tribunal (Adjudicating
Authority) to treat application under Section 10 of the ‘I&B Code’ without
payment of fees. It does not mean that the ‘Corporate Applicant’ cannot file
an independent application under Section 10 of the ‘I&B Code’ even after
180 days of abatement of the reference under the ‘SICA Repeal Act, 2003’
on payment of requisite fee. The impugned order therefore cannot be upheld.
The Learned Appellant Authority in view of the decision in “Mr. Suresh
Narayan Singh”, a Corporate Insolvency Resolution Process is required to
be initiated but not under Section 10 of the Code but to follow the decision
and direction given in the order passed in the matter of “Mr. Suresh
Narayan Singh”.
The appeal was allowed with aforesaid observations and directions.
However, in the facts and circumstances of the case, there shall be no order
as to cost.
42
CASE NO. 12
G. M. Lingaraju (Appellant)
Vs.
Gurudatt Sugars Marketing Private Limited & Anr. (Operational
Creditor/Respondent)
Date of Order: 10.09.2018
Resolution Process by Operational Creditor
Facts:
The question arises for consideration in this appeal is on what does
"existence of dispute" mean for the purpose of determination of a petition
under Section 9 of the 'I & B Code'?
Decision:
Learned counsel appearing on behalf of the appellant submitted that there is
an ‘existence of dispute’. Further, it is also informed that the admitted dues
had already been paid to the respondent pursuant to settlement with the
‘Operational Creditor’.
Taking into consideration the fact that there is an ‘existence of dispute’ prior
to issuance of demand notice, it was held, that the petition under Section 9
was not maintainable. The impugned order dated 15th June, 2018 is
accordingly set aside. The Appeal was allowed with observations and
directions.
Case Review: Order dated 15thJune, 2018 passed by NCLT, Bengaluru
Bench, set aside.
43
CASE NO. 13
Era Infra Engineering Ltd. (Appellant/ Corporate Debtor)
Vs.
Prideco Commercial Projects Pvt. Ltd. (Respondent)
Section 9 read with Section 8 of the Insolvency and Bankruptcy Code,
Facts:
The only question which arises for consideration in this appeal is whether an
Operational Creditor can initiate Corporate Insolvency Resolution against the
Corporate Debtor without delivering a demand notice in Form 3 of unpaid
operational debtor or a copy of an invoice in Form 4 demanding payment of
the amount involved in the default to the Corporate Debtor?
In sub-section (1) of Section 8 of the 'I & B Code', though the word "may" has
been used, but in the context of Section 8 and Section 9 reading as a whole,
an 'Operational Creditor,' on occurrence of a default, is required to deliver a
notice of demand of unpaid debt or get copy of the invoice demanding
payment of the defaulted amount to be served on the Corporate Debtor. The
Corporate Debtor shall, within a period of ten days of the receipt of the
demand notice or copy of the invoice mentioned in sub-section (1) of Section
8 bring to the notice of the Operational Creditor that debt under question is in
dispute or acceptable.
After the expiry of the period of ten days from the date of delivery of the
notice or invoice demanding payment under sub-section (1) of Section 8, if
the Operational Creditor does not receive payment from the Corporate
Debtor or notice of the dispute under sub-section (2) of Section 8, the
Operational Creditor may file an application before the Adjudicating Authority
for initiating a Corporate Insolvency Resolution Process.
Decision:
In the present ruling, Hon’ble NCLAT decided that since no notice was
44
issued by the Operational Creditor under Section 8 of the I & B Code,2016,

Demand notice by Operational Creditor stipulated under Rule 5 in Form 3
has not been served. Therefore, in absence of expiry period of tenure of 10
days, there was no question of preferring an application under Section 9 of I
& B Code, 2016.
The NCLAT stated that Adjudicating Authority had failed to notice the
aforesaid facts and mandatory provisions of the laws stated above.
The NCLAT set aside the order passed by the Adjudicating Authority and the
application preferred by the Operational Creditor under Section 9 of the I & B
Code, 2016 was dismissed being incomplete. The NCLAT also held that the
orders, interim arrangements etc. are vacated, moratorium declared earlier is
quashed, appointment of Interim Resolution Professional is quashed and all
actions taken by the IRP are declared illegal.
The Appeal is allowed with the aforesaid observations.
Case Review: Order dated 12th April, 2017 passed by NCLT, Principal
Bench, New Delhi in Insolvency Petition No 26 (ND) of 2017, set aside.
CASE NO. 14
Sudhi Sachdev (Appellant - Promoter)
Vs.
APPL Industries Limited (Respondent -Operational Creditor)
Company Appeal At (Insolvency) No. 623 of 2018
Facts :
An appeal has been preferred by ‘Sudhi Sachdev’, Promoter of ‘M/s Auto
Décor Pvt. Ltd.’ (Corporate Debtor) against order dated 2nd August, 2018
passed by the Adjudicating Authority (National Company Law Tribunal), New
Delhi Bench whereby application under Section 9 of I&B Code preferred by
Respondent – ‘APPL Industries Ltd.’ (Operational Creditor) has been
admitted and order of moratorium has been passed.
Learned counsel appearing on behalf of the Appellant submits that there was
an existence of dispute in view of the fact that the Respondent has instituted
45
cases under Section 138/441 of Negotiable Instruments Act, 1881, which are
pending in the Court of Metropolitan Magistrate, Gurgaon. During the
proceeding, the Corporate Debtor has paid Rs.31,85,525/-, reducing the
outstanding balance to Rs.34,25,251/-. The last payment was made on 18th
March, 2016. Therefore, in view of the pendency of such case, application
under Section 9 of I&B Code is not maintainable.
Question of law before Hon’ble NCLAT:
Whether application filed u/s 9 of the IBC is maintainable during the
pendency of the proceedings under Section 138 of the Negotiable
Instruments Act, 1881?
Decision:
In the present case, it is not in dispute that there is a debt payable to the
Operational Creditor and default on the part of the Corporate Debtor.
The pendency of the case under Section 138/441 of the Negotiable
Instruments Act, 1881, even if accepted as recovery proceeding, it cannot be
held to be a dispute pending before a court of law. Thereby Hon’ble NCLAT
held that the pendency of the case under Section 138/441 of Negotiable
Instruments Act, 1881 actually amounts to admission of debt and not an
existence of dispute. Hon’ble NCLAT found no merit in the appeal and the
appeal was accordingly dismissed.
Existing provision under IBC 2016:
A CIRP of a Corporate Debtor can be initiated by its Operational Creditor
on occurrence of a ‘payment default’ (of operational debt), by filing an
application before the relevant National Company Law Tribunal (NCLT)
under Section 9 of the IBC. Before making the application, the Operational
Creditor must first issue a demand notice or copy of invoice (demanding
payment of operational debt) to the Corporate Debtor under Section 8(1) of
the IBC 2016.
The Corporate Debtor has 10 (ten) days to either pay or bring to the notice
of the Operational Creditor the “existence of a dispute and the record of the
pendency of a suit or arbitration proceeding filed before the receipt of”
such Demand Notice (Section 8 (2) of IBC) (Notice of Dispute).
In case the Corporate Debtor has issued a Notice of Dispute, the CIRP
application of the Operational Creditor is required to be rejected by the
NCLT.
46
It may be noted that the term “dispute” is defined in Section 5(6) of the IBC
as “dispute includes a suit or arbitration proceedings relating to: (a) the
existence of the amount of debt; (b) quality of goods or service; or (c) the
breach of a representation or warranty”
It is pertinent to note that the entire scheme relating to CIRP applications
filed by Operational Creditors and holds that what is important is that the
existence of the dispute and/or the suit or arbitration proceeding must be
“pre-existing” i.e. it must exist before the receipt of the demand notice.
In one of the Landmark decisions passed by Hon’ble Supreme Court, it
was held that when examining/checking an application under Section 9,
Hon’ble Tribunal will have to govern the following questions:
Whether there is an “operational debt” as defined, exceeding Rs.
1,00,000/-?
Whether the documentary evidence furnished with the application shows
that the aforesaid debt is due and payable and has not yet been paid?
Whether there is existence of a dispute between the parties or the record
of the pendency of a suit or arbitration proceeding on the dispute filed
before the receipt of the Demand Notice?
Even if one of the conditions mentioned above is found to be deficient, the
NCLT must reject the application.
CASE NO. 15
Jaya Patel (Appellant- Director of the Corporate Debtor)
Vs.
Gas Jeans Pvt. Ltd. & Ors. (Respondents/ Operational Creditor)
Company Appeal (AT) (Insolvency) No.308 of 2018
Facts:
Application under Section 433-434 of the Companies Act, 1956 of the
Respondent ‘Gas Jeans Pvt. Ltd.’ was pending before Hon’ble Bombay High
Court for winding up of ‘Vama Apparels India Pvt. Ltd – Corporate Debtor’,
47
pertaining to a debt of Rs.21,63,359/-. The case was transferred pursuant to

Rule 5 of the Companies (Transfer of pending proceedings) Rule, 2016
before National Company Law Tribunal, Mumbai Bench (Adjudicating
Authority). The Respondent therein filed Form-5 r/w Rule 6 to treat the same
as application under Section 9 of the Insolvency and Bankruptcy Code, 2016
(for short ‘I&B Code) for initiation of Corporate Insolvency Resolution
Process against ‘Vama Apparels India Pvt. Ltd.’. By impugned order dated
17th May, 2018, the Adjudicating Authority admitted the application, passed
order of moratorium and appointed Interim Resolution Professional. The
Appellant – Director of the Corporate Debtor has challenged the aforesaid
order dated 17th May, 2018 on the ground that notice under Section 8(1) was
issued on the same date when Form-5 under Rule 9 was filed as also there is
an existence of dispute.
Decision:
An application under Section 9 in Form-5 can be filed only after completion of
ten days and if the matter has not been settled. Any application under
Section 9 preferred before the completion of 10 days cannot be entertained
and admitted by the Adjudicating Authority. Application under Section 9,
therefore, being not maintainable on the date the application under Section 9
was filed, the impugned order dated 17th May, 2018 cannot be sustained. The
order passed by the Adjudicating Authority was thus set aside.
Case Review: Order dated 17th May, 2018 passed by NCLT, in Gas Jeans
Pvt. Ltd., set aside.
CASE NO. 16
Anil Nanda (Appellant)
Vs
Hari Kishan Sharma & Ors (Respondents)
Facts:
The Appellant- ‘Mr. Anil Nanda’, Shareholder of ‘M/s. AKME Projects
Limited’- (‘Corporate Debtor’) has challenged the order dated 17th April,
48
2018 passed by the Adjudicating Authority (National Company Law Tribunal),

Court-II, New Delhi, whereby and where under, the application preferred by
the Respondent- ‘Mr. Hari Kishan Sharma’- (‘Operational Creditor’) under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (‘I&B Code’ for
short) has been admitted, order of ‘Moratorium’ has been passed and
‘Interim Resolution Professional’ has been appointed.
Learned counsel appearing on behalf of the Appellant submitted that there is
an existence of dispute. Apart from that disagreed with the interest claimed
from the due date. According to the Appellant, there was no admission made
by the ‘Corporate Debtor’ with regards to the differential amount of Rs.
6,11,937/- and the interest as sought for.
Also plea was taken by the Corporate Debtor that the notice issued u/s 8
does not bear signature or sign on receipt by any person or employee at the
registered office of the Respondent Company.
That the full and final settlement is fabricated and false and there is bonafide
dispute over the final settlement between the parties.
Decision:
There is nothing on record to suggest that there is a pre-existence (bonafide)
dispute raised by the ‘Corporate Debtor’. That even part of the dues, once
becomes payable comes within the meaning of ‘debt’ and if not paid it will
amount to default. The ‘Corporate Debtor’ has not disputed the existence of
debt’, nor there is anything on record of the pendency of a suit or arbitration
proceedings, or any pre-existing dispute raised prior to issuance of demand
notice under Section 8(1) of the Code. Therefore, no relief was granted on
the plea of so-called existence of dispute. In absence of any merit, the
appeal was dismissed
CASE NO. 17
Sudhir Sales & Services Ltd. (Appellant/ Operational Creditor)
Vs.
D-Art Furniture Systems Pvt. Ltd (Respondent)
Section 9 read with Section 8 of the Insolvency and Bankruptcy Code,
49

Facts:
The Adjudicating Authority (National Company Law Tribunal), Principal
Bench, New Delhi, by impugned order dated 24th April, 2018 had rejected
the application on the ground of existence of dispute giving rise to the
present appeal.
The only question arises for consideration in this appeal is an "existence of
dispute."
The grievance of the Appellant- (‘Operational Creditor’) is that despite
successful completion of the contract by ‘Operational Creditor’ to the
satisfaction of the Respondent- (‘Corporate Debtor’), the outstanding amount
was not paid.
It is stated that Respondent- (‘Corporate Debtor’) vide communication dated
13th November, 2013 while acknowledging the amount payable, assured the
applicant that the payment shall be made very soon. The Appellant-
(‘Operational Creditor’) in his last visit in January 2016, made it clear to the
Respondent- (‘Corporate Debtor’) that in case payment is not received by
31st March 2016, the Appellant (‘Operational Creditor’) will proceed against
the Respondent- (‘Corporate Debtor’) as per law.
Further case of the Appellant- (‘Operational Creditor’) is that while nothing
was heard from the Respondent- (‘Corporate Debtor’), the Appellant-
(‘Operational Creditor’) was constrained to send statutory notice dated 13th
April, 2016 under Sections 433 (e) and 434 (1) (a) of the Companies Act,
1956. Thereafter, petition under Sections 433 and 434 of the Companies Act,
1956 for winding-up of the Respondent Company was filed before the
Hon’ble High Court of Delhi.
And for the first time in a letter dated 9th September, 2017, the Respondent-
(‘Corporate Debtor’) raised certain disputes relating to DG Sets and separate
invoices for diesel which was never raised earlier. No such allegation was
made in the letter dated 13th November, 2013 on the Appellant-
(‘Operational Creditor’) about the quality of DG Sets and of raising separate
invoices for diesel.
From the letter sent by the Corporate Debtor on 13th Nov 2013, it was clear
that the Respondent- (‘Corporate Debtor’) had neither disputed the claim
50
made by the Appellant- (‘Operational Creditor’) nor raised any question

relating to quality of service or material.
The only plea taken therein is that the outstanding amount will be released
as soon as the Respondent- (‘Corporate Debtor’) get the payment from OC
on this account which is subject to approval of reconciliation by a third party
i.e. ‘M/s. ESAJV D-Art India Pvt. Ltd.’ (not the ‘Corporate Debtor’). The
reference of arbitration has been made in the impugned order is between
other parties and the ‘Operational Creditor’ is not a party to it.
Pendency of any arbitral proceeding is not between the ‘Operational Creditor’
and the ‘Corporate Debtor’ but between some other parties which cannot be
taken into consideration that there is pre-existing dispute between the
Appellant- (‘Operational Creditor’) and the Respondent- (‘Corporate Debtor’).
In the present case, the Adjudicating Authority has decided the issue of pre-
existence of dispute on the basis of letter dated 13th November, 2013 and
the reply given by the ‘Corporate Debtor’ under Section 8(2) given by the
Respondent- (‘Corporate Debtor’) on 9th September, 2017.
Decision :
In “Innoventive Industries Ltd.(Supra)”, the Hon’ble Supreme Court held that
pre-existing dispute is the dispute raised before demand notice or invoices
was received by the ‘Corporate Debtor’. Any subsequent dispute raised while
replying to the demand notice under Section 8(1) cannot be taken into
consideration to hold that there is a pre-existing dispute. Therefore, the reply
given by the ‘Corporate Debtor’ on 9th September, 2017 is to be ignored for
finding out whether there is pre-existence of dispute or not.
In “Mobilox Innovations Pvt.Ltd.(Supra)”, the Hon’ble Supreme Court held
that a dispute truly exists in fact and is not spurious, hypothetical or illusory.
Here, no such dispute was pre-existing apart from that a hypothetical or
illusory dispute which has been raised by the ‘Corporate Debtor’ while
replying to the demand notice served under Section 8(1) by the ‘Operational
Creditor’.
In view of the aforesaid facts, NCLAT held that there is no pre-existing
dispute in the present case and the Adjudicating Authority wrongly relied on
the letter dated 13th November, 2013 and letter dated 9th September, 2017
to reject the claim of the Appellant.
NCLAT accordingly set aside the impugned order dated 24th April, 2018
51
passed by the Adjudicating Authority in Company Petition No. (IB)- 94 (PB)/

2018 and remitted the case to the Adjudicating Authority for admitting the
application under Section 9 filed by the Appellant- (‘Operational Creditor’), in
absence of any defect. The Respondent- (‘Corporate Debtor’) cannot raise
any objection before the Adjudicating Authority for admission of the
application under Section 9, having been heard by this Appellate Tribunal
and the issue having been decided. However, the order passed in this appeal
will not come in the way of the Respondent- ‘Corporate Debtor’ to settle the
claim with the Appellant- (‘Operational Creditor’) before admission of the
application under Section 9 of the ‘I&B Code’ in which case, the Appellant-
‘Operational Creditor’ may withdraw the application.
The appeal is allowed with aforesaid observations and directions.
SECTION-12A
CASE NO. 18
Praveen Arjun Patel (Appellant)
Vs
JK Lakshmi Cement Ltd. (Respondents/ Corporate Debtor)
Company Appeal (AT) (Insolvency) 264 OF 2018
Section 9 read with Section 12 A of the Insolvency and Bankruptcy
Code, 2016 – Application Withdrawal
Facts:
Application filed under Section 9 was allowed to be withdrawn vide order
dated 12/06/2018 – Intervening Application (IA) made on Grounds – 12 A of
the Code not satisfied and rights adversely affected.
Being aggrieved by the said order dated 12.6.2018 the applicants had filed
respective IAs thereby stating that on 6.6.2018 the Hon’ble President had
promulgated the Insolvency & Bankruptcy Code (Amendment) Ordinance
2018 by which certain provisions of IBC have been amended and as per that
amendment, Section 12 A of the IBC provides that the Adjudicating Authority
may allow the withdrawal of application admitted under Section 7 or Section
9 or Section 10, on an application made by the applicant with the approval of
52
ninety percent voting share of the committee of creditors, in such manner as

may be prescribed.
In view of amendment in Section 12A of the IBC, the applicants have stated
that the order dated 12.6.2018 passed by this Appellate Tribunal permitting
unilateral withdrawal of Section 9 application by the Operational Creditor
without the approval of the 90% of the voting share in the Committee of
Creditors of the Corporate Debtor is contrary to the said mandate and
deserves to be recalled/modified.
Decision:
Having heard the arguments of both the parties it was said that Section 12 A
of IBC would be applicable when admission for Corporate Insolvency
Resolution Process application has been admitted by the Adjudicating
Authority and there would be no challenge to the admission of the
application. Subsequently, the Adjudicating Authority allowed the withdrawal
of application in terms of Section 12A of the Code and obviously the admitted
application for withdrawal will have to meet the criteria as specified in the
said Section. However, in this case admission of the application filed under
Section 9 of the IBC Code was challenged before the Appellate Tribunal
which has set aside the admission. Consequently, there is no valid admission
of the application under IBC Code. In these circumstances the position for
withdrawal of application will be in terms of Rule 8 of The Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules 2016. Therefore,
there was no impact of Section 12 A on this decision in this case.
In terms of Section 9 of the Code any Operational Creditor can initiate
insolvency resolution proceedings. Therefore, the applicants herein have
their rights protected by IBC that they are entitled to initiate insolvency
resolution proceedings and withdrawal of this application by a third party
does not impact their rights under the IBC.
No merit was found in the applications and hence accordingly dismissed.
Case Review: The order dated 12.6.2018 passed by this Appellate Tribunal
permitting withdrawal of Section 9 application maintained.
53
SECTION-30 & 31
CASE NO. 19
Binani Industries Limited (Appellant/ Corporate Debtor)
Vs
Bank of Baroda & Anr. (Respondents)
Facts:
Other cases which were merged and simultaneously heard were:
1) Rajputana Properties Pvt. Ltd Vs Binani Industries Limited & Ors-
CA. No 123/2018
2) Rajputana Properties Pvt. Ltd Vs Ultratech Cement Ltd. & Ors-
CA. No 188/2018
3) Binani Industries Limited Vs Binani Cements Limited & Anr-
CA. No 216/2018
4) Mr. Vijay Kumar Iyer, Resolution Professional Vs Mr. Braj Bhusandas
Binani & Ors- CA. No 234/2018
As all these appeals arise out of the order(s) passed by the Adjudicating
Authority (National Company Law Tribunal), Kolkata Bench, they were heard
together and are disposed of by this common judgment.
The ‘Binani Cement Limited’, a flagship subsidiary of the Appellant- ‘Binani
Industries Limited’ representing the ‘Braj Binani Group’, has preferred
Company Appeal against order of Adjudicating Authority which has referred it
back to the ‘Resolution Professional’ to consider in accordance with the
Rules and Regulations of the ‘I&B Code’. The grievance of the Appellant is
that the Adjudicating Authority should have passed positive direction and
should have allowed the Appellant- ‘Binani Industries Limited’ to interact with
and/or meet the bidders/ ‘Resolution Applicants’, ‘Financial Creditors’ and
other stakeholders of the ‘Corporate Debtor’ from time to time.
Binani Industries Limited’ has also preferred another Company Appeal
whereby the Adjudicating Authority refused to accept the proposal of ‘Binani
54
Industries Limited’ for repayment of the dues of the ‘Financial Creditors’ and
close the ‘Corporate Insolvency Resolution Process’, in absence of any
jurisdiction.
Rajputana Properties Private Limited’ has preferred Company Appeal against
the order passed by the Adjudicating Authority, whereby liberty was granted
to the ‘Committee of Creditors’ to consider the settlement plan proposed by
the ‘Binani Industries Limited’.
Another Company Appeal has been preferred by ‘Rajputana Properties
Private Limited’ against the order filed by the ‘Resolution Applicant’ for
approval of the plan of the ‘Rajputana Properties Private Limited’ has not
been accepted for the reasons mentioned in the said order.
Mr. Vijay Kumar Iyer, who is the ‘Resolution Professional’ has preferred
Company Appeal against the order dated 2nd May, 2018 in so far it relates to
adverse observations made by the Adjudicating Authority against the said
‘Resolution Professional’.
After the aforesaid background, the facts are as below:-
Mr. Vijay Kumar Iyer- ‘Resolution Professional’ filed an application under
Sections 30 and 31 of the IBC 2016 read with Regulation 39 of IBBI
(Insolvency Resolution Process for Corporate Persons) Regulations, 2016’
for approval of the ‘Resolution Plan’ for ‘Binani Cement Limited’. It was
informed that the application is within time and the ‘Committee of Creditors’
by majority vote approved the ‘Resolution Plan’ submitted by ‘Rajputana
Properties Private Limited’. As noticed, number of objections were filed
including, by ‘Binani Industries Limited’, a group company of ‘Binani Cement
Limited’- (‘Corporate Debtor’), ‘Ultratech Cement Limited’ and others. The
Adjudicating Authority noticed that the ‘Committee of Creditors’ voted in the
meeting held on 14th March, 2018 with 99.43% and approved the plan
submitted by the ‘Rajputana Properties Private Limited’. However, 10.53% of
the ‘Committee of Creditors’ who were forced to vote in favour of the
‘Resolution Plan’ recorded a protest note(s) alleging that they had not been
dealt equitably when compared with other ‘Financial Creditors’ who were
corporate guarantee beneficiaries of the ‘Corporate Debtor’. The Adjudicating
Authority also noticed that the ‘Resolution Plan’ submitted by the ‘Ultratech
Cement Limited’, including revised offer submitted on 8th March, 2018 was
not properly considered by the ‘Committee of Creditors’ for wrong reasons.
55
The Adjudicating Authority held that the ‘Resolution Plan’ submitted by

‘Rajputana Properties Private Limited’ was discriminatory and contrary to the
scheme of the ‘I&B Code’. Thereby, while rejecting the ‘Resolution Plan’
submitted by ‘Rajputana Properties Private Limited’ as discriminatory,
directed the ‘Committee of Creditors’ to consider the other ‘Resolution Plans’,
including the ‘Resolution Plans’ submitted by ‘Ultratech Cement Limited’.
The Appellate Tribunal has observed that objective of the ‘I&B Code’ is first
Resolution, then maximisation of value of assets of the ‘Corporate Debtor’
and lastly to promote entrepreneurship, availability of credit and balance the
interests. It also defined the Role of Financial Creditor as a member of
Committee of Creditors and stated that the liabilities of all creditors who are
not part of ‘Committee of Creditors’ must also be met in the resolution.
Further while elaborating on Resolution Plan, the bench said that ‘It is not a
sale’ nor It is an auction or a recovery, it should also not be confused with
liquidation. Further it observed a discrimination being made between two
same set of creditors i.e. Financial Creditors.
However, the ‘I&B Code’ or the Regulations framed by the Insolvency and
Bankruptcy Board of India do not prescribe differential treatment between the
similarly situated ‘Operational Creditors’ or the ‘Financial Creditors’ on one or
other grounds.
Plea taken by learned Senior Counsel for ‘Rajputana Properties Private
Limited’ was that the intent of the legislature is to bind ‘minority Financial
Creditors’ with the decision of the ‘majority Financial Creditors’ is not based
on basic principle of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate persons) Regulations, 2016.
At this stage, it is desirable to notice that after the decision of this Appellate
Tribunal in “Central Bank of India (Supra)”, the Insolvency and Bankruptcy
Board of India also amended/repealed the Regulation 38 aforesaid having
found it discriminatory.
Decision:
In the result, the Company Appeal (AT) (Insolvency) Nos. 123, whereby
liberty was granted to the ‘Committed of Creditors’ to consider the settlement
plan proposed by ‘Binani Industries Ltd’ & 188 of 2018 preferred by
‘Rajputana Properties Private Limited’ for approval of Resolution Plan and
Company Appeal (AT) (Insolvency) Nos. 82 remitting the matter to the
Resolution Professional to consider their proposal for settlement which has
56
become infructuous & 216 of 2018 preferred by ‘Binani Industries Limited’

towards settlement of dues are dismissed. The Company Appeal (AT)
(Insolvency) No. 234 of 2018 preferred by Mr. Vijay Kumar Iyer, ‘Resolution
Professional’ is allowed. The observations made against Mr. Vijay Kumar
Iyer were set aside. Records of Company Petition (IB) No. 359/KB/2017 is
remitted to the Adjudicating Authority for constitution of monitoring committee
and implementation of revised approved plan submitted by ‘Ultratech Cement
Limited’ in accordance with law.
SECTION-34
CASE NO. 20
Mr. Devendra Padamchand Jain, Resolution Professional (Appellant)
Vs.
State Bank of India, State Bank of Hyderabad, Indian Overseas Bank,
Punjab National Bank, Bank of India, Bank of Baroda, IFCI Limited, IFCI
Factors Limited (Financial Creditors), VNR Infrastructure Ltd (Corporate
Debtor), Insolvency and Bankruptcy Board of India (Board) …….
(Respondents)
[arising out of Order dated 24th August, 2017 by NCLT, Hyderabad
Bench, Hyderabad in C.A. No. 142 of 2017 in C.P. (IB) No.
12/10/HDB/2017]
The Adjudicating Authority has the right to appoint a new liquidator
under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to
as the ‘I & B Code’)
Facts:
The Corporate Insolvency Resolution Process has been initiated at the
instant of the corporate applicant who filed the application under Section 10
and proposed the name of interim resolution professional. After interim
resolution professional, the resolution professional is appointed in
accordance with law.
57
The Adjudicating Authority (National Company Law Tribunal) Hyderabad

Bench, Hyderabad passed order under Section 33 (1) and 34(1) of I & B
Code vide its order dated 24th August, 2017 removed the Resolution
Professional (Appellant) and appointed a liquidator.
Appellant contended against the impugned order passed by the Adjudicating
Authority by which the appellant was replaced with another person as the
liquidator was beyond his jurisdiction. The appellant submitted that as per
sub-section (1) of Section 34 the Adjudicating Authority while passing the
order for liquidation of the Corporate Debtor under Section 33 of the Code is
required to appoint the resolution professional as the liquidator for the
purpose of resolution process under Chapter II. The Adjudicating Authority
can only replace the resolution processional, for the reasons mentioned in
sub-section (4) of Section 34. It was submitted that resolution plan was not
rejected for failure to meet any requirement and in fact the draft resolution
was not approved. Therefore, the stage of sub-section (2) of Section 30
never reached.
It was also stated that the Committee of Creditors had not recommended for
replacement of the resolution professional or to appoint a new liquidator.
The creditor stated that the Adjudicating Authority was not satisfied with the
resolution professional appointed earlier as he failed to assist the
The relevant provisions for removal of resolution professional and
appointment of liquidator were noticed and discussed below.
In terms of the provisions of Section 22 of I & B Code, the Committee of
Creditors by a majority vote of not less than 75% may allow and resolve to
appoint the ‘Interim Resolution Professional’ as the ‘Resolution Professional’
or to replace the ‘Interim Resolution Professional’ by another ‘Resolution
Professional’. The Resolution Professional required to conduct Corporate
Insolvency Resolution Process in terms of Section 23 read with Section 24
etc, however, Resolution Professional can be replaced by the Committee of
Creditors if it is of the opinion to replace it in view of power vested under
Section 27.
According to Section 27 of IBC, the Committee of Creditors by a majority
vote of not less than 75% may allow and resolve to appoint the ‘interim
58
resolution professional’ as the ‘resolution professional’ or to replace the

‘interim resolution professional’ by another ‘resolution professional’.
As per Section 30, the resolution professional is required to examine each
resolution plan received by him and confirm accordingly. In case of non-
approval of resolution plan and before expiry of the insolvency resolution
period, liquidation proceedings are to be initiated under Section 33.
As per sub-section (1) of Section 34 on passing of the order for liquidation
under Section 33, the Resolution Professional shall act as liquidator, unless
replaced by the Adjudicating Authority for the grounds mentioned in sub
section (4) of Section 34.
From the aforesaid provisions, the following facts emerge:
a) Interim Resolution Professional can be appointed as a Resolution
professional; [Refer sub-section (2) of Section 22]
b) The Committee of Creditors can replace the Interim Resolution
Professional by another Resolution Professional; [Refer sub-section
(2) of Section 22]
c) The Committee of Creditors can replace Resolution Professional, if it
is of opinion that the resolution professional appointed under Section
22 is required to be replaced, it may replace him in the manner as
prescribed under Section 27; [ Refer : Section 27]
d) The Adjudicating Authority is also empowered to replace resolution
professional in case the resolution plan submitted under Section 13 is
rejected for failure to meet the requirements mentioned sub-section (2)
of Section 30. [Refer : sub-section (4) of Section 34]
e) The Resolution Professional appointed under Section 33 shall act as
liquidator for the purpose of liquidation unless replaced by the
Adjudicating Authority under sub-section (4) of Section 34. [Refer :
sub-section (1) of Section 34]
The Financial Creditors herein having 100% voting right has accepted that
the Resolution Professional (appellant herein) was not assisting the
Adjudicating Authority to its satisfaction during hearing. The Resolution
Professional was required to examine the Resolution Plan but had not stated
that the plan submitted by him provides for all the requirements as provided
under sub-section (2) of Section 30 of the Code. The Committee of Creditors
59
is also not satisfied with the Resolution Professional and taken plea that they
are happy with the Liquidator who has been appointed and performing the
duty since September, 2017 in accordance with law.
Decision:
In view of the aforesaid provisions, NCLAT held that the Adjudicating
Authority has jurisdiction to remove the resolution professional if it is not
satisfied with its functioning of the resolution professional, which amounts to
non-compliance of sub-section (2) of Section 30 of the I & B Code. In
absence of any merit this appeal is dismissed.
SECTION-60
CASE NO. 21
Amandeep Singh Bhatia & Ors (Appellant/ Operational Creditor)
Vs.
Vitol S.A. & Anr (Respondents/ Corporate Debtor)
Company Appeal (AT)(Insolvency) No.502 of 2018
Section 60(5)(c) read with Section 67 of the Insolvency and Bankruptcy
Code, 2016 – Adjudicating Authority for Corporate Persons
Facts:
The appellants are the Ex-Directors of Corporate Debtor, which is under
liquidation. The appellants are also personal guarantors on behalf of the
Corporate Debtor.
In the liquidation proceedings, one of the Operational Creditors filed
application with prayer to seek directions on the 2nd respondent including
appellants to deposit their passports with the Registry of the Tribunal during
the pendency of the said application. In similar case, the Hon’ble Supreme
Court has passed order of prohibition that the Managing Director and
Directors JIL and JAL shall not be permitted to leave the country without prior
permission and also Adjudicating Authority (NCLT) Mumbai bench has
passed order of prohibition that to protect the interest of all the stakeholders
and also to facilitate the proceedings those persons should not be allowed to
leave the country without prior permission.
60
Decision:
It cannot be stated that the Adjudicating Authority is not empowered to direct
the Ex- Directors not to leave the country without prior permission of
Further any order passed under the law, cannot be held to be violative of
Article 21 of Constitution of India.
Further, the Adjudicating Authority has not stayed the movement of the
appellants, but has only observed that if they intend to leave the country,
they should take the permission of the Adjudicating Authority. Therefore, the
order cannot be held to be an order of permanent injunction on the
appellants.
No merit found and accordingly the appeal is dismissed.
APPLICABILITY OF LIMITATION ACT UNDER IBC

CASE NO. 22
Neelkanth Township and Construction Private Limited (Appellant)
Vs.
Urban Infrastructure Trustee Limited (Respondents)
Facts:
One of the questions which arises for consideration in this appeal is whether
provision of the Limitation Act, 1963 is applicable under IBC?
The Hon’ble Court was faced with the issue of whether the Limitation Act
would apply to the applications filed by financial and Operational Creditors
for initiation of CIRP under IBC.
The judgment in Neelkanth Township was pursuant to an appeal filed by a
Corporate Debtor, i.e., Neelkanth Township & Construction Pvt. Ltd., against
the order of the Hon'ble National Company Law Tribunal (NCLT) allowing
commencement of insolvency proceedings on the action of a Financial
Creditor, i.e. Urban Infrastructure Trustees Ltd. (Urban Infrastructure).
61
Urban Infrastructure had subscribed to optionally convertible debentures

(OCDs) issued by Neelkanth. These OCDs matured in the years 2011, 2012
and 2013. However, the application for insolvency of Neelkanth was made in
2017, i.e. after expiry of a period of 3 (three) years from the date of maturity
of the said OCDs. The NCLT, however, proceeded to admit the insolvency
application in April 2017, since the Corporate Debtor defaulted in repaying
the debt.
Arguments:
The CD Counsel argued that because three debenture certificates were due
for redemption for the years 2011, 2012 & 2013 and since application is filed
in the year 2017, this claim is ex facia time barred, and hence Tribunal ought
not to entertain or proceed with the same.
A procedural provision cannot override or affect the substantive obligation of
the Adjudicating Authority to deal with applications under Section 7 merely
on the ground that Board has not stipulated or framed any Regulations with
regard to Section 7(3)(a) of the Code.
Board has framed IBBI (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016’ where ‘Form-C’ attached to the Regulations
relates to proof of claim and under serial no.10, Financial Creditor is
supposed to submit the list of documents in proof of claims. Therefore, the
stand that there are no Regulations made by the Board in case of Section
7(3) (a) of the Code cannot be accepted.
The NCLAT reasoned that the IBC was not an Act for recovery of money
claims, but an Act relating to the initiation of Corporate Insolvency Resolution
Process. Resultantly, if a debt were to arise, which included interest and
there was a default on repayment of such debt having a continuous course of
action, the argument that the claim of the financial debtor stood barred by
limitation could not be accepted.
Further, the NCLAT stated that the Corporate Debtor has the liability and
obligation in respect of amount which is due to the debenture holder from the
Corporate Debtor, including Financial Debt i.e, the amount due on maturity of
debentures.
With the debenture payable, as on the maturity date with interest, it was
disbursed against consideration for the time value of the money. Thus, it
62
cannot be said that debentures on maturity do not come under the purview of
Section 5(8)(c) of the Code.
Decision:
The Appellate Authority held that the learned Adjudicating Authority having
admitted the application under Section 7 of the Code, the application being
complete, no interference is called for.
In absence of any merit the appeal is dimissed.
In the recent pronouncements the Hon’ble Supreme Court held that
Limitation Act is applicable to applications filed by financial and Operational
Creditors under Section 7 and 9 of the Code, from the inception of the Code.
The right to sue accrues when a default occurs and if the default occurs over
three years prior to the date of filing of the application, the application would
be barred by limitation, except in those cases where delay can be condoned
by showing sufficient cause under Section 5 of the Limitation Act.
Now by the IBC(Second Amd) Act, 2018, it provides that the provisions of
the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to the
proceedings or appeals before the Adjudicating Authority, the National
Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt
Recovery Appellate Tribunal, as the case may be.
63
Chapter 4
Orders passed by National Company
Law Tribunal (NCLT)
SECTION-7
CASE NO. 1
Bench National Company Law Tribunal (NCLT), Ahmedabad
Bench, Ahmedabad
Financial Small Industries Development Bank Of India
Creditor
Corporate Alps Leisure Holidays Pvt. Ltd.
Debtor
Amount of Rs. 7.58 cr
Default
Date of Order 13-11-2018
Relevant Section Section 7 of the Insolvency and Bankruptcy Code,
2016
Facts of the The Financial Creditor has granted financial
Case assistance of term loan of Rs. 7,80,00,000/- on 07-03-
2014 and was disbursed in two instalments before end
of March 2014. Date of NPA was 08-02-2017 (as per
RBI Norms) and default date as per IBC 2016 being
10-11-2016, when the instalment of the loan
repayment fell due. Letter for re-schedulement was
given which was rejected. The case came for first
hearing on 22-11-2017 and till final admission, the
case was adjourned 14 times for various reasons.
Reasons were like documents presented were in
vernacular language which needed to be translated in
English, or some times for one side not being present
or sometimes both sides were not present, sometime
Orders passed by National Company Law Tribunal (NCLT)
was spent, to work for settlement between the parties

since it was reported.
Decision of the The bench after having satisfied about the default and
Tribunal after having been given more than enough opportunity
of being heard, admitted the case.
CASE NO. 2
Bench National Company Law Tribunal (NCLT), Chennai
Bench,Chennai
Financial Asset Reconstruction Company (India) Limited
Creditor
Corporate M/S Sri Srivathsa Paper Mills Private Limited
Debtor
Amount of Rs 142.89 cr
Default
Relevant Section 7 of the Insolvency and Bankruptcy Code,
Section 2016 read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudication Authority)
Rules, 2016– Initiation of Corporate Insolvency
Resolution Process by Financial Creditor.
Facts of the Corporate Debtor availed terms loans and other
Case facilities from Indian Overseas Bank, by execution of
various Documents. The Debt was assigned to Asset
Reconstruction Company (India) Ltd. by execution of
instrument of assignment on 10.02.2015. The
Corporate Debtor failed to repay Rs 142,89,19,352
which was outstanding on 6-4-2018 and also failed to
make a fixed deposit of Rs 2.5 crores as per the
agreed terms.
In spite of plenty of opportunities provided, the
Corporate Debtor could not present reasonable terms
for OTS. The Counsel for Corporate Debtor has fairly
admitted to the liability that was projected and did not
resist the application of the Financial Creditor.
65
Decision of the The Adjudicating Authority was satisfied that a default

Tribunal has been committed by the Corporate Debtor in
repayment of the loan amount. The petition was
therefore admitted and Interim Resolution Professional
was appointed.
CASE NO. 3
Bench National Company Law Tribunal (NCLT), Division
Bench, Chennai
Financial Stanbic Bank Ghana Limited
Creditor
Guarantor Rajkumar Impex Private Limited
Amount of US $10,849,284.88
Default
2016– Initiation of Corporate Insolvency Resolution
Facts of the The only question arises for consideration in this
Case appeal is what comes under the purview of Financial
Creditor under Section 5(7) read with Section 5(8) of
the 'I & B Code'?
In Section 5(7) read with Section 5(8) of the 'I & B
Code’ “Financial Creditor" means any person to whom
a financial debt is owed and includes a person to
whom such debt has been legally assigned or
transferred to and "financial debt" means a debt along
with interest, if any, which is disbursed against the
consideration for the time value of money.
In this proceeding, Learned Counsel for the petitioner
submitted that M/s. Rajkumar Impex Ghana Limited
(Principal Borrower) is the subsidiary of Respondent
and borrowed money to the tune of US
$10,849,284.88 from the Financial Creditor and has
66
failed to repay the said amount and hence, the

Financial Creditor initiated proceedings against the
respondent. After giving sufficient opportunity to
respondent, a decree was passed in favour of
Financial Creditor for sum of US $12,878,922.47
comprising the principal amount and the interest that
would be payable by the respondent who is guarantor
herein.
The Learned Counsel for the respondent filed a
counter and argued that the petition under IB Code,
2016 is not maintainable on the grounds that the
Financial Creditor not being an Indian Company
cannot invoke the provisions of IB Code. He also
submitted that the principal borrower is an
independent entity and not a subsidiary of the
Respondent Company and hence, the Financial
Creditor cannot enforce the claim against the
Guarantor (Respondent).
The Learned Counsel for the Financial Creditor
submitted that dispute is irrelevant for the purpose of
an application under Section 7 of the IB Code, 2016
consequently dispute with the principal borrower is
also irrelevant. The respondent is not only liable as
guarantor but also as a principal obligator. The order
of Hon’ble High Court of Justice, London was made on
merits and IB Code, 2016 does not prohibit filing a
petition by foreign creditor.
Decision of the Heard both the parties and perused the pleadings.
Tribunal Since, the Respondent failed to defend its case before
Hon’ble High Court of Justice, London, now it cannot
contend that the said order is not on the merits. In
view of all the submissions made by the parties and
the observations made, the Tribunal concludes that
the Financial Creditor has made out a prima facie case
under IB Code, 2016. This Tribunal has no jurisdiction
to enforce the foreign decree; however there is no bar
67
in it taking cognizance of the foreign decree. The

objections raised by Counsel for the Respondent are
not valid ground for rejection of the instant petition.
Therefore, the petition stands admitted. The Tribunal
thus orders for the commencement of the Corporate
SECTION-9
CASE NO. 4
Bench National Company Law Tribunal (NCLT), Jaipur
Bench, Jaipur
Operational Manohar Karamchandani
Creditor
Corporate Balajidham Buildestates Pvt. Ltd.
Debtor
Amount of
Rs.10.08 lacs
Default
2016
Facts of the Operational Creditor (OC) was acting as a selling
Case agent and an agreement has been entered to that
effect on 01-06-2013. Operational Creditor was
entitled to a sum of Rs. 6,49,575/- for the invoices
raised during the period 01-10-2015 to 30-06-2016 as
also interest @ 12% and further an amount of Rs.
3,00,000/- towards refund of security deposit taken at
the time of agreement by the Corporate Debtor. Since
the Corporate Debtor had not responded to reminders,
a notice u/s. 8 of IBC 2016 was issued. To this notice,
the Corporate Debtor did not respond and no sum was
paid against the said notice. In view of the non-
payment or lack of any response on the part of the
Corporate Debtor it is averred, this petition had been
preferred before this Tribunal seeking for initiation of
68
Corporate Insolvency Resolution Process (CIRP)

against the Corporate Debtor.
The matter was originally filed before the NCLT New
Delhi, Bench of this Tribunal, however, consequent to
the constitution of Jaipur Bench, the above company
Petition transferred from NCLT, New Delhi to NCLT,
Jaipur Bench and pursuant to the transfer, the case
was listed before this Jaipur Bench of the Tribunal on
26-07-2018.
Decision of the Taking into consideration all the aspects and the
Tribunal records as well as the statements made by the
Corporate Debtor based on affidavit that it is unable to
satisfy the claim as made by the Operational Creditor,
this petition was admitted as envisaged by Section 9
of the IBC,2016 as against the Corporate Debtor.
Moratorium in terms of Section 14 of IBC, 2016 will
commence from the date of this order admitting the
petition and the proposed IRP proposed by the
Operational Creditor is appointed as an IRP to
commence and carry forward the CIRP against the
Corporate Debtor.
CASE NO. 5
Bench National Company Law Tribunal (NCLT), Ahmedabad
Bench, Ahmedabad
Operational Venus Furniture
Creditor
Corporate AUM Structbuild Pvt. Ltd.
Debtor
Amount of
Rs. 79.20 lacs (inclusive of interest)
Default
2016
Facts of the Against purchase orders issued by the Corporate
69
Case Debtor for supply of Godrej Lab Furniture and office

furniture on 21-12-2016 and 26-12-2016 against which
tax invoices were raised on 30-03-2017 and 02-03-
2017 totalling to Rs. 2,76,17,772/- out of which
Corporate Debtor has paid Rs. 2,22,32,000/- and the
balance amount which was unpaid alongwith interest
amounted to Rs. 79,19,876/-. Proper procedures as
required under IBC 2016 were followed by the
Operational Creditor and inspite of that Corporate
Debtor did not respond to the notice issued under
Section 8 of IBC 2016. On the date of hearing on
09.07.2018 Corporate Debtor prayed for 2 weeks time
which was granted. On 26.07.2018 the Corporate
Debtor raised that there was a pre-existing dispute,
which however could not be proved. Argued that there
was no provision of delayed payment in any of the
invoices.
Decision of the It was found that in this case the provisions as
Tribunal contained in Section 9 (5) (a) to (c) of IBC 2016 are
satisfied. Bank statement as required under Section
9(3) (c) of the Code is produced. Respondent has
failed to file any evidence regarding pre existing
dispute. Thus the application filed by applicant is
complete in all legal aspects. Hence, the case was
admitted.
CASE NO. 6
Bench National Company Law Tribunal (NCLT), Chandigarh
Bench, Chandigarh
Operational Bhagwati Kripa Paper Mills Pvt. Ltd.,
Creditor
Corporate A.P. Enterprises Private Limited
Debtor
Amount of
Rs. 4.48 cr
Default
70

2016
Facts of the The Operational Creditor passed a Resolution dated
Case 23.03.2018 resolving to file the petition under the
Code against the Corporate Debtor petitioner.
Operational Creditor is the manufacturer and supplier
of high quality kraft paper. The goods were supplied to
the respondent-Corporate Debtor from time to time.
On the basis of various purchase orders issued by the
respondent, the petitioner raised sale orders and
periodically raised the invoices of the goods delivered
to the respondent-Corporate Debtor. The last invoice
was issued on 8-11-2017.
Notice of demand was issued dt. 27-03-2018 and it is
alleged that the reply to the demand notice has been
sent much after the expiry of 10 days containing the
allegations which mostly was an afterthought just to
defeat the rights of the Operational Creditor. It is
alleged that all the allegations contained in the reply
are disputed. The reply contains only the bald
averments. The dispute raised with regard to the
deterioration of the quality of goods supplied by the
petitioner are being raised for the first time which in
any case is belated and the same has been taken only
to create a sham and illusory defence. The quality
issue was never raised by the Corporate Debtor nor
any proof to substantiate such a claim has been
annexed, especially the plea has no legs to stand as
the respondent-Corporate Debtor admitted the liability
by way of the balance confirmation and issuing
multiple cheques. Even these undated cheques,
according to Corporate Debtor were issued as security
and were said to have been misused by the
Operational Creditor. Balance confirmation was also
denied stating that in good faith signature was
obtained on 3-4 blank papers.
It was brought to the notice of petitioner towards
71
Section 75 & 76 of IBC 2016 wherein punishment for

false information is stipulated.
Decision of the With the help of various documents including emails
Tribunal placed before the bench, the bench was convinced
that there is a default in making the payment to the
Operational Creditor and after ruling out all the
contentions made by the Counsel of the Corporate
Debtor, the case was admitted.
CASE NO. 7
Bench National Company Law Tribunal (NCLT), Mumbai
Bench, Mumbai
Operational Deevya Shakti Paper Mills (P) Ltd
Creditor
Corporate Borkar Colour Packs Private Limited
Debtor
Amount of Rs.52.20 lacs (inclusive of interest @24%)
Default
Relevant Section 9 of the Insolvency and Bankruptcy Code,
Section 2016 read with Rule 6 and Rule 10
Facts of the Operational Creditor claims that they supplied Coated
Case Duplex Paper Boxes to the Corporate Debtor and
raised invoices till 10.07.2017 for Rs. 36,62,285. The
Corporate Debtor deliberately withheld the payments,
failed and neglected to pay the outstanding principal
amount of Rs. 36,62,285/-. The Operational Creditor
sent Demand notice to the Corporate Debtor in Form 3
on 07.03.2018 calling upon the Corporate Debtor to
make the payment of Rs. 52,20,560/- which is inclusive
of interest calculated @24%p.a.
The Corporate Debtor contended that the Petition is
liable to be dismissed with the exemplary cost on
account of the blatant and mala-fide suppression of
documents. It was further contended by the Corporate
72
Debtor that, even according to the Operational Creditor

there was a confusion regarding the amount due. The
Corporate Debtor further claimed that they are
remitting 100% advance against purchase orders and
as per their records no payment is pending.
It was submitted that the charging of interest for the
delayed payment was informed to the Corporate
Debtor only at the time when the demand notice was
sent on 07.12.2017 as well as the demand notice
under Section 8 of the Code was sent on 07.03.2018.
The Corporate Debtor was not aware of the charging of
interest by the Petitioner for the past 3 years. The
Petitioner itself has stated that there was no
agreement for payment of interest in respect of three
invoices, however the Petitioner has claimed the
interest of 24% in the demand notice and in the
petition, now in the revised claim scaled down the rate
of interest to 18% even though the Petitioner is not
entitled to charge any interest.
The Hon’ble NCLAT in its order dated 27.07.2018 in
the case of Krishna Enterprises Vs. Gammon India Ltd.
in CA No. 144/2018 held as below:-
“5. In the present appeals, as we find that the principal
amount has already been paid and as per agreement
no interest was payable, the applications under
Section 9 on the basis of claims for entitlement of
interest, were not maintainable. If for delayed payment
the Appellant(s)’ claim any interest, it will be open to
them to move before a court of competent jurisdiction,
but initiation of Corporate Insolvency Resolution
Process is not the answer.”
Decision of the The Application was Rejected.
Tribunal The AA stated though there is a debt due, definitely
substantial amount, but Petitioner has not come up
with a proper claim. The interest charged was sudden,
though mentioned on invoices, was never put to
practice. Sudden interest charges will affect the
profitability, financial stability and the very existence of
73
the industry itself which will give hardship to the

economy as a whole. The petition is dismissed with the
liberty to the Petitioner to proceed in accordance with
law.
SECTION-10
CASE NO. 8
Bench National Company Law Tribunal (NCLT), Hyderabad
Bench, Hyderabad
Financial Indian Bank, Oriental Bank of Commerce, Allahabad
Creditor Bank, Indian Overseas Bank, Karur Vysya Bank,
Central Bank of India, Andhra Bank, Bank of
Maharashtra
Corporate Kamineni Steel & Power India Pvt. Ltd
Debtor
Amount of 1405.01 Crores
Default
2016 read with Rule 7 of the Insolvency and
Bankruptcy (Application to Adjudication Authority)
Rules, 2016– Initiation of Corporate Insolvency
Resolution Process by Corporate Applicant.
Facts of the The principal business activities of the company
Case include manufacture of steel billets and wholesale of
metal scraps, etc. The company was installed with a
capacity of 360,000 MTPA and a captive gas-based
power plant of 220 MW. The major portion of the total
estimated cost of project had been funded by term
loans by Financial Creditors. Due to delay in
commencement of operation of steel plant, the
company could not meet the repayment schedule as
per the original loan agreement. The term loans were
restructured with sanction of additional term loan to
meet expenses towards IDC. Further due to other
74
major factors which resulted in mismatch of cash flows

and resultant financial crisis leading to heavy
operational losses and consequent erosion of entire
net worth.
At the instance of consortium bankers, detailed
Techno Economic Viability (TEV) study was conducted
and they concluded that project can be made
technically feasible subject to implementation of Flexi-
structuring scheme by consortium banks and infusion
of additional funds as per RBI Guidelines. Out of 8
Consortium Bankers, 4 Bankers have implemented the
scheme and 4 are yet to implement the scheme. The
Learned Counsel further submits that default is still
continuing and is required institution of Corporate
Insolvency Resolution Process by this Tribunal.
Accordingly, the Company Petition is filed requesting
for implementation of Resolution Plan by the lenders
which includes re-phasement and restructuring of the
debt which will result in the improvement of operations
and serviceability of debt operations.
Decision of the From the material placed on record, this Adjudicating
Tribunal Authority is satisfied that a default has been
committed by the Corporate Debtor in repayment of
the loan amount. The petition was therefore admitted,
and Interim Resolution Professional was appointed.
CASE NO. 9
Bench National Company Law Tribunal, Mumbai Bench,
Mumbai
Financial Allahabad Bank
Creditor
Corporate SBM Paper Mills Ltd
Debtor
Applicant Satyanarayan Malu
Date of Order 20.12.2018
75
Relevant 10 & 12A

Section
Facts of the Several Miscellaneous Applications were filed and were
Case decided together.
One was filed by the Corporate Debtor himself praying
to Allow the Applicant to withdraw Company Petition
No. 1362 of 2017 filed under Section 10 of the IBC in
accordance with Section 12A of the IBC.
The other was filed by the Resolution Professional,
seeking approval of resolution plan approved by the
Committee of Creditors u/s 31(1) of the IBC, 2016.
The Third petition was filed by Resolution Applicant
M/s. Khandesh Roller Floor Mills on 03.10.2018 seeking
permission for withdrawal of its resolution plan along
with refund of Earnest Money Deposit of Rs. 50.00 Lacs
and termination of Bank Guarantee of Rs. 95.00 Lacs.
The essential questions of law were :
(i) Whether an Applicant who has filed an
Application/Petition u/s 10 of the IBC is entitled to
withdraw its own petition u/s 12A of IBC 2016?
(ii) Whether a Resolution Applicant who has submitted
a Resolution Plan which was approved with
majority vote by CoC can be allowed to withdraw
the said Resolution Plan which is under
consideration for approval before the NCLT?
(iii) Whether ex-director of the Corporate Debtor, which
is under Insolvency, can offer One Time Settlement
(OTS) with the Financial Creditor/Creditors if
qualified u/s 29A of the Insolvency Code 2016?
These intermingled issues were decided by the Hon’ble
bench. While the RP has approached to NCLT for
approving the resolution plan approved by the COC,
simultaneously, Satyanarayan Malu, Suspended
director of the Corporate Debtor was negotiating OTS
proposal with Allahabad Bank. He offered Rs. 14 Crores
which was improved to Rs. 17 Crores and finally
76
reached to Rs. 18 Cr. and contended that this is a

better proposal than the Resolution Plan under
consideration which was at Rs. 12.50 Cr. Though the
Resolution plan offered significantly lesser amount than
the said amount under OTS, it was sent for approval of
the Adjudicating Authority after passing through all the
legal process. While at the same time Allahabad bank
demanded 10% upfront payment and an amount of Rs.
1 Cr was deposited by the suspended board member in
a no lien account towards OTS acceptance.
It was pleaded that the applicant (suspended Director)
is giving the best offer to the Financial Creditor and
others, therefore, withdrawal is beneficial for all
stakeholders. If withdrawal is permitted, the
stakeholders shall get 100% of their dues without
haircut.
Decision of the It was discussed that while interpreting legal provisions
Tribunal laid down in connection with the business transactions
or even imposition of taxes, it is healthier to frame, as
also interpret a law, which is capable of understanding
the market conditions, indeed not having a straight
graph. Hence a strict rule of interpretation is sometimes
avoided, the bench opined. The Bench opined that a
Law is mandated for the benefit of the society and not
vice-versa.
Interpreting a statute is ought to be based upon sound
understanding of business operations and corporate
model of functioning. A golden rule of interpretation of
such statute is to subscribe a ‘creative interpretation’.
However, a “Laxman Rekha” is to be drawn while
interpreting the provisions of a Law so that the main
Legislative intent is not disturbed. A purposeful
interpretation, also termed as “purposive interpretation”
is sometimes more helpful to redress the grievance, so
therefore preferred from literal interpretation. A fair
construction of a statute dealing with economic laws is
expected to be a purposive interpretation coupled with
77
literal interpretation and this approach is said to be a

correct modern day approach.
The first reaction during the course of hearing of this
Bench was that how is it justifiable on the part of an
applicant who has moved a Petition u/s 10 to declare
itself insolvent (as happened in this case) at one point
of time and thereafter at a later stage suo-moto seeking
permission for withdrawal of the said Petition? It has
also been questioned that in this manner the procedure
laid down in the provisions of the IBC may be wrongly
utilized? How a person can be allowed to play with the
precious time of a Court by moving a Petition with the
prayer to commence CIRP and at the fag end of the
process seeking permission of withdrawal of the said
Petition? Moreover, Section 12A was introduced and
even at that time Regulation 30A was not in the statute
Book being introduced w.e.f. 03.07.2018. It was made
clear that the Regulations shall come into force on
their publication in the Official Gazette and shall
apply to CIRP commencing on or after the said date
i.e. 03.07.2018. Thus no uncertainty was left in the
statute Book about enforceability of Regulation 30A.
Only Section 12A is relevant for judicial consideration.
Since the provisions of Section 12A has not laid down a
condition of pre-EoI advertisement, therefore, the
present ‘withdrawal’ application is maintainable.
Bench Expressed that this has happened for the first
time in the two and half years (Approx.) that a
Resolution Applicant is withdrawing a Resolution Plan
which is approved by the CoC with majority vote. But if
the sole Resolution Plan be allowed to be withdrawn
then there shall be no option left but to declare
‘Liquidation’ of the Corporate Debtor. Due to the
unexpected and unprecedented development on the
part of the Resolution Applicant, the CoC as well as the
RP have been put in a strange situation that what to do
and how to proceed when the CIRP period has also
expired. Also Bank authorities through an affidavit
78
conveyed their consent for withdrawal of the Petition on

account of acceptance of OTS.
As a result, circumstances of this case demands that
permission be granted to allow the withdrawal of
Application.
A conscious decision to impose a cost of litigation on
the Corporate Debtor of Rs. 5,00,000/- (Rupees Five
Lakhs only) to be paid to MCA/NCLT within 15 days on
receipt of this order was however taken. Subject to the
fine imposed (supra) this withdrawal application was
allowed by invoking the jurisdiction prescribed u/s 12A
of the IBC.
Due to the withdrawal of the main Petition, the approval
of the Resolution Plan or withdrawal of the Resolution
Plan, either way not going to have any impact on the
issue of insolvency. However, certain admitted facts
cannot be ignored that without assigning convincing
reason, this Resolution Applicant is making an attempt
to withdraw the Resolution Plan, in other words
thwarting the CIRP process. It is not appropriate on the
part of a Resolution Applicant to first bid and thereafter
on its own withdraw its proposal. The Bench was of the
view that under the peculiar situation as discussed
hereinabove, this Resolution Plan has although become
futile, however, such attempt on the part of a Resolution
Applicant needs to be discouraged. It is a common
practice, as also adopted by Hon'ble Courts, that in
case of breach of commitment, an earnest money can
be forfeited. Therefore, the Prayer of return of entire
earnest money deposited of Rs. 50 Lakhs is not
acceptable in toto and the Resolution Professional is
directed that out of Rs. 50 Lakhs, a sum of Rs. 25
Lakhs to be retained as a deterrence to be utilized
towards CIRP cost and other related expenses yet to be
ratified by this Tribunal. Only Rs. 25 Lakhs is directed to
be refunded to the Resolution Applicant.
Lastly, regarding the application as submitted by the
79
Resolution Professional for approval of Resolution Plan,

no adjudication under the provisions of the Code was
therefore required because this Resolution Plan has
become redundant.
SECTION-12
CASE NO. 10
Bench National Company Law Tribunal (NCLT), Kolkata
Bench, Kolkata
Financial State Bank of India
Creditor
Corporate Debtor Adhunik Metaliks Limited
Relevant Section Application made by Resolution Professional to allow
him to exclude a period of 20 days from the statutory
period of 270 days within which Resolution
Professional is obliged to complete the entire
Facts of the Application was filed by Financial Creditors Under
Case Section 7 read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority)
rules, 2016 whereby IRP was appointed by order
dated 3rd August, 2017 and the Corporate Insolvency
Resolution Process was initiated under the I & B
Code.
CIRP process was due to end on 29th January, 2018
and with extension of 90 days the period was to end
on 29th April, 2018.
The Resolution Professional received two resolution
plans and placed before the CoC on 13th April, 2018.
After a lot of deliberations and negotiations, CoC
decided to accept the Resolution Plan as submitted by
M/s. Liberty House Group. On 19th April, 2018, CoC
and Resolution Professional came across the media
reports that M/s. Liberty House Group has been
declared ineligible under Section 29A of Insolvency
80
and Bankruptcy Code, 2016 in some other

proceedings.
The Resolution Professional called for some
clarification about the same from Liberty House Group
on 19th April, 2018 and received the clarification in 20
days, resultantly he could not submit the resolution
plan for approval by the Adjudicating Authority within
the period of 270 days.
The Corporate Debtor is the company as a going
concern and there are 3000 regular employees and
10000 casual employees working in the company.
Section 12 of the I & B Code, mandates that CIRP
shall be completed within the period of 180 days from
the date of admission of the application to initiate such
process. Section 12(2) permits the Tribunal to extend
the above period by 90 days provided such application
is filed by Resolution Professional in concurrence with
Committee of Creditors. Section 12(3) makes it clear
that such period can not be extended beyond period of
90 days. Proviso to that Section further mandates that
such extension shall not be granted more than once.
Therefore, Tribunal has no authority under the law to
allow the process to continue beyond statutory period
of 270 days.
Following issues were considered:
a) If Tribunal refuse to exclude 20 days, the
Resolution Professional has no option but to file
the report that he has not received any resolution
plan worthy of acceptance within the period of
270 days and in that event Bench has to allow the
Corporate Debtor to go into liquidation. In that
case, the Corporate Debtor will not be treated as
going concern and thereby throwing the fate of
regular and casual employees into uncertainty.
b) If Tribunal use its discretion by allowing the
resolution process to continue beyond statutory
period of 270 days then that would be without the
authority under the law.
81
Decision of the The Tribunal had referred the following Guidelines

Tribunal provided by Hon’ble NCLAT in Company Appeal No.
(AT) (Insolvency) 185 of 2018 in Quinn Logistics India
Pvt Ltd vs Mack Soft Tech Pvt Ltd and others while
considering the application for exclusion of such
period from statutory period of 270 days.
i) If the CIRP stayed by a court of law or the
Adjudicating Authority or Appellate Tribunal or the
Hon’ble Supreme Court.
ii) If no Resolution Professional is functioning for
one or other reason during the CIRP, such as
removal.
iii) The period between the date of order of
admission/moratorium is passed and the actual
date on which the Resolution Professional take
charge for completing the CIRP
iv) On hearing a case, if the order is reserved by the
Adjudicating Authority or the Appellate Tribunal or
the Hon’ble Supreme Court and finally pass the
order enabling the Resolution Professional to
complete the CIRP.
v) If CIRP is set aside by the Appellate Tribunal or
order of the Appellate Tribunal is reversed by the
Hon’ble Supreme Court and CIRP restored.
vi) Any other circumstances which justifies the
exclusion of certain period.
Guideline No. (vi) above may somewhat permit the
Tribunal to consider the application.
Tribunal has taken the view that the Corporate Debtor
is the company as a going concern and if 20 days are
not excluded then Corporate Debtor will be liquidated
which will cause great prejudice to the workmen and
other stakeholders. Hence, considering the statement
and object of the statute, the applications are allowed
and Period of 20 days stands excluded from statutory
period of 270 days and Resolution Professional is
allowed to consider the plans before him.
82
SECTION-19
CASE NO. 11
Bench National Company Law Tribunal (NCLT), Chandigarh
Bench, Chandigarh
Petitioner Oasis Agro Infra Ltd, Amandeep Singh, Resolution
Professional.
Corporate Debtor Mandeep Singla & Ors. (Suspended Board of
Directors)
Relevant Section Section 19(2) of the Insolvency and Bankruptcy Code,
2016
Facts of the This is an application filed under Section 19 (2) of the
Case Code for issuance of appropriate directions to Ex-
Directors/Management for extending full cooperation
and to provide necessary information to the resolution
professional.
Question of law:
Can erstwhile management deny the IRP/RP that they
will not provide the information/details beyond 2
years?
Section 19 of the Code casts an obligation on the ex-

personnel of the Corporate Debtor, its promoter or any
other person associated with the ex-management
including ex-directors to extend all assistance and
cooperation to the interim resolution professional as
may be required by him in managing the affairs of the
Corporate Debtor.
Section 19 (2) of the Code then empowers the
resolution professional to file appropriate application
before the Adjudicating Authority-NCLT to seek
necessary directions and the Adjudicating Authority
must issue direction to such defaulting personnel of
ex-management.
83
Decision of the The limit of two years imposed on Resolution

Tribunal Professional for presenting it before CoC creates no
right in the ex-management to deny any information
prior to two years.
The provision is couched/framed in the language
which requires performance of duties by Interim
Resolution Professional / Resolution Professional.
It does not attire the Ex-Directors with a right to
withhold information beyond period of two years.
Therefore, the attempt to escape from furnishing of
information is wholly against the spirit of the IB Code.
The application was thus allowed.
SECTION-29A
CASE NO. 12
Bench, Kolkata
Creditor
Corporate Electrosteel Steels Ltd.
Debtor
Amount of Rs. 13395.00 cr (total permitted financial debt)
Default
Relevant Section Section 29A Ineligibility & Connected Person
Facts of the Resolution Plan of Vedanta Limited was approved by

Case 100% voting shares of Committee of Creditors. It had
subsidiary (held by 20-03-2018 order) Kankola Copper
Mines Pvt. Ltd. (KCM) (A connected party) in Zambia
where it was charged for violation of environment
laws.
CoC contended – KCM being a Corporate entity can’t
be convicted of offence punishable with imprisonment,
84
directors or managers of KCM can’t be deemed to be

convicted of offence of KCM, directors, managers
don’t fall in definition of connected persons, phrase
‘…punishable with imprisonment for Two Years or
more….” excluded cases wherein the law does not
provide a minimum sentence of 2 years.
Decision of the Offence punishable with imprisonment is different from

Tribunal offence punishable with fine or imprisonment. The
KCM in the case was found guilty of an offence
punishable with imprisonment or fine for a term not
exceeding 3 years or both. So there was no
imprisonment, disqualification as stated under Clause
(d) of Sec 29A of the Code. So it is held that Vedanta
Limited is eligible Resolution Applicant.
Once the order came that KCM is connected person
none including CoC challenged.
Resolution Plan of Corporate Debtor, Electrosteel
Steels Ltd, approved by 100% voting shares of CoC is
Approved and binding on the Corporate Debtor, its
employees, members, creditors, coordinators and
other stakeholders involved in the Resolution Plan.
CASE NO. 13
Bench National Company Law Tribunal (NCLT), New Delhi
Bench, New Delhi
Creditor
Corporate Bhushan Steel Limited
Debtor
Amount of Rs 58,926.74 crores (aggregate claims received by
Default IRP)
Date of Order 15.5.2018
85
Relevant Section Section 29A(a) & 29A(d) of the Insolvency and

Bankruptcy Code, 2016 – Person not eligible to be
resolution applicant
Section 30 and 31 dealing with submission of
resolution plan by RP and approval of resolution plan
by Adjudicating Authority.
Regulation 39(6) giving preference of resolution plan
over constitutional documents of the Corporate Debtor
(i.e. shareholders agreements, joint venture
agreement or other document of similar nature).
Facts of the Tata Steel Limited (TSL) and JSW Living Private
Case Limited resolution plans were found compliant with the
requirements of Code and CIRP Regulations.
However, on recommendation of CoC, TSL was
notified as highest scoring resolution applicant.
Objections by Bhushan Steel Employees
• They have raised an objection that a wholly owned
subsidiary of TSL-Resolution Applicant was a
connected person and the entity was known as
Tata Steel UK. The aforesaid connected person
had been found guilty on two counts under the
Health and Safety at Work Act, 1974 ('HSW Act')
vide an order dated 2-2-2018 for failing to
discharge its duties under Section 2(1) of the HSW
Act, UK. The objection raised was that since Tata
Steel UK had been convicted by order dated 2-2-
2018 passed by the Crown Court at Kingston upon
Hull of an offence punishable with imprisonment
for two years or more it attracted disqualification
under Section 29A of the Code.
• TSL had a relation with Mr. C. Sivasankaran (Mr.
C) who was declared bankrupt by the Supreme
Court of Seychelles in August 2014. Mr C through
his Company, Sterling Infotech Private Limited had
purchased shares in Tata Teleservices Limited. It
was alleged that he had taken a loan of Rs 650
crores from Standard Chartered Bank and
Resolution Applicant – TSL stood guarantee. It
86
was also alleged Mr. C made a post-bankruptcy

composition offer and came out of the bankruptcy
in 2016 which would not cure the embargo
imposed by the provisions of Section 29A of the
Code.
Application by Larsen & Toubro Limited
• Larsen & Toubro Limited has filed application
under Section 60(5) (c) of the Code asserting that
they should be regarded as secured creditor as
there is charge created on plant and machinery
and the resolution plan must provide for full of its
dues.
Application by Bhushan Energy Limited (Group
Company of Bhushan Steel) against approved
Resolution plan
• Reply filed by the Bhushan Energy Limited (BEL)
which itself is under CIRP, it has been submitted
that the resolution plan adversely effects the rights
of BEL which arise under the power purchase
agreements dated 29.03.2007 as amended on
30.06.2014 and dated 26.10.2010 as amended on
05.05.2014 (PPA-1 & PPA-2). These agreements
were entered between BEL and the Corporate
Debtor. The objection raised is that the resolution
plan submitted by TSL seeks to terminate the said
power purchase agreements unlawfully and BEL
objects to the resolution plan filed by the
Resolution Applicant.
• Counsel of RP of BEL submitted that valid
contracts are 'property' within the meaning of
Article 300A of the Constitution and no person can
be deprived of his property save by authority of
law. Article 300A provides that property includes
valid contracts and intangibles such as intellectual
property. According to the learned counsel vested
right created in favour of a party under a valid
contract cannot be taken away. Highlighting
another aspect, learned counsel has submitted
87
that Insolvency Code does not enable termination

of valid contracts by way of a resolution plan nor
there is any provision under Sections 30 and 31
read with Regulations 37 and 38 of the CIRP
Regulations. The termination on the ground that
the PPAs are onerous is wholly unsustainable and
the resolution plan cannot avoid the transaction on
account of increase in the rates merely because it
is a contract between related parties.
Decision of the Adjudicating Authority (NCLT) decision on above
Tribunal various matters as follows:
Decision in the matter of allegation raised by Bhushan
Steel Employees
• With regard to prosecution and conviction of Tata
Steel UK which is a 100 per cent subsidiary of H1
Resolution Applicant-TSL, NCLT observed that on
perusal of the clause (d) of Section 29A, it shows
that the expression used is 'punishable with
imprisonment for two years or more' whereas
under Section 33(1)(a) of the HSW Act, the
expression used is 'imprisonment for a term not
exceeding two years or a fine or both'. The
provisions of Section 29A(d) would not be
applicable to cover a juristic person and could be
applied only to a natural person because it
contemplates visiting the convict with
imprisonment for two years or more. As there is no
provision for imposition of fine and a corporate
body like a company cannot be visited with
imprisonment/custodial sentence (Para 72 of the
Order). NCLT was of the view that Section 29A(d)
does not provide for imposition of fine and
therefore, it would not be applicable to the facts in
the instant case because a Corporate Entity
cannot be subjected to any custodial sentence
which is the only provision made by sub-section
(d) of Section 29A. [Para 74 of the Order].
• NCLT ruled that Sterling Infotech Private Limited
cannot be concluded as a 'connected person' or
88
'related party' or 'associated company' as TSL

never furnished any guarantee for repayment of
loan taken by 'C' from Standard Chartered Bank.
The Resolution Applicant-TSL merely sought to
purchase the shares which were with pre-emptory
rights. Even that undertaking had lapsed nine
years ago as it ceased to operate in March 2009
and has not been acted upon by Standard
Chartered Bank. In any case the order of
Bankruptcy issued by Supreme Court of
Seychelles has been subsequently revoked in
2016. Tribunal also observed that the application
has not been filed by the Bhushan Employees
authorizing anybody. The allegation even
otherwise on facts is not sustainable. Accordingly,
it is held that the objection is frivolous and the
same is rejected. [Para 69 of the Order].
Decision in the matter of application by Larsen &
Toubro Limited
• NCLT was of the view that claim of L&T to be
treated as secured creditor on the face of it
appears to be wholly unsustainable. There is no
document placed on record showing any creation
of charge or security warranting a view that the
L&T should be regarded as a secured creditor and
not as the Operational Creditor. The charge is
created by execution of a document as per the
requirements of the Companies Act, 2013. In the
absence answering the basic description of
Section 55(4)(b) of Transfer of Property Act, 1882,
no benefit could be gained by L&T. It is well settled
that any supplier of goods and services would fall
within the meaning of expression 'Operational
Creditor' and the claim made by L&T would
amount to rewriting the provisions of the statute
which is an impossible proposition. Therefore,
there is no substance in the aforesaid argument
and same is rejected. [Para 80 of the Order]
Decision in the matter of application by Bhushan
89
Energy Limited (Group Company of Bhushan Steel)

against approved Resolution plan
• NCLT decided that the objections raised by BEL
are not sustainable, it has also been made clear by
Regulation 39(6) of the CIRP Regulations, 2016
that a resolution plan which would otherwise
require consent of members of the Corporate
Debtor under the terms of the constitutional
document, shareholders' agreement, joint venture
agreement or other document of a similar nature
shall take effect notwithstanding that such consent
has not been obtained. Regulation 39(6) of the
CIRP Regulations in fact takes care of the
provisions made for termination of PPAs which
were entered between the Corporate Debtor and
the BEL. Sub-Regulation 6 of Regulation 39 is
couched in very wide language and provides in
categorical terms that no consent from the BEL or
its RP is required. The case of the RP would fall
within the expression of 'or other document of a
similar nature'. If the Resolution Applicant has
found the terms of PPAs as onerous and it has
been approved by the CoC then it is no ground for
the BEL to argue that it is a constitution right
conferred by the article 300A and the same cannot
be taken away without due process of law. The
I&B Code provides for due process of law. As a
matter of fact, the provisions of Regulation 39(6)
fully back up the claim of the Resolution
Professional and therefore, the objection raised by
BEL is rejected. [Para 78 of the Order]
Conclusion
Considering the above, Adjudicating Authority (NCLT,
New Delhi) ordered the following:
• When the resolution plan as approved by the CoC
is placed before the NCLT, then it is to record its
satisfaction as to whether the requirements as
referred to in sub-section 2 of Section 30 are
fulfilled. On its satisfaction the NCLT is to approve
90
the resolution plan which is to be binding on the

Corporate Debtor and its employees, members,
creditors, guarantors and other stakeholders
involved in the resolution plan. [Para 59 of Order]
• The CoC approved resolution plan of H1
Resolution Applicant-TSL is accepted & approved.
The appointment of monitoring agency is approved
from the date of the approval of the CoC approved
resolution plan to function until the closing date i.e.
the date on which the implementation of the steps
set out in the CoC approved resolution plan would
be completed. The monitoring agency shall have
the same function, power and protection as
conferred on the resolution professional under the
Code and the CoC shall continue with its role and
responsibility and have protection as set out in the
Code including approving the matter as has been
approved during the period prior to effective date.
[Para 81 of the Order].
• Thus, the application filed by the Resolution
Professional for accepting the resolution plan
approved by the CoC submitted by Resolution
Applicant-TSL is accepted and it is clarified that
application for reliefs and concessions sought in
resolution plan should be filed before appropriate
authorities by monitoring agency and TSL [Para 83
of the Order].
SECTION-30 AND SECTION 31

CASE NO. 14
Bench, Mumbai
Petitioner Pratik Ramesh Chirania
Corporate Trinity Auto Components Limited
Debtor
91
Relevant Section Section 30(1) & (6) and Section 31 read with Section
60(5) of the Insolvency and Bankruptcy Code, 2016
Facts of the An order was passed on 25 May 2017 admitting the
Case petition by appointing the IRP with an order for
commencement of Moratorium as well as CIRP. The
Corporate Debtor itself moved this petition to
commence the CIRP under IBC.
The appointed IRP had followed the procedures laid
down under the IBC 2016 making Public
announcement, invited EOIs, filed constitution of
Committee of Creditors report.
Thereafter in response to the advertisement calling
EOI only one Resolution Applicant has submitted the
plan to the RP.
The Resolution Plan was considered in the meeting of
COC held on 05 Oct 2017 with voting of 96.54% in
terms of the Section 30(4) read with Regulation 39(3)
of the CIRP Regulation 2016. A certificate in
compliance with Regulation 39(4) of the CIRP
Regulation submitted by RP before the Hon’ble NCLT.
On careful reading of the Resolution Plan, Hon’ble
Tribunal was of the view that a modification is required
under the Resolution Plan submitted by Resolution
Applicant and approved by the COC members. But it is
to be examined “whether AA has authority to
incorporate any suggestion in a Resolution Plan,
already approved by the Committee of Creditors”?
The procedure as prescribed under the Code is that a
Resolution Plan is required to be submitted by a
Resolution Application U/s 30 of the Code. On
approval, the Resolution Professional is to submit U/s
30 (6) the Resolution Plan, as approved by the
Committee of Creditors, to the AA. Thereafter, u/s 31,
AA is to examine the contents of the Resolution Plan.
The mandate of this Section is that if the AA is
“satisfied” that the Resolution Plan as approved by the
92
Committee of Creditors meets the requirement, as

referred to in Section 30 (2), shall by an order,
approve the Resolution Plan. So the prerequisite is
that recording of “satisfaction” by AA is condition
precedent. A “Satisfaction” is to be recorded in writing
in the Judgement approving the Resolution Plan.
“Satisfaction” is required to be based upon a
conscious decision on examination of the terms of the
Resolution Plan.
Decision of the If the AA is satisfied that the Resolution Plan as
Tribunal approved by COC under Section 30(4) meets the
requirements as referred in Section 30(2) and Hon’ble
Tribunal by order approve the said Resolution Plan
which shall be binding on the Corporate Debtor and its
employees, members, creditors and other stake
holders involved in the Resolution Plan.
In the present case, The Hon’ble NCLT has approved
the Resolution Plan subject to some modification.
CASE NO. 15
Bench National Company Law Tribunal (NCLT), Principal
Bench, New Delhi
Financial Reliance Commercial Finance Limited
Creditor
Corporate Ved Cellulose Limited
Debtor
Amount of 2.01 Crore (approx.) (amount claimed)
Default
Relevant Section Section 30 and Section 31 of the Insolvency and
Bankruptcy Code, 2016
Facts of the The IRP had filed his report on CIRP dated 08th Aug
Case 2017 along with Resolution Plan dated 03rd August
2017 mooted by the Corporate Debtor/Company as
93
accepted by Reliance Commercial Finance Limited.

The Resolution Plan showed that the proposal made
by the Corporate Debtor towards full and final
settlement along with their claim has been accepted
by the Corporate Debtor in respect of the loan in
question. Accordingly, IRP has filed an application
before NCLT for approval of the Resolution Plan under
Section 31.
In meanwhile, Bank of India has raised certain
objections to the Resolution submitted by the IRP
before the Hon’ble Tribunal. Accordingly, Learned
Counsel of the BOI submitted to the Hon’ble Tribunal
that there are grave irregularities in the public
announcement made by IRP. There was defect in the
Constitution of the CoC, details concerning
constitution of CoC were filed after expiry of the
limitation period prescribed under the IBBI
Regulations, there are material defects in the
Resolution Plan, the IRP has failed to maintain the
updated list of claims etc.
The IRP continued to act in his capacity as IRP and
held meeting of the creditors after his tenure of 30
days come to an end on 30.07.2017.
Decision of the The Hon’ble National Company Law Tribunal pointed
Tribunal out that there is an obligation casted on the IRP/RP to
constitute a committee of creditors after collation of
claims received against the Corporate Debtor.
However, the objector BOI was not included in the
COC despite of the fact that its name figures in the
certificate of charge with ROC. Therefore, there is
flagrant violation of the provisions of Section 21(2) of
the Code.
It appears that the IRP was in a hurry even though the
Initial period of 180 days as stipulated under Section
12 of the Code was to expire much later. It is further
highlighted by Hon’ble Tribunal that 90 days extension
is permissible if the AA is satisfied on the application
filed by IRP. The term of IRP as per Section 16 (5),
94
came to an end on 30th July, 2017. Therefore, NCLT

stated that it is unable to approve the Resolution Plan
as it fails to confirm the mandatory provisions of the
Code and Regulations framed by IBBI.
As a sequel to the above discussion, the Hon’ble
Tribunal rejected the report along with Resolution Plan
and requested the IBBI to appoint new IRP in this
matter.
SECTION-60
CASE NO. 16
Bench, Kolkata
Financial RBL Bank Ltd.
Creditor
Corporate MBL Infrastructure Ltd.
Debtor
Relevant Section Rule 15 and Rule 153 0f NCLT Rules 2016 read with
Section 60 (6) of the Insolvency and Bankruptcy Code,
2016
Facts of the Exceptional Circumstances beyond control and
Case litigation led to CIRP not being completed in 270 days.
Two questions arise for consideration:
Firstly, whether this Adjudicating Authority is
empowered to extend the time limit prescribed under
Section 12 of the Code? If not, whether this
Adjudicating Authority has power to exclude the
duration of continuation of stay order to Hon’ble
Appellate Tribunal and the period rendered for the
disposal of interim applications by this Bench during
the CIRP? Secondly, whether reconsideration of vote
in respect of the approval of the resolution plan
already finalized on 22.12.2017 is permissible under
the law?
95
The Adjudicating Authority(AA) observed that this is a

unique case in which a Resolution Plan which has
been originally failed for the want of requisite voting
percentage as required under sub-section (4) of
Section 30 of the Code when put up for
reconsideration obtained the required voting share so
as to approve the resolution plan by the CoC.
The AA noted here that the Resolution Applicant in the
application CA (IB)288/KB/2018 not at all prayed for
extension of CIR Process period but prayed for
exclusion of the period due to pending litigation.
Therefore, the question is whether this Adjudicating
Authority can exclude the period spent for litigation
during the CIRP and consider the plan for approval as
if it was filed within time as per Section 12 of the
Code. At the outset a reading of Section 12 of the
Code and its proviso, it appears that it does not
specify any restriction upon the Adjudicating Authority
in excluding the period taken for inter party litigation
before the conclusion of CIR process. What is
prohibited is extension beyond 270 days.
It is further noted that in this case, resolution applicant
is none other than a promoter/director of the
Corporate Debtor who is familiar with the operation of
the Corporate Debtor company attempted to convince
the then existing CoC to approve his plan by modifying
it so as to suit the CoC requirements from 22.06.2017
onwards and ultimately succeeds in his endeavour to
convince majority of the Financial Creditors except few
so as to see that his company may not go for
liquidation but to survive upon the approval of the plan
in hand.
From a reading of Rules 15 and 153 of NCLT Rules,
2016, the AA drew the understanding that the Tribunal
in its discretion from time to time in the interest of
justice and for reasons to be recorded, enlarge such
period, even though the period fixed by or under these
Rules or granted by the Tribunal may have expired.
96
This is a case in which so many issues came up for

consideration before the Tribunal during the period of
CIRP. The CoC has changed the IRP thereby, there is
change in IRP. During the consideration of the only
one plan of the resolution applicant, an amended
Ordinance was notified laying down certain
disqualification to promoter directors of a company like
the promoter in the case in hand. A clarification was
sought for by the resolution applicant before the
Bench. Against the order of clarification, two of the
Financial Creditors filed appeal before the Hon’ble
NCLAT. There was an order of stay restricting the
Bench from proceeding further in regard to approval of
the plan.
The AA observed that in this case CIR Process could
not be completed within the statutory period fixed
under Section 12 of the Code by the acts beyond
control of the applicants and non-exclusion, no doubt
would cause grave in justice to the applicant. No
specific legal bar enables the Adjudicating Authority to
prevent an order of exclusion as prayed for by the
resolution applicant. In this case, it appears to the
Tribunal that the time period of continuation of the stay
order in CA(AT) (Insolvency) No. 330 of 2017
preventing them from approving the plan and the
period taken for disposal of CA (IB) 543 of 2017 by
this Bench shall be excluded from the 270 days fixed
for the conclusion of CIRP.
According to Rules 15 and 153 of NCLT Rules, 2016,
it appeared to the AA that even in a case if they are
satisfied that grave injustice would be occurred if a
prayer of extension for a no fault of the applicant is
occurred this Adjudicating Authority can extend the
time limit provided under Section 12 of the Code.
However, the bench was not asked to extend the time
limit as provided under Section 12 of the Code but to
exclude the period due to litigation and upon the
findings by the AA, it held that the exclusion of period
due to litigation is liable to be allowed in a case of this
97
nature. So, the AA did not hold that it can extend the
period of CIRP as prescribed under Section 12 of the
Code.
The next question that came before the Tribunal was
whether reconsideration by dissenting creditor and
abstaining the creditor on resolution plan after the time
limit of completion of the insolvency process can be
allowed? Both Learned Counsel for IDBI and Bank of
Baroda raised the question. The Tribunal in answering
the earlier question came to a conclusion that the time
period due to continuation of the stay order and period
due to litigation before this bench shall be excluded.
Therefore, total of 106 days should be counted for
exclusion. That being excluding 106 days from the 270
days fixed under Section 12 of the Code also expired
on 10.04.2018.
The AA observed that whether or not a member of
CoC can change its mind on a decision once it has
been adopted, is within their own power and choice.
Two dissenting Financial Creditors out of 20 Financial
Creditors alone were challenging the reconsideration
of resolution plan. The AA further observed that from a
practical standpoint of a prudent man thinking also, if
one person wishes to change its mind that is not
debarred from changing its mind, why not change
stand considering the subsequent change in the
circumstances or events. So, the AA did not find any
justifiable reason to hold that reconsideration of the
resolution plan is bad in law as contended by IDBI and
Bank of Baroda.
Decision of the 106 days excluded from 270 days and the Resolution
Tribunal Plan approved by the Financial Creditors of CoC with
a voting share of 78.5% was hereby approved under
Section 31(1) of the Insolvency & Bankruptcy Code,
2016 which will be binding on the Corporate Debtor,
its employees, members, creditors, coordinators and
other stakeholders involved in the Resolution.
98
CASE NO. 17
Bench, Mumbai
Creditor
Applicant Mr. Sunil Gopichand Teckchandani & Others
Respondent Metallica Industries Limited Through IRP
Date of Order 29-10- 2018
Relevant Section Section 60(5)(c) of the IBC 2016
Facts of the The Miscellaneous Application No.1253 of 2018 is
Case filed by the Applicants under Section 60(5)(c) of the
IBC 2016 on behalf of the individuals who have
purchased units in a “KamlaIndustrial Park” which is
an industrial gala which is located at Kandivali (W).
The Applicants purchased these units from a
Company bearing name “Metallica Industries Ltd.”- the
Corporate Debtor. The Corporate Insolvency
Resolution Process has been initiated against the
Corporate Debtor upon an Application filed the by
State Bank of India under Section 7 of the I&B Code,
2016 and IRP had been appointed to conduct the
Corporate Insolvency Resolution Process of the
Corporate Debtor.
The Applicants have filed this present Application
against the actions of the Respondent Resolution
Professional, whereby he is deliberately preventing
the Applicants and other Unit Purchasers from
participating in the Corporate Insolvency Resolution
Process.
Applicant has sought relief to stay the Corporate
Insolvency Resolution Process of the Corporate
Debtor pending the admission of the claims of the
99
Applicants and other Unit Purchasers of the said

development project. Applicants had further sought
declaration that the constitution of Committee of
Creditors of the Corporate Debtor is illegal, unlawful
and contrary to the provisions of I&B Code, 2016.
NCLT observations:
In the case of Arcelormittal India Pvt. Ltd. v/s. Satish
Kumar Gupta &Ors. in Civil Appeal No.9402-9405 of
2018, the Hon’ble Supreme Court has specifically laid
down the law that:
What is important to note is that the committee of
creditors shall not approve a resolution plan where the
resolution applicant is ineligible under Section 29 A
and may require the resolution professional to invite a
fresh resolution plan where no other resolution plan is
available. Once approved by the committee of
creditors, the resolution plan is to be submitted to the
Adjudicating Authority under Section 31 of the Code.
It is at this stage that a judicial mind is applied by the
AA to the resolution plan so submitted, who then, after
being satisfied that the plan meets (or does not meet)
the requirements mentioned in Section 30, may either
approve or reject such plan.
Section 60(5) of the Code, when it speaks of the NCLT
having jurisdiction to entertain or dispose off any
application or proceeding by or against the Corporate
Debtor or Corporate person, does not allow the NCLT
with the jurisdiction to interfere at the Applicant’s
behest at a stage before the submission of the
Resolution Plan before the Adjudicating Authority.
By law laid down by the Hon’ble Supreme Court in the
Arcelormittal case, it is clear that before approval of
the Resolution Plan by the CoC, no Application can be
entertained by the Adjudicating Authority under
Section 60(5).
100
Decision of the In MA 1253 of 2018 Applicant has sought relief of

Tribunal staying the process of CIRP and further sought
declaration that constitution of CoC is unlawful is not
permissible.
The Application can be entertained by the Adjudicating
Authority under Section 60(5) of I&B Code, 2016 only
after the approval or disapproval of the Resolution
Plan by the CoC.
It is clear that relief sought by the Applicants is not
permissible in law at this stage since the Resolution
Plan is not yet approved. Therefore, the Application
moved at this stage u/s 60(5) of the I&B Code, 2016 is
pre-mature, hence liable to be rejected as not
maintainable.
This MA is disposed off accordingly.
SECTION-66
CASE NO. 18
Bench National Company Law Tribunal (NCLT), Allahabad
Bench, Allahabad
Financial IDBI Bank Ltd.
Creditor
Corporate Jaypee Infratech Limited
Debtor
Relevant Section Application made by Resolution Professional under
Section 66, 43, 45 and 60(5)(a) read with Section
25(2)(j) of the Insolvency and Bankruptcy Code, 2016
(“I & B Code”)
Facts of the Application was filed by Financial Creditors Under
Case Section 7 read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 whereby IRP was appointed by Hon’ble
101
Supreme Court vide order dated 11th September, 2017

and initiated the Corporate Insolvency Resolution
Process under the I & B Code.
The Resolution Professional had then filed this
application for seeking direction that the transactions
entered into by the Promoters and Directors of the
Corporate Debtors creating the mortgage of 858 acres
of immovable property owned and in possession of the
Corporate Debtor, to secure the debt of related parties
i.e. Jaiprakash Associates Ltd., by way of mortgage
deeds dated 29.12.2016, 12.05.2014, 07.03.2017,
24.05.2016 and 04.03.2016 are the fraudulent and
wrongful transactions within the meaning of Section 66
of I & B Code.
The directors of the Corporate Debtor had mortgaged
858 acres of land to secure the debt of Jayprakash
Associates Limited which is the holding the company
of the Corporate Debtor, at the time when the
Corporate Debtor itself was in dire need of funds.
Further, there are no approvals obtained from the
shareholders of the Corporate Debtor as well as the
lenders of the Corporate Debtor to mortgage the land
in favour of landers of related party.
The creation of Mortgage was made without any
consideration of economic gain and had not taken
place in the ordinary course of business of the
Corporate Debtor.
Following were the issues for consideration:
a) Whether Interim Resolution Professional has
authority to file the application?
b) Whether the impugned transactions have been
carried out with the intent of defraud the creditors
of the Corporate Debtor or for any fraudulent
purpose and is covered under Section 66 of the
I&B Code?
c) Whether the impugned transactions are
preferential transactions covered under Section
43(2)(a) of the I&B Code or undervalued
102
transaction under Section 45 of the Code?

d) Whether look back period available for the
impugned transactions as per provisions of
Section 46(1)(i) is one year or two years?
Decision of the In respect of the issue whether Interim Resolution
Tribunal Professional has authority to file the application -
a) Hon’ble Supreme Court vide its order dated 21st
March, 2018 has directed the Resolution
Professional to proceed with finalising the
Resolution Plan. The Supreme Court has further
issued the direction to Resolution Professional to
proceed and finalise the Resolution Plan but the
same shall be implemented after taking the leave
from this Court.
b) As per Regulation 39(2) of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution
Process of Corporate Persons) Regulations,
2016, he is required to submit to the Committee of
Creditors all details of the transactions which fall
under Section 43, 45, 50 and 66 of I&B Code.
c) Section 25(1) casts a duty upon the Resolution
Professional to preserve and protect the assets of
the Corporate Debtor, including to continue the
business operation of Corporate Debtor. Section
25(2)(j) casts a duty upon Resolution Professional
to apply for the avoidance of any such transaction
before the Adjudicating Authority by Chapter III of
the Code.
Therefore it was held that the company application
filed by Resolution Professional under Section 43,45
and 66 of I&B Code is allowed.
In respect of the issues (b) to (d) – it was observed
that :
a) ‘Security Interest’ created by Jaypee Infratech in
favour of the lenders of Jaypee Associates was
found to be “fraudulent, preferential and
undervalued”
103
b) The preferential, undervalued and fraudulent

transactions undertaken by the management of
the Corporate Debtor, were found to be detriment
of the corporate creditors (including home buyers)
and shareholders.
c) The provisions indicate that the retrospective
effect is laid down in the legislation itself and is
two years preceding the insolvency
commencement date for a related party and one
year for other than related party. Thus look back
period of the transaction is made dependent on
the insolvency commencement date and not on
the date when the I & B Code came into effect.
Therefore, it was held that the impugned transactions
are declared as fraudulent, preferential and
undervalued transactions as defined under Section 43,
45 and 66 of I & B Code, 2016 and hence, the order
was passed to release and discharge the security
interest created by Corporate Debtor in favour of
lenders of Jaiprakash Associates Limited under the
provision of Section 44(c) of I & B Code, 2016. Also
passed an order under Section 48(a) of the Code that
the properties mortgaged during two years preceding
from the date of commencement of CIRP i.e. 9th
August, 2017 by way of preferential and undervalued
transactions shall deem to be vested in the Corporate
Debtor.
104
APPLICATION BY IRP SEEKING FOR DISCHARGE

FROM CIRP
CASE NO. 19
Bench National Company Law Tribunal (NCLT), Bench III,
New Delhi
Operational Takkshill Enterprises
Creditor
Corporate IAP Company Private Limited
Debtor
Relevant Section Application made by Insolvency Resolution
Professional seeking for discharge from the Corporate
Insolvency Resolution Process (CIRP) initiated by the
Tribunal by admitting the Company petition filed by
Operational Creditor vide its order dated 28.02.2018.
Facts of the Application was filed by Operational Creditor whereby
Case IRP was appointed by Tribunal vide order dated 28 th
February, 2018 and initiated the Corporate Insolvency
Resolution Process under I & B Code, 2016.
It was contended by the Resolution Professional that
the order was not received by him either by way of
email or by way of post till 14th March, 2018. The order
was also not uploaded on time. On 15th March 2018, it
is further stated that a representative was sent by IRP
to collect the free copy. However, on receipt of the
copy of the order, the Insolvency Resolution
Professional sent an email on 17th March, 2018 to the
advocate for Operational Creditor and the Registrar of
the Tribunal, expressing the inability of Insolvency
Resolution Professional to continue as IRP and that
the consent given be treated as withdrawn due to
unavoidable circumstances.
IBBI having been impleaded as party to this
application, IBBI has filed a detailed reply wherein it
105
has been stated that the Application is not justified as

it lacks merit since the issue raised is based upon an
incorrect understanding of law. In accordance with the
guidelines of December, 2017, the Board prepared the
panel of IPs for appointment as IRP or Liquidator and
has shared the Panel with the Tribunal. Further, the
said Panel has validity of 6 months and that a new
panel replaces the earlier panel. It is further pointed
out that the affidavit submitted as reply, the reasons
given was of inability to devote adequate time to the
subject assignment and hence the reason for
discharge given by IRP was contradictory and non
maintainable.
In furtherance to this, OC has also made an
application to Tribunal to issue appropriate directions
to the IRP or for appointment of new IRP and in
addition, the new application was filed for
appointment, mentioning the name of IRP.
Therefore, an issue for consideration was whether
Insolvency Resolution Professional can make an
application to seek for discharge from CIRP initiated
by Tribunal.
Decision of the The Tribunal had considered the pleas made in the
Tribunal application filed by IRP appointed by Tribunal vide its
order dated 28th February, 2018, the reply filed by IBBI
and application filed by Operational Creditor and was
of the opinion that the unprofessional action of IRP
has virtually made the CIR Process initiated by this
Tribunal as a non-starter.
Tribunal referred to the Paragraph of Chapter 4.4 of
the Report of Bankruptcy Law Reforms Committee
Volume I, Rationale and Design 2015 extracted herein
below to describe where the success of IBC rests:
“The role of the IP’s, thus vital to the efficient
operation of the insolvency and bankruptcy resolution
process. A well functioning system of resolution driven
by IPs enables the adjudicator to delegate more and
106
more powers and duties to the Professionals. This

creates the positive externality of better utilisation of
judicial time. The worse the performance of IPs, the
more the adjudicator may need to personally
supervise the process, which in turn may cause
inordinate delays. Consumers in a well functioning
market for IPs are likely to have greater trust in the
overall insolvency resolution system. On the other
hand, poor quality services and recurring instances of
malpractice and fraud, erode consumer trust.”
Tribunal rejected the application made by Insolvency
Resolution Professional with costs of Rs. 50,000
payable to Insolvency and Bankruptcy Fund or in the
absence of this fund to the credit of Prime Minister’s
Relief Fund. Further, it has directed the IRP to
commence the performance of his duties. In
furtherance to above, due to unprofessional act,
Tribunal directed IBBI to take such action against the
IRP as contemplated under various Regulations as
framed by it in relation to IP and IPA empanelled with
it.
107

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Series 2

Insolvency and Bankruptcy Code, 2016

Insolvency and Bankruptcy Laws Group under

Insolvency and Bankruptcy Laws Group under

The Institute of Chartered Accountants of India

All rights reserved. No part of this publication may be reproduced, stored in a

Published in : January, 2019

Committee/Department : Insolvency and Bankruptcy Laws Group

Price : Rs. 120/-

Published by : The Publication Department on behalf of

Printed by : Sahitya Bhawan Publications, Hospital

Justice Anil R. Dave (Retd.)

Date: 9th January, 2019

CA. Naveen N.D. Gupta

CA. Nihar Niranjan Jambusaria

CA. Ranjeet Kumar Agarwal

Date: 9th January, 2019

2. Orders passed by High Courts

4. Orders passed by National Company Law Tribunal

1. Small Industries Development Bank Of India Vs. 64-65

2. Asset Reconstruction Company (India) Limited Vs 65-66

3. Stanbic Bank Ghana Limited Vs. Rajkumar Impex 66-68

4. Manohar Karamchandani Vs. Balajidham 68-69

5. Venus Furniture Vs. AUM Structbuild Pvt. Ltd 69-70

6. Bhagwati Kripa Paper Mills Pvt. Ltd.,Vs. A.P. 70-72

7. Deevya Shakti Paper Mills (P) Ltd Vs. Borkar 72-74

8. Indian Bank, Oriental Bank of Commerce, 74-75

9. Allahabad Bank Vs. SBM Paper Mills Ltd 75-80

Date of Order: 11-10-2018

EFFECT OF STATUTORY ENACTMENTS

authorities. The second question, which was implicit if there was to be a

WHETHER IBC CAN BE INVOKED WHERE

ARTICLE 32 OF THE CONSTITUTION

Date of Order : 09-08-2018

re-commencing the CIRP. In order to do justice to the interests of all the

ARTICLE 142 OF THE CONSTITUTION

Date of Order: 06-09-2017

on-going proceedings against the Corporate Debtor before the National

REGULATION 6 OF THE IBBI (IP) REGULATIONS

FIR bearing No.RC/219/2012, dated 3.7.2012, has been registered against

WHETHER THE COMPANY COURT HAS ANY

Whether the Company Court has any jurisdiction to stay the

meaning of ‘Operational Creditor’ as defined under Section 5. There being a

to as ‘EXIM Bank’) relates to Corporate Insolvency Resolution Process

Admittedly, JEKPL has given the ‘Counter-Indemnity Obligation’ by way of

the meaning of ‘Corporate Debtor’ qua the ‘Financial Creditor’ in whose

Learned counsel appearing on behalf of the Respondent submitted that the

the applicant is to dispatch a copy of the application filed with the

available in the said current account is to be appropriated towards the dues

Date of Order: 05-09-2018

admitted unless it is incomplete, in which case it may give notice to the

International Road Dynamics South Asia Private Limited (Appellant)

 Whether different claims arising out of different agreements or work

3. In absence of any document showing dispute raised prior to issuance

issued by the Operational Creditor under Section 8 of the I & B Code,2016,

pertaining to a debt of Rs.21,63,359/-. The case was transferred pursuant to

2018 passed by the Adjudicating Authority (National Company Law Tribunal),

2016 – Application for Initiation of Corporate Insolvency Resolution

made by the Appellant- (‘Operational Creditor’) nor raised any question