IBC: Gist of Case Laws, by Vallari Dubey

Recently notified Insolvency and Bankruptcy Code, 2016 is still novel to the legal world. It is in the initial stage of execution and interpretation. While a lot of cases have been filed under the Code by different applicants, the intent of resolution is still taking its correct shape. Summarised below are interesting and important judgements in the IBC resolution history so forth.

1. Existence of Dispute:  inevitable to validate one’s defense against Operational Creditor

In KKV Naga Prasad v. Lanco Infratech Limited[1] (CP No. (IB) No. 9/9HDB/2017, Order dated 21/02/2017), it was prima facie that the claim made by the petitioner was itself in dispute, and that it is not up to the Tribunal go into deciding disputed claims of parties, while the Bench stated this, it relied on the objects of the Code as stated therein. The Tribunal therefore rejected the petition.

In One Coat Plaster & Shivam Construction Company v. Ambience Private Limited[2] (CP. No. (I.B.)07/PB/2017 & (I.B.)08/PB/2017, Order dated 01/03/2017)

There were two separate applications made against the same Corporate Debtor; Given the similar nature of the applications, the Bench disposed off these with a common order.

It was remarked by the Bench that definition of dispute is not an exhaustive definition but an illustrative one.

There was a dispute but the Bench didn’t seem to have a take on any suit/arbitration proceedings which are critical for existence of dispute. The Bench merely relied on the fact that demand notice was served to the Corp debtor by the OC and in respond the Corporate Debtor sent a notice which was delayed by 4 days. The Bench, therefore dismissed the application under Section 9 of the Code.

In Phillips India Ltd. v. Goodwill Hospital and Research Centre Ltd.[3] (CP No. (IB)-03(PB)/2017, Order dated 02/03/2017), the Bench relied on the judgement of One Coat Plaster v. Ambience Pvt. Ltd. and dismissed the application under Section 9 on grounds similar to latter case, being existence of dispute.

In Annapurna Infrastructure Pvt. Ltd. & Ors v. SORIL Infra Resources Limited[4] (CP No. (IB)-22(PB)/2017, Order dated 24/03/2017) the Bench observed, in favour of the respondent that the definition of ‘dispute’ under Section 5(6) of the Code is an illustrative definition rather than an exhaustive one. Thus, the respondent (Corporate Debtor) is “not left with the only option of showing the existence of dispute by way of a pending suit, arbitration or to show the breach of representation or warranty”. It was accepted that “the Corporate Debtor is well within his right to show that ‘goods’ and services were not supplied at all or that supply was far from satisfactory in case of demand raised by an ‘operational creditor’”. Hence, depending on facts and circumstances of each case, a corporate debtor is capable of rejecting the demand on any sustainable gounds.

Similar stand was taken by the Bench in Raman Seth & Anr. V. M/s Unitech Hi-Tech Developers Ltd.[5] (CP No. (IB)-32(ND)/2017, Order dated 31/03/2017), where on account of pendency of claim before National Consumer Disputes Redressal Commission is evident of existence of dispute, by virtue of which, the claim of the petitioner under the Code was considered to be sub-judice before a legal forum and the application under Section 9 of the Code was dismissed.

In M/s Uttam Galva Steel Ltd. v. M/s DF Deutsche Forfait AG and Misr Bank Europe GmbH[6] (C.P. no 45-2017, Order dated 10/04/2017), the bench observed the criticality of “existence of dispute” at length. The bench opined its views on the following issues as was argued by the corporate debtor:

a. Format of Application

The Bench construed that there cannot be any pleadings part in the Forms prescribed under the Code for the purpose of initiating corporate insolvency resolution process.

b. On seeing the Code as draconian

It was propounded that one cannot look at the Code to be draconian so as to presume that court proceedings in India are adversarial only.

c. “Dispute” under the Code

The main point of argument in this case was ‘dispute’ and its existence.

Section 9 of the Code entitles an Operational Creditor to file an application to initiate insolvency resolution proceedings against the Corporate Debtor subject to the condition that the applicant has not received the payment or the notice of the dispute u/s 8(2). The Court remarked that in order to interpret the definition of “dispute”, one shall read it in line with Sections 8 and 9 of the Code, as wasn’t it for these provisions, the definition of ‘dispute’ shall have no meaning. It was stated that one cannot disregard the intent of Section 8 and 9, solely to interpret the definition in their defense. Considering mere “denial of claim” shall not suffice for it to be termed as dispute.  Further to this, the bench concluded that the “dispute” shall exist before the receipt of notice by the corporate debtor under Section 8.

d. On the Applicants’ Locus Standi as Operational Creditors

Deutsche and Misr, filed the application as Operational Creditors even though they were not original creditors. The Bench observed that legal assignees are very much entitled u/s 9. There need not exist a separate contract between corporate debtor and the applicants to make their stand true to the fact under Indian Law. Also, the bench felt of no need to have permission of corporate debtor granted to assign the debts to the applicants viz. Deutsche and Misr in this case. Hence, the applicants are eligible under Section 9 as Operational Creditors.

e. On Interest claimed

The Court observed that, even though not specifically mentioned, interest can be claimed by the Operational Creditors over and above principal amount on failure to pay on time on part of the debtor.

The petition was admitted and insolvency resolution proceedings were initiated thereafter.

The respondent in Eviro International Corporation v. Gold Plus Glass Industry Ltd.[7] (CP No. (IB)-43(PB)/2017, Order dated 28/04/2017), was able to prove it to the satisfaction of the Tribunal that there exists evident that there is record of dispute, which was also to the notice of the Applicant. The application was admitted.

2. “Amount in default” cannot be a part of “Amount to be Claimed” as mentioned in the petition

In Urban Infrastructure Trustee Ltd v. Neelkanth Township and Construction Pvt Limited[8] (C.P. No. 21/I & BP/NCLT/MB/MAH/2017, Order dated 01/03/2017), the bench observed that the amount to be claimed and default occurred cannot be two different amounts. The application of the financial creditor u/s 7 was dismissed on the ground that the petitioner cannot segregate the amount to be claimed into “default occurred” and “default not occurred” in the petition made to the Tribunal. Thus the petition was not maintainable in the form before the Bench.

3. Restoring of Petition

In J.J. Plastalloy Pvt Ltd v. Miltech Industries Private Limited[9] (C.P. no. 04/I&BP/NCLT/MB/MAH/2017, Order dated 14/03/2017), the matter was discussed as to whether a petition originally filed which was dismissed on default can be restored based on Rule 48(2) of NCLT Rules. The H’ble Bench opined that such restoration if done ought to be in compliance of the Code, i.e. if restoration is given effect to and the same is after 14 days of filing of the original petition, it shall defeat the provision under the Code as per which order has to be passed within a period of 14 days from the date of application under Sections 7, 9 and 10 of the Code.  The application was dismissed for the second time.

4. Whether “Assured Returns” are “Financial Debt”

In Nikhil Mehta & Sons (HUF) & Ors v. AMR Infrastructure Ltd[10] (C.P. no. (ISB)-03(PB)/2017, Order dated 23/01/2017) the petitioner made an application to initiate insolvency proceedings under Section 7 of the Code. His petition was dismissed on following two important grounds:

  1. The vitality of the definition of ‘financial creditor’ under Section 5(7) of the Code, and
  2. the argument that ‘Assured returns’ are not ‘financial debt’ under Section 5(8) of the Code.

The Bench highlighted that anyone making an application under Section 7 has to be a financial creditor under the Code, failing which the applicant cannot apply. The Bench opined the essential requirement for a debt to be a financial debt, that it is debt disbursed against the consideration of ‘time value of money’. That means the inflows and outflows are distanced by time and there is a compensation for time value of money. On examination of nature of transactions in the present case, the Bench found that it is a pure and simple agreement of sale or purchase of property. An ‘assured amount of return’ in such transactions could not be given the status of ‘financial debt’. Held, since the debt referred in the case is not a financial debt, applicant making an application as a financial creditor based on this fact, is not eligible under Section 7.

5. On ambit of “Operational Debt” under Section 5(21) of the Code

  • The Bench in Vinod Awasthy v. AMR Infrastructure Ltd[11] (C.P. no (IB)-10(PB)/2017)b, Order dated 20/02/2017) accentuated that ‘operational debt’ under Section 5(21) is confined to only four categories, viz. goods, services, employment and Government dues.
  • Also, the framer of the Code has not included in the expression that operational debt is any debt other than financial debt. Hence anything other than these four categories shall be de jure out of the purview of definition of operational debt. It was observed by the Bench that the debt in the present case is not associated with any of the four categories but it was sought to be recovered as is necessarily associated with delivery of possession of immovable property which was delayed.
  • Since the debt in question cannot be regarded as operational debt thus, the applicant has no stand as an Operational Creditor and his application on these grounds were thus dismissed.
  • It was further propounded that dues are on account of advance made to purchase a flat/commercial property and remedy for the same is also available under the Consumer Protection Act and General Law of the Land. Thus the Bench was of the view that it is not possible to construe Section 9 so widely to include the given remedy in the matter.
  • Similar view as above was taken by the respective Benches in Mukesh Kumar & Anr v. AMR Infrastructure Ltd[12], Sajive Kanwar v. AMR Infrastructure Ltd[13], Pawan Dubay & Anr v. JBK Developers Pvt Ltd[14], Mr. Satish Mittal v. Ozone Builders & Developers Pvt. Ltd.[15].

6. Application filed against one Company where debt is owed by Group of Companies

  • In Ishwar Kandelwal v. Amrapali Infrastucture Private Limited[16] (C.P. no (I.B.)21/PB/2017, Order dated 22/03/2017) the applicant claimed debts from 11 different Companies as mentioned in the petition under the same group, however the application was made against just one Company named as “Amprapali Infrastructure Pvt Ltd”.
  • It was pinpointed by the Bench that the amount of debt claimed by the applicant should correspond to the debt owed by the Corporate Debtor named in the application and not otherwise. The fact that debt is owed by Companies belonging to the same group doesn’t justify the application made against just one of the Companies.
  • The Code doesn’t allow collective enforcement of liabilities owed by a group of Companies against a single Company which is not given taking into consideration the nature of the Code. The application was dismissed by the Bench.

7. Validity of Application filed when winding up proceeding under the Companies Act, 1956 had been initiated

  • In the case of Nowfloats Technologies Private Limited v. Getit Infoservices Private Limited[17], (C.P. no (I.B.)45(PB)/2017, Order dated 11/04/2017) the applicant had already filed winding up proceedings against the respondent in the High Court of Delhi under the provisions of Companies Act, 1956, for which the application was admitted by the Court and an official liquidator was duly appointed.
  • The Bench, after taking into consideration the order passed by the H’ble High Court and the Notification no S.O. 3676(E) of the Central Government dated 15 December, 2016, remarked that no suit or other legal proceeding shall be proceeded with against the Company except by leave of the High Court, which is seized of the winding up proceedings.
  • In the present case, no leave as aforementioned was obtained by the applicant, and thus application made under the Code was thereby dismissed.

8. Claim made on bogus documents, liable to be dismissed

In Creative Solutions v. AMR Infrastructure Limited[18] (C.P. no (I.B.)34/PB/2017, Order dated 10/04/2017), the invoices or bills raised by the petitioner Company (Operational Creditor) could not be validated given absence of important information on such invoices/bills such as date, the name of person in whose name these are raised, also Registration number of service tax or VAT. Therefore, as was clearly stated by the Hon’ble Bench, that there was absence of any material to be produced to decipher the actual amount of claim as made by the petitioner, the petition was dismissed.

9. Multiple remedies for same cause of action

The Bench in Annapurna Infrastructure Pvt. Ltd. & Ors v. SORIL Infra Resources Limited[19] (C.P. no. (IB)-22(PB)/2017, Order dated 24/03/2017), opined that it is against the fundamental principles of judicial administration to allow a party to avail more than one remedies, as is evident from Section 10 of CPC.

The application was dismissed with a cost of Rs. 1,00,000.

The Hon’ble Principal Bench of New Delhi, NCLT in Deem Roll Tech Limited v. R. L. Steel & Energy Limited[20] (C.P. no (I.B.)24/PB/2017, Order dated 31/03/2017), on the similar issue, underscored the following:

The petitioner had already obtained a decree from the civil court in relation to the amounts claimed, and that the petitioner can get the decree executed before the appropriate civil courts meant for execution. The Bench made it clear that the Tribunal could not be converted into an executing court. Additionally, it was held that a petitioner cannot seek multiple remedies in respect of same cause of action and venture into forum shopping. The application made under Section 9 of the Code was thus dismissed with costs of Rs. 25,000.

10. Claims being time-barred

 

In Deem Roll Tech Limited v. R. L. Steel & Energy Limited[21] (C.P. no (I.B.)24/PB/2017, Order dated 31/03/2017), the Bench opined that Section 255 of the Code provides that the Companies Act, 2013 shall be amended in the manner specified in the eleventh schedule to IBC and accordingly, it is evident that Companies be amended in the relevant way except for Section 433 which pertains to applicability of provisions of the Limitation Act, 1963. Thus, it was propounded that such provisions are applicable to the proceedings or appeals before the Tribunal or Appellate Tribunal, as the case may be. The claims made by the petitioner were considered to be time-barred.

In Speculum Plast Pvt. Ltd. v. M/s. PTC Techno Pvt. Ltd.[22] (CP No. (IB)-41(ND)/2017, Order dated 11/04/2017) the Bench stated, that the difference between the period when invoices were raised and initiation of given proceedings under Section 9 of the Code, was beyond the period of limitation i.e. beyond three years. Further to this, where the petitioner sought to rely on cheques tendered by the Corporate Debtor for enhancing the period of limitation, even that was construed to be beyond the enhanced period of limitation. The claim being time-barred, was thus dismissed.

11. What constitutes, pending proceedings under Arbitration Act?

Para 26 of the order in Annapurna Infrastructure Pvt. Ltd. & Ors v. SORIL Infra Resources Limited (CP No. (IB)-22(PB)/2017, Order dated 24/03/2017) highlighted a very important point:

Appeal under Section 37 of the Arbitration Act could be preferred within 30 days against an order passed under Section 34 of the Act. Merely because no appeal was pending on the date of issuance of demand notice under Section 8(1) of the Code, when the respondent had time to prefer appeal would not entitle the applicant to invoke Section 9 of the Code, thus making the petitioner ineligible to file insolvency resolution application as an Operational Creditor.

12. Inability to pay debts

The Tribunal highlighted that the corporate debtor was not in a position to meet its liabilities and in the absence of any dispute from the respondent’s side, the order was passed in favour of the applicant, thereby admitting the application of initiation of insolvency proceedings. (S.R. Constructions v. International Recreation and Amusement Ltd.[23] (CP No. (IB)-68(PB)/2017, Order dated 28/04/2017).

Akin to the above, NCLT admitted the petition in the case of Belthangady Taluk Rubber Grower’s Marketing & Processing Co-operative Society Limited v. Falcon Tyres Limited[24](CP(IB) No.01/BB/17, Order dated 28/04/2017). Further, the application was admitted in Agarwal Marketing and Services (Energy) Pvt. Ltd. v. Max Tech Oil & Gas Services Pvt. Ltd.[25] (CP No. (IB)-48(PB)/2017, Order dated 01/05/2017), filed under Section 9 of the Code, on account of inability to pay current liabilities on part of the corporate debtor.

Similar to the above, NCLT admitted the application in Anant Overseas Pvt. Ltd. v. M/s Global Houseware Ltd.[26] (CP No. (IB)-73(PB)/2017, Order dated 03/05/2017).

13. Delivery of “demand notice”, a ‘sine quo non’ under IBC

The Tribunal emphasized on the importance of sending “demand notice”, stating that it is crucial for putting the Corporate Insolvency Process under Section 9 of IBC into motion and in case of failure on part of the Operational Creditor, it shall disentitle him from proceeding further. (Manish Kumar v. Iyogi Technical Services (P) Ltd.[27] (CP No. IB-33 (PB) 2017), Order dated 01/05/2017)

14. Defective petition

The petition was found to be defective  and incomplete, where the defects as pointed out in the NCLT Order were not taken care by the Operational Creditor and the petition was therefore rejected. (Surendra Trading Company v. M/s. Juggilal Kamplat Jute Mills Company Ltd.[28] (CP No. (IB) 10/ALD/2017, Order dated 03/05/2017))

15. Power of Attorney, to file for resolution under Section 7 of IPC

In case of ICICI Bank Ltd. v. Palogix Infrastructure Pvt. Ltd. & Ors. (SB Case No. 01/IBC/GB/2017 (CP No. 37 of 2017 Order dated 30/03/2017)), the proceedings necessitated out of two divergent orders, on account of which a special Bench was constituted to decide on the disagreement. In relation to power of attorney (PoA) given to a person by the applicant, the issue arose as to “whether the power of attorney in question had ever bestowed upon the attorney holder the necessary authority to initiate a proceeding u/s 7 of the Code”, the Tribunal referred to several judgments and analysed the complex scenario, going in-depth of several facts and circumstances which occurred soon before and after the execution of power of attorney. In the present case, the power of attorney was executed when the Companies Act, 2013 was already in operation; However when IBC came into picture, situations were changed to a great extent. It was propounded that “procedures vis-à-vis winding up/insolvency/liquidation of the companies etc. under the Act of 1956 and the procedures for insolvency/liquidation etc under the Code of 2016 are not one and same.” Under the PoA in question, various powers including power to initiate winding up proceedings were bestowed. However, such powers could not be stretched to embrace the power to initiate a corporate insolvency resolution proceeding under Section 7 of the Code. The Special Bench concurred with the findings of the learned Member Judicial and answered the reference for divergent views as above without any further remarks.

16. Code v. Other Acts

In case of ICICI Bank Ltd. v. Innoventive Industries Ltd.[29](CP No. 01/I & BP/NCLT/MAH/2016, Order dated 17/01/2017), it was held that the Code shall prevail the Maharashtra Relief Undertakings (Special Provisions) Act, 1958. The petition made under Section 7 as a financial creditor was thereon admitted.

[1] http://nclt.gov.in/Publication/Hyderabad_Bench/2017/Others/Lanco%20Infratech%20Ltd..pdf

[2] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/One%20Coast%20Plaster%20and%20Ambience%20Private%20Limited..pdf

[3] http://nclt.gov.in/interim_orders/principal/02.03.2017/Goodwill%20Hospital%20and%20Research%20Centre%20Ltd..pdf

[4] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Soril%20Infra%20Resources%20Ltd.%20(Annapurna)%20(Final.pdf

[5] http://nclt.gov.in/Publication/New_Delhi_Bench/2017/Others/Raman%20Seth%20&%20anr.%20%20Vs.%20Unitech%20Hi%20-Tech%20Developers%20Ltd.pdf

[6] http://nclt.gov.in/Publication/Mumbai_Bench/2017/Others/Uttam%20Galva%20Steel%20Ltd.%20dated%2010.04.2017%20CP%2045-2017%20FINAL.pdf

[7] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/EviroInternationalCorporationGoldPlusFinal.pdf

[8] http://nclt.gov.in/Publication/Mumbai_Bench/2017/Others/Urban%20Infrastructure%20Trustee%20Ltd.%20CP%2021-I&BP-2017%20Order%20dated%20on%2001.03.2017%20Final.pdf

[9] http://nclt.gov.in/Publication/Mumbai_Bench/2017/Others/1J%20J%20Plastalloy%20Pvt.%20Ltd.%20MA%2048-2016%20CP%2004-2017%20I&BP%20Order%20dated%20on%2014.03.2017%20FINAL.pdf

[10] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/AMR%20Infrastructure%20Ltd.%20(Nikhil%20Mehta).pdf

[11] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Col.%20Vinod%20Awasthy%20(Final).pdf

[12] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Mukesh%20Kumar%20&%20anr.%20%20Vs..%20AMR%20infrastructructres.pdf

[13] http://nclt.gov.in/interim_orders/principal/16.02.2017/Sajive%20Kanwar%20Vs.%20AMR%20Infrastructure.pdf

[14] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Pawan%20Dubay%20&%20anr.%20Vs.%20J.B.K.%20Developers%20Pvt%20ltd%20..pdf

[15] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/OzonwBuilders(SatishMittal)(Final).pdf

[16] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Amprapali%20Infrastructure%20Private%20Limited%20(Final).pdf

[17] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Getit%20Infoservices%20Pvt.%20Ltd..pdf

[18] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Creative%20Solutions.pdf

[19] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Soril%20Infra%20Resources%20Ltd.%20(Annapurna)%20(Final.pdf

[20] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Deem%20Roll%20-Tech%20Limited%20%20vs.%20r.l.%20Steel%20Energy%20ltd.pdf

[21] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Deem%20Roll%20-Tech%20Limited%20%20vs.%20r.l.%20Steel%20Energy%20ltd.pdf

[22] http://nclt.gov.in/Publication/New_Delhi_Bench/2017/Others/PTC%20Techno%20Pvt.%20Ltd..pdf

[23] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/SRConstructionsFinal.pdf

[24] http://nclt.gov.in/Publication/Bengaluru_Bench/2017/Others/Belthangady%20Taluk%20Rubber%20Grower’s%20Marketing%20&%20Processing%20Co%20operative%20Society%20Ltd%201%202017%20FO.pdf

[25] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/MaxTechOilGasServicesPvtLtdFinal.pdf

[26] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/Global%20Plus%20Houseware%20Ltd.pdf

[27] http://nclt.gov.in/Publication/Principal_Bench/2017/Others/IyogiTechnicalServicesLtdFinal.pdf

[28] http://nclt.gov.in/Publication/Allahabad_Bench/2017/Others/final%20order%20cp%20no%20(IB)10%20ALD%202017%20DATED%20IN%203.5.2017.pdf

[29] http://nclt.gov.in/Publication/Mumbai_Bench/2017/Others/Innoventive%20Industries%20Ltd..pdf

Is the two-section ordinance key to India’s bulging NPA crisis?

By Vinod Kothari, (vinod@vinodkothari.com)
The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing assets (NPA), was signed into law by the President on 5 May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, the Banking Regulation Act. After reading the law, one is forced to ask if this is what was holding up the resolution of NPA crisis in the country. Did it actually have to take all this time?

Read more

Relaxing the quantitative criteria required by JLF for approving a restructuring plan by Nitu Poddar & Vallari Dubey

RBI’s fast move in view of its latest powers granted through the Banking Ordinance

 

The Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP) work on the principle of indentifying the stress in a borrower entity and cure it at its nascent stage itself. The intent is to preserve the “economic value” of the underlying assets against the loan extended by financial creditor.

Read more

A Two-section Ordinance, holding the key to India’s NPA crisis By Vinod Kothari

The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing loans, was signed into a law by the President on 5th May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, viz., the Banking Regulation Act. After reading the law, one is forced to think – if this is what was holding up the resolution of NPA crisis in the country, did it actually have to take all this time?

Read more

Impact of winding up petitions on insolvency filings by Nitu Poddar

Can an Application for resolution process of a company be filed under IBC, 2016 in case a winding up Petition is pending before a High Court?

MCA Notification on transition for pending proceedings

MCA notification for Companies (Transfer of Pending Proceedings) Rules, 2016[1]  only provides for the transition of the litigation process from High Court to the NCLT.  This Rule lays down the criteria for deciding whether the matter will be filed with and adjudged by NCLT or by High Court.

As per the Rule 5 of the said Rules, where the Petition for winding up has been served on the Respondent Company and is pending before the respective High Court, such Petition shall be adjudged by the High Court.

When a matter is being adjudged by the High Court under Act, 1956, the same will be governed by the provisions of the erstwhile Act, 1956.

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A DISPUTE AS TO “DISPUTE” by Sikha Bansal- (Under the aegis of Vinod Kothari & Company)

The Insolvency and Bankruptcy Code, 2016 (“the Code”) enables a financial creditor and an operational creditor to initiate insolvency proceedings against a corporate debtor. While in case of a financial creditor, the creditor may initiate a case without serving “demand notice” on the corporate debtor; an operational creditor, before taking action under section 9, shall first serve a demand notice on the corporate debtor. If in response, the corporate debtor intimates existence of a “dispute”, the operational creditor cannot proceed under section 9. Therefore, “dispute” becomes a crucial word as it decides whether an operational creditor has a “cause of action” against the corporate debtor.

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RECTIFICATION OR RESTRUCTURING OR RECOVERY: JUDICIARY CLEARS THE AIR OF CONFUSION, by Sneha Bhawnani

In the recent past, the financial sector has witnessed an alarming rise in the number of stressed assets. Undoubtedly, the ability of the lender to deal with stressed assets has been time and again tested. Nevertheless, there is existence of informal as well as formal framework to deal with default on the part of the borrower company. For instance, the informal regulatory framework of the country provides various avenues to the lenders for the purpose of revitalising Read more

Voluntary Liquidation Regulations: Last, but not the Least, by Sikha Bansal

The Insolvency and Bankruptcy Board of India, vide Notification No. IBBI/2016-17/GN/REG010 dated March 31, 2017 has issued the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (“the VL Regulations”) pursuant to section 59 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) and has appointed April 1, 2017 as the date on which the VL Regulations shall come into force.

The Ministry of Corporate Affairs vide Notification No. S.O. 1005(E) dated March 30, 2017[1] has notified April 1, 2017 as the date on which the following sections of the Code came into force: Read more