APPLICATION UNDER SARFAESI- A Liberal Approach by the Supreme Court

By Richa Saraf, (legal@vinodkothari.com)

 

In the case of M.D. Frozen Foods Exports Pvt. Ltd. v. Hero Fincorp Ltd.[1], the Hon’ble Supreme Court held that there was no illegality in an Non-Banking Financial Company (NBFC) invoking SARFAESI Act for recovery of loan arrears with respect to an account classified as Non-Performing Asset (NPA) before the NBFC got notified under the Act. It also clarified that NBFC is entitled to initiate both arbitration proceedings and SARFAESI proceedings with respect to a loan account, and that the ‘doctrine of election’ was not attracted in such a scenario. There was a cleavage of judicial opinions inter se the High Courts, while the Full Bench of the Orissa High Court, as also the Delhi High Court and the Allahabad High Court have taken a view favourable in terms of the simultaneous legal processes under the SARFAESI Act and arbitration recovery proceedings, the Andhra Pradesh High Court has taken a divergent view and after careful scrutiny of the rival contentions and the judicial precedents cited, the Apex Court has finally settled the law on the point. Below, we discuss the same.  Read more

DECIPHERING “DISPUTE” IN INSOLVENCY AND BANKRUPTCY CODE

By Richa Saraf, (legal@vinodkothari.com)

-Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.[1]

The Supreme Court of India has provided a much required clarity on the provisions of Insolvency and Bankruptcy Code, 2016 (IBC) vis-à-vis the existence of dispute. In this article, we broadly discuss the various issues that were dealt with in the judgment.

BRIEF FACTS OF THE CASE:

Mobilox Innovations Pvt. Ltd. (hereinafter referred to as “Appellant” or “Corporate Debtor”) was engaged by Star TV for conducting tele-voting for the “Nach Baliye” program on Star TV, who in turn subcontracted the work to the Kirusa Software Pvt. Ltd. (Respondent). A Non-Disclosure Agreement (NDA) was also executed between the parties in this regard. Read more

CONSTITUTIONAL VALIDITY OF INSOLVENCY AND BANKRUPTCY CODE

By Richa Saraf, (legal@vinodkothari.com)

A writ petition has been filed in the Madras High Court, by Southern Polypet Private Limited, wherein the petitioner has challenged the Insolvency and Bankruptcy Code, 2016 (Code) as being contrary to the provisions of the Constitution of India and the Hon’ble High Court comprising Chief Justice Indira Banerjee and Justice M. Sundar has issued a notice with respect to this petition. Read more

RESTRICTIVE REMEDY UNDER SECTION 14 OF SARFAESI ACT

By Richa Saraf , (legal@vinodkothari.com)

In a recent Calcutta High Court (“Hon’ble High Court”) ruling of Union Bank of India & Anr. v. State of West Bengal & Ors. (01.09.2017), the object and intention behind Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) was discussed. The issue for consideration before the Hon’ble High Court was whether the District Magistrate can consider and dispose of an application under Section 14, subsequent to sale of the immovable property, over which security interest was claimed and the Hon’ble High Court answered in negative. Below, we discuss the ruling. Read more