India Case Law

H.D.F.C. BANK LIMITED versus KISHORE K. MEHTA (DEAD) THR. LRS.

The Supreme Court held that a pre-2016 DRT recovery certificate could not support an insolvency notice under Section 9(2) of the Presidency Towns Insolvency Act.

• Insolvency notice under section 9(2) of the presidency towns insolvency act, 1909
• Recovery certificate issued by debts recovery tribunal
• Whether a recovery certificate is a decree or order
• Retrospective effect of statutory amendment
• Rights crystallized on date of institution of proceedings
• Insolvency-notice

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SINGAMASETTY BHAGAVATH GUPTHA & ANR. versus ALLAM KARIBASAPPA (D) BY LRS./ALLAM DODDABASAPPA (D) BY LRS. & ORS.

The High Court erred in holding that Section 37 saved the transfer deed of 11.03.1983 because the District Court had found that the underlying documents (Ex.P.4 and Ex.P.6) were fabricated and that there was no final, valid transaction prior to adjudication; for Section 37 to protect a transfer, the transactions/orders of the court or receiver must be valid and have attained finality and appellate courts must independently reappreciate evidence before overturning trial findings. Consequently the appeals by the purchasers fail and the District Court judgment dated 16.02.2004 is restored.

Source excerpt

• Annulment of adjudication
• Section 37 provincial insolvency act, 1920
• Validity of transfers by official receiver
• Appellate review of factual findings

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TATA STEEL LTD. versus RAJ KUMAR BANERJEE & ORS.

The limitation period under section 61(2) IBC began on the date of pronouncement of the NCLT order (07.04.2022) and the statutory maximum period for filing the appeal was 45 days (30 + 15). The respondent filed beyond that period. Section 4 of the Limitation Act does not operate to extend the discretionary condonable period; the NCLAT lacked jurisdiction to condone delay beyond 15 days. Consequently, the NCLAT order condoning delay was ultra vires and was set aside; appeal allowed.

Source excerpt

• Limitation
• Condonation of delay
• Appeals to nclat
• Computation of limitation period
• Prescribed period under limitation act
• Section 61(2) ibc

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M/S JSW STEEL LIMITED versus PRATISHTHA THAKUR HARITWAL & ORS.

The Court held that the demands raised by the respondents for periods prior to the date on which the NCLT approved the resolution plan were contemptuous because under the law declared in Ghanshyam Mishra all claims not included in an approved resolution plan stand extinguished and cannot be the subject of recovery proceedings; consequently the demand notices and all proceedings pursuant thereto were illegal and are quashed and set aside, although no punitive action was taken against the respondents who tendered unconditional apology.

Source excerpt

• Resolution plan approval
• Extinguishment of claims not included in resolution plan
• Statutory dues
• Demand notices
• Binding effect of approved resolution plan

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DILIP B JIWRAJKA versus UNION OF INDIA & ORS

Sections 95 to 100 of the IBC are constitutionally valid: the resolution professional appointed under s.97 performs a facilitative, recommendatory role under s.99 (collating facts and seeking information relevant to the application) and does not exercise judicial adjudicatory power; no judicial determination is required prior to appointment of the resolution professional and the true adjudicatory function occurs under s.100 where the adjudicating authority must observe principles of natural justice and decide within the prescribed timeline whether to admit or reject the application; s.96 inte…

Source excerpt

• Insolvency and bankruptcy code part iii (ss.95-100)
• Natural justice (audi alteram partem)
• Interim moratorium
• Role of resolution professional
• Right to privacy
• Statutory interpretation

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INDUSTRIAL DEVELOPMENT BANK OF INDIA (THROUGH STRESSED ASSETS STABILIZATION FUND CONSTITUTED BY THE GOVERNMENT OF INDIA) versus SUPERINTENDENT OF CENTRAL EXCISE AND CUSTOMS AND OTHERS

The adjudicated customs duties by orders dated 15.09.2000 and 10.10.2000 became 'due and payable' well before the relevant date (winding up order dated 01.12.2003) and thus do not qualify as preferential under Section 530(1)(a); Section 529A's non-obstante provision gives overriding priority to workmen's dues and specified secured creditors, and the Customs Act does not negate or override that statutory preference; accordingly the prior secured creditor (IDBI) is entitled to enforce its charge and the High Court decision granting customs authorities first right to sell is set aside, with sale…

Source excerpt

• Preferential payments
• Overriding preferential payments
• Secured creditors' charges
• Relevant date
• Interpretation of 'due' and 'due and payable'
• Statutory first charge

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MODI RUBBER LIMITED versus CONTINENTAL CARBON INDIA LTD.

The rehabilitation scheme sanctioned by BIFR under Section 18 of SICA, 1985 binds all creditors including unsecured creditors; unsecured creditors do not have an option to opt out of a sanctioned scheme and must accept the scaled down value of their dues as provided by the scheme, and the Delhi High Court decision to the contrary was quashed and set aside.

Source excerpt

• Rehabilitation scheme under s.18 sica
• Binding effect of sanctioned scheme on creditors
• Status and rights of unsecured creditors
• Suspension of proceedings under s.22 sica
• Article 300a challenge to scaling down of debts

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M/S. SHEKHAR RESORTS LIMITED (UNIT OF ORIENT TAJ) versus UNION OF INDIA

Where a corporate debtor could not deposit the Scheme-determined settlement amount within the Scheme period because it was legally impossible to make payments during an IBC moratorium, the debtor cannot be penalized or rendered remediless; relief by appropriate remedial measures is available. Accordingly, the High Court's refusal of relief was erroneous and the deposited amount must be appropriated towards the Scheme dues and a discharge certificate issued.

Source excerpt

• Moratorium under ibc
• Sabka vishwas (legacy dispute resolution) scheme, 2019
• Article 226 writ
• Designated committee under the scheme
• Payment during moratorium

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KOTAK MAHINDRA BANK LIMITED versus A. BALAKRISHNAN & ANR.

Issuance of a Recovery Certificate by the Presiding Officer under Section 19(22) read with Section 19(22A) of the Debt Recovery Act gives rise to a fresh cause of action; a liability arising from such Recovery Certificate is a 'financial debt' within clause (8) of Section 5 IBC and the holder is a 'financial creditor' under clause (7) of Section 5; such a holder may initiate CIRP under Section 7 IBC within three years from the date of issuance of the Recovery Certificate. Accordingly the NCLAT order holding the Section 7 application time-barred was quashed and set aside.

Source excerpt

• Corporate insolvency resolution process (cirp)
• Recovery certificate / debt recovery
• Definition of financial debt and financial creditor under ibc
• Limitation for initiation of cirp
• Statutory interpretation
• Moratorium (section 14 ibc)

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INDIAN OVERSEAS BANK versus M/S RCM INFRASTRUCTURE LTD. AND ANOTHER

The CIRP commenced and moratorium was ordered on 3 January 2019; because the statutory SARFAESI sale under Rules 8 and 9 is complete only on full payment and issuance of the sale certificate, and the balance sale consideration was accepted by the Bank only on 8 March 2019 (after commencement of CIRP), the Bank's continued SARFAESI proceedings and realization were prohibited by Section 14(1)(c) read with Section 238 of the IBC. Consequently the NCLT and NCLAT rightly set aside the sale and their orders do not call for interference.

Source excerpt

• Moratorium under section 14 of the ibc
• Overriding effect of section 238 of the ibc
• Sarfaesi act enforcement and statutory sale
• Completion of sale under security interest (enforcement) rules rr.8 and 9
• Voluntary insolvency under section 10 ibc
• Allegations of mala fide initiation under section 65 ibc

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