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INSOLVENCY AND BANKRUPTCY NEWS

shares in accordance with the loan agreement. Thus, the FC has chosen to Ÿ Submission of the revised resolution plan for approval before the AA
exercise its rights under the Code in the event of default in repayment without CoC’s approval violates the statutory provision of section
which is certainly permissible in law. 30(2) and (3) of the Code and has vitiated the entire CIRP and made the
resolution plan void ab initio.
Jet Aircraft Maintenance Engineers Welfare Association Vs. Shri
Ashish Chhawchharia Resolution Professional for Jet Airways Ÿ Regulation 36(2) of CIRP Regulations provides the mandatory condition
(India) Ltd. & Ors. [Company Appeal (AT) (Insolvency) No. 628 of for publication of ‘Form-G’ on the CD's website and the website
2020] designated by the Board for the purpose. Non-publication of notices of
Form G is a material irregularity in exercise of the powers by RP during
The AA had allowed the sale of CD’s encumbered immovable non-core
asset during the moratorium period to generate the cash ow required for the CIRP period.
obtaining the title of six aircrafts that were taken by CD on nancial lease. Ÿ The related party FC or OC cannot be discriminated under the
On sale of the encumbered property, the secured creditor relinquished its resolution plan, denying their right to get payments under the
charge on payment of its dues. The grounds of challenge before NCLAT resolution plan only on being a related party. By getting only payment
was that the injunction in section 14 is mandatory and there is no discretion under the resolution plan, related party creditors could in no way
vested with AA. NCLAT observed that prohibition in transferring the sabotage the CIRP.
assets of the CD is on the CD and the said prohibition ipso-facto does not Sumit Bansal, Insolvency Professional Vs. Committee of Creditors
prohibit RP or CoC, who are empowered by specic provision of the Code of JP Engineers Pvt. Ltd. & Ors., [Comp. App. (AT) (Ins.) No. 160 of
to undertake any such sale. It also observed that despite declaration of
moratorium under section 14(1)(b), the RP is empowered to conduct sale 2022]
of unencumbered assets, if he is of the opinion that it is necessary for better IP led appeal claiming that IBBI has no jurisdiction and AA ought not to
realization of the value. The decision of RP to proceed with the sale after have sought recommendations of IBBI on the professional fee of IP. NCLAT
CoC’s approval was permissible and was not interjected by virtue of observed that “IBBI is fully clothed with jurisdiction to regulate payment of
declaration of moratorium under section 14(1)(b). It further held that due remuneration of RP and IRP both by framing regulation or by issuing executive
to provision under section 14(1)(c), secured creditor could not have instructions till regulation are not framed can regulate the subject”… “The
realized its dues during ongoing CIRP, but since the resolution plan is mere fact that IBBI has been asked to submit its recommendations by the AA, in
approved, NCLAT declined to reverse the transaction at this stage. the present case, there is no reason to question the jurisdiction of IBBI to
submit a recommendation. The recommendations may be helpful to determine
Standard Surfa Chem India Pvt. Ltd. (formerly known as M/s Portia the issue in accordance with guidelines and circulars issued by the IBBI in this
Ventures Private Limited) Vs. Kishore Gopal Somani, The respect, if any.”
Liquidator of Advanced Surfactants India Ltd. [Company Appeal
(AT) (Insolvency) No.684 of 2021] Mukesh N. Desai Vs. Piyush Patel & Ors. [Company Appeal (AT)
(Insolvency) No. 780 of 2020]
The AA and the Liquidator had refused to grant extension of time for
payment to the successful bidder in view of timeline specied in regulation The issue for consideration before NCLAT was whether a landowner
47A of the Liquidation Regulations. The issue for determination was as to intending to share prots emanating from the agreed venture, by way of an
whether the appellant is entitled to the exclusion of time during period of MoU, would fall within the ambit of the denition of ‘nancial creditor’
lockdown due to COVID-19. NCLAT while setting aside the order of AA under section 5(8) of the Code. AA observed that the amount paid by
held that regulation 47A of Liquidation Regulations deals with the model appellant had no time value of money by way of interest or repayable along
timeline for liquidation process. It is only directory in nature and cannot be with interest, as the amount was paid towards development and
considered a deadline. In exceptional circumstances, such a time limit can construction of the project and in return he is entitled to get 25 percent out
be extended. of the net prot, as reected in the MoU. NCLAT upheld the order of AA
holding that section 7 application led under the Code would not be
Ashish Chaturvedi & Anr. Vs. Inox Leisure Limited & Ors. maintainable as there is no sum(s) i.e., owed, assigned or transferred to in
[Company Appeal (AT) (Insolvency) No. 1103 of 2020] compliance of the provisions of section 5(8) of the Code.
The AA imposed a penalty of ₹ 5 lakh on each of the two ex-directors Vikram Puri (Suspended Director) & Anr. Vs. Universal Buildwell
under the provisions of the Companies Act, 2013 for withdrawal of ₹ 32 Private Limited & Anr. [Company Appeal (AT) (Insolvency) No.
lakh during moratorium and non -cooperation by them. NCLAT remanded 1018 of 2021]
the matter back to the AA for taking a decision under the provisions of the
Code after giving an opportunity to the appellant to present their case and The issue was whether the AA while exercising jurisdiction under the Code
giving due consideration of the facts of the case. It also held that the penalty is empowered to issue non-bailable warrant against any person or party.
can be imposed only under Chapter VII of the Code under which ofcers of NCLAT observed that the provision of rule 77 of the NCLAT Rules, 2016
the CD can be penalized and not under the Companies Act, 2013. read with Order XVI Rule 10 of Civil Procedure Code, 1908 fully
empowers the AA to issue a non-bailable warrant for enforcing attendance
Dr. Periasamy Palani Gounder Vs. Mr Radhakrishnan Dharmarajan of a person. It further observed that the proceedings under the Code are
Resolution Professional, Appu Hotels Limited & Anr. [Company proceedings of special nature and AA is empowered to take appropriate
Appeals (AT) (CH)(Insolvency) No.164, 176, 218 & 219 of 2021] measures for ensuring compliance of the provisions of the Code and for
The NCLAT observed that statutory requirements in regulating a matter of ensuring that all personnel extend co-operation to IRP/ RP.
practice and procedure are mandatory and that the resolution plan M/s. G.L. Engineering Industries Pvt. Ltd. Vs. Supreme Engineering
approved by AA is in contravention of section 30 (2) of the Code. It made Ltd. [Company Appeal (AT) (Insolvency) No. 431 of 2021]
following observations:
The AA had dismissed a section 9 application due to insufciency of
Ÿ Valuers appointed by IRP did not physically verify the CD's assets documents to establish any outstanding operational debt. Further, it
despite regulation 35 (1) (a) of the CIRP Regulations mandates that the observed that dishonor of cheques is a subject matter of the Negotiable
estimated fair value and liquidation value shall be computed after Instruments Act, 1881 (NI Act) and does not relate to any outstanding
physical verication of the assets of the CD. amount due from the respondent by way of any operational debt. NCLAT,
while dismissing the appeal, observed that the journal entries not
Ÿ A valuation consisting of mere naked values without a detailed report is supported by any other additional evidence cannot be ‘solely’ relied upon
not valid. The existence of a valid and accurate valuation report is a sine to prove that the amount claimed arises out of ‘supply of goods and
qua non for the CoC to exercise its commercial wisdom.
services’ to fall within the ambit of operational debt under section 5(21) of
Ÿ Approved resolution plan discriminates between related party the Code. Further, the dishonor of cheques is a subject matter of the NI Act
unsecured FC and other unsecured FCs, likewise related party OCs and recovery of these amounts cannot be said to be paid towards the
and other Ocs. supply of goods and services, specically in the light of the absence of any
such agreement or invoices to that effect.

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