Year 2023 Case Digest - Part Ii: Nclat Judgments On Insolvency and Bankruptcy Code, 2016 (Ibc) and Companies Act, 2013

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YEAR 2023 CASE DIGEST - PART II

NCLAT JUDGMENTS ON INSOLVENCY AND BANKRUPTCY CODE,
2016 (IBC) AND COMPANIES ACT, 2013
Part-I and Part-III
51. Financial Creditor who does not attend the proceeding, cannot be heard in
saying that CIRP has wrongly been conducted
Case Name: Consolidated Finvest & Holdings Ltd. Vs. Subhash Kumar Kundra, RP – CLC Industries
Ltd. & Ors.
Case Citation: (2023) ibclaw.in 197 NCLAT
In this case, the Appellant was challenging the entire process which was not legally done hence
prayer was made to issue fresh EoI and Appellant does not want liquidation of the Corporate
Debtor but was interested in resolution of the Corporate Debtor. Out of sixteen CoC meeting, only
in one CoC meeting, the Appellant attended and neither he voted in any agenda nor raised any
objection regarding the process. NCLAT held that Financial Creditor of the Corporate Debtor have
been given rights as per IBC to take steps for resolution of the Corporate Debtor and financial
creditor who does not attend the proceeding, can not be heard in saying that process has wrongly
been conducted.
52. The word used in CIRP Regulation 9(2) is ‘may’ as against ‘shall’ in Regulation
9(1) which means that Regulation 9(2) is provided more as a matter of
convenience for the workmen or employees but still demands a declaration in
respect of claim with proof and verification of the Form ‘Particulars’ mentioned
therein
Case Name: Fort Gloster Industries Ltd. Vs. Resolution Professional, Fort Gloster Industries Ltd.
NCLAT held that a close reading of Regulation 9(2) of the Regulations says that where there are
dues to be paid to the workmen or employees of the Corporate Debtor, they may collectively
choose an authorised representative to submit their claim with proof but in Form-E of the Schedule.
The word used in Regulation 9(2) of the Regulations is ‘may’ as against ‘shall’ in Regulation 9(1) of
the Regulations which means that Regulation 9(2) of the Regulations is provided more as a matter
of convenience for the workmen or employees but still demands a declaration in respect of claim
with proof and verification of the Form ‘Particulars’ mentioned therein.
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53. Having not filed claim of electricity dues of pre-CIRP in CIRP, it is not entitled
to recover pre-CIRP dues and electricity cannot be disconnected
Case Name: Swastik Aqua Ltd. & Anr Vs. Jharkhand Bijli Vitran Nigam Ltd. & Anr.
NCLAT held that There can’t be any dispute that the Appellant/Monitoring Professional/Resolution
Professional were liable to make the payment of the dues during the CIRP period, which according
to Appellant stood paid. In the event any amount is still due with regard to the electricity dues
during the CIRP, it shall be open for the Department to issue bill and realise the same. We further
make it clear that R-1 having not filed any claim in the CIRP regarding pre-CIRP dues, it is not
entitled to recover the pre-CIRP dues and on non-payment of the said amount, to disconnect the
electricity.
54. Whether an application filed under Section 65 of the IBC is maintainable

after the filing of the application under Section 7, 9 or 10 of the Code or could
be maintainable only after the admission of such an application?
Case Name: Ashmeet Singh Bhatia Vs. Sundrm Consultants Pvt. Ltd. & Anr.
In this case, an application filed by appellant has been dismissed by the NCLT holding that it is to be
noted that a bare reading of Section 65(1), states that “If, any person initiates the insolvency
resolution process… “. However, in the present case the CIRP has not yet been initiated and it is
currently being heard by this bench, CIRP has not yet been initiated. The Applicant can approach
this tribunal under Section 65 of Code, only once the Petition is admitted and CIRP has been
initiated. NCLAT set aside the order of NCLT and held that as a matter of fact, the Learned Tribunal
has taken a decision, while interpreting Section 65 of the Code, that the application under Section
65 of the Code would be maintainable only once the application under Section 7, 9 or 10 is admitted
and the CIRP is initiated. However, in our considered opinion the view taken by the Learned
Tribunal is totally erroneous as it has not looked into the basic provisions much less the definitions
provided under Section 5(11) and 5(12) of the Code and has been unnecessarily influenced with the
word “initiates” used under Section 65 to observe that it would mean that when the CIRP is initiated
i.e. after the admission. In case where application is filed under Section 65 of the Code, it would be
maintainable after the application is filed either under Section 7, 9 or 10 of the Code.
55. There is no scope for condonation of delay beyond the period of 15 days
much less 45 days for filing appeal before NCLAT under IBC
Case Name: Diwakar Sharma Vs. Anand Sonbhadra RP of M/s Subhkamna Buildtech Pvt. Ltd. &
Anr.
NCLAT referred judgments, Mr V Nagarajan Vs. SKS Ispat and Power Ltd. (2021) ibclaw.in 157 SC and
National Spot Exchange Ltd. Vs. Mr. Anil Kohli, RP for Dunar Foods Ltd. (2021) ibclaw.in 151 SC and
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held that Section 61(1) provides for a right of appeal to an aggrieved person. Section 61(2) provides
a period of limitation 30 days for preferring an appeal in terms of Section 61(1) before the Appellate
Authority. Section 61(2) proviso provides another period of 15 days which can be extended in case
the Appellant satisfies the Appellate Authority about the existence of a sufficient cause for not filing
the appeal in time. There is no further provision in the Code for looking into the aspect of
condonation of delay beyond the period of 15 days much less 45 days.
56. In case of claim on the basis of Arbitration Award, claim amount should be
as per the award and RP has power to change the claim amount even after
admission of the claim
Case Name: Intec Capital Ltd. Vs. Uday Kumar Bhaskar Bhat IRP of Atharva Auto Logistics Pvt. Ltd.
The submission of Appellant that Resolution Professional cannot reduce the claim amount once
admitted, NCLAT held that under CIRP Regulations, 2016, the Resolution Professional has, in events
additional materials comes, power to change the claim amount. Therefore, we do not find any error
in the said order. On the submission of learned counsel for the Appellant that the award which was
delivered by the Sole Arbitrator is not relevant insofar as claim of the Appellant is concerned, NCLAT
held that claim calculated on the basis of the award can neither be said to be incorrect nor against
the materials on record.
57. The allocation in Resolution Plan to Creditors can be questioned when the
plan value earmarked for them is less than the liquidation value, mere
allocation of meagre amount cannot be a ground to question the resolution
plan
Case Name: Pani Logistics Through its sole proprietor, Kiran M. Jain Vs. Vikas G. Jain & Ors.
NCLAT held that the allocation in the plan to the creditors can be questioned when the plan value
earmarked for them is less than the liquidation value. Mere allocation of meagre amount cannot be
a ground to question the resolution plan. It is also submitted by learned counsel for the Appellant
that several cases against the ‘Rare Asset Reconstruction Ltd.’ are pending including Income Tax
raid. There has been several material have come in to light which indicate that the Asset
Reconstruction Company is a fraudulent company which is involved in several illegal activities. A
fraudulent company should not be allowed to take over the Corporate Debtor. NCLAT held that be
that as it may. The law will take its own course. On these grounds, we are unable to interfere with
the order approving the Resolution Plan.
58. The IBC does not contemplate multiplicity of applications against the same
Personal Guarantor, when the Insolvency Resolution Process commences
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against a Personal Guarantor, claims of all Creditors are taken care

Case Name: Union Bank of India Vs. Mr. P.K. Balasubramanian
Issue in this case that Section 95 Application was filed by Appellant/Union Bank of India three days
prior to the date when the State Bank of India had filed their Application and therefore their
Application ought to have been admitted first. NCLAT held that indeed, the date of filing of the
application under Section 95 is what is to be taken into account and not the date when the
application is numbered. There is no appreciable evidence on record to state that the said
application was defective. When an Insolvency Resolution Process commences against the Personal
Guarantor, all Creditors of the Personal Guarantor are taken care of in the proceedings under
Chapter-III. The Code does not contemplate multiplicity of applications against the same Personal
Guarantor. This Tribunal is of the earnest view that when the Insolvency Resolution Process
commences against a Personal Guarantor, Claims of all Creditors are taken care of under the
scheme of the I & B Code, 2016.
59. Transactions of giving huge amount without any security interest or bank
guarantee and subsequently writing off the same from the book can only be
termed as fraudulent transactions
Case Name: Shri Baiju Trading and Investment Pvt. Ltd. Vs. Mr. Arihant Nenawati (Liquidator for
Royal Refinery Pvt. Ltd.) & Ors.
NCLAT observes that in 2019 such huge loan was all of a sudden written off by the Respondent Nos.
2 & 3 from the books of the Corporate Debtor and evidently the Appellant is the principal/sole
beneficiary. The plea of the Appellant made before us that it is a Corporate Debtor who has written
off and not by the Appellant and therefore the Appellant should not be held liable for fraudulent
transactions under Section 66 is not convincing at all. It is a matter of common prudence that if the
money is written off from the books of the Corporate Debtor, there is hardly any chance for the
management/ successor/ Resolution Professional to recover the same from the Appellant.
There is no explanation which we can take into account either from the submissions of the
Appellant or Respondent Nos. 2 & 3 as to why such write off was necessary and circumstances
which led to this write off. Such transactions of giving huge amount to unconnected/unrelated
parties and apparently without any security interest or bank guarantee as collateral security in
favour of the Corporate Debtor and subsequently writing off the same from the book can only be
termed nothing else but as fraudulent transactions done with the intent to defraud the creditors of
the Corporate Debtor. From the averments as well from the records made available, this Appellate
Tribunal tend to agree with the Adjudicating Authority that the nature of the transactions are
covered squarely under Section 66 of the Code, 2016.
60. Neither NCLT nor NCLAT is having jurisdiction to adjudicate a dispute comes
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around the execution of sale deed/interpretation of agreement to sale which

had already occurred prior to initiation of CIRP
Case Name: SICOM Ltd. Vs. Kitply Industries Ltd.
By the impugned order, the appellant/Sicom Ltd was directed by NCLT to transfer Igatpuri Unit to
the nominee of the Resolution Applicant M/s Kitply Industries Ltd within 45 (forty five) days. NCLAT
observed that till date the Corporate Debtor is not title holder of the property in question and
dispute comes around the execution of the sale deed. It is admitted that dispute regarding either
payment of remaining consideration amount as per sale agreement or non-execution of sale deed
arose much much before initiation of CIRP in the present proceeding and as such neither RP nor
NCLT was having any jurisdiction to deal with such property. We may observe that even in the
resolution plan it was indicated that dispute in respect of the property in question was existing
which is evident from communication dated 02.06.2019. NCLT has exceeded its jurisdiction in
directing the appellant to transfer the property in question in favour of Corporate Debtor. The
dispute whether agreement to sale which was entered in between the parties in the year 1998 was
breached by the appellant or the respondent breached the agreement, may not be examined in a
proceeding under the IBC. Such disputes are required to be examined by the court of competent
jurisdiction. In view of admitted position that title of the property in respect of Igatpuri Unit still lies
with the appellant, the Learned NCLT has committed error in allowing the application filed on
behalf of the Respondent in directing for transferring the land in question and as such there is no
option but to set aside the impugned order.
61. Under the Insolvency and Bankruptcy Code, 2016, the shift is from inability
to pay, to the existence of a Default
Case Name: N.K. Kurian Vs. Kosamattom Finance Ltd.
NCLAT held that a mere dispute about the quantum of payment, does not infringe the right of a
Financial Creditor to prefer an application under Section 7 of the Code. The circumstance under
which the Corporate Debtor is not able to repay the Financial Debt need not be taken as a defence
in a proceeding under the Code. The reason for incapacity/inability of a Corporate Debtor to pay its
debt is not required to be gone into/looked into by an Adjudicating Authority in the considered
opinion of this Tribunal. It cannot be gainsaid that, even if a portion of the debt due and payable is
tacitly admitted by a Corporate Debtor and it comes within the threshold sum of the default of Rs. 1
crore, as per then, the Adjudicating Authority/Tribunal, is endowed with a subjective discretion, to
admit the Section 7 Application filed by a party under the Code, 2016 once the Debt and Default are
proved, to its satisfaction.
62. Liquidation value found by the Registered Valuers cannot be allowed to be

changed by CoC
Case Name: Kotak Mahindra Bank Limited Vs. RP of Universal Buildwell Pvt. Ltd.
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NCLAT held that the liquidation value fixed by the Valuers cannot be ignored in the resolution
process. It is true that CoC on any valid reason can take a call to ask for any fresh valuation due to
any relevant circumstances, but the valuation done by the Registered Valuers and average of
liquidation value taken up by the Valuers serves the specific purpose and cannot be allowed to be
disregarded by the CoC. In event, it is accepted that the CoC can change the liquidation value on its
own, that may lead to unsatisfactory results. We, thus, are of the view that liquidation value found
by the Registered Valuers cannot be allowed to be changed by the CoC.
63. Who decides: correct amount of debt, at the time of CIRP admission by NCLT
or to be subsequently looked into at the time of collation of the claims by
Resolution Professional
Case Name: Manmohan Gupta Vs. MDS Digital Media Pvt. Ltd. & Anr.
In this appeal which was filed against the order of Adjudicating Authority in which CIRP application
u/s 9 of IBC has been admitted. Appellant contends that there was actually no debt amount. In the
balance sheet of the Operational Creditor also no debt was shown. The amount which was claimed
by the Operational Creditor was also not the correct amount. NCLAT held that the Adjudicating
Authority has admitted the Section 9 application on the basis of admission made by the Corporate
Debtor for an amount of Rs.8,56,836/-. When the admitted amount is more than the threshold, the
Adjudicating Authority did not commit any error in admitting Section 9 application. The question as
to what is correct amount of debt was the question which was to be subsequently looked into at
the time of collation of the claims by the Resolution Professional and at the stage of admission of
section 9 application it was not necessary for the Adjudicating Authority to express any opinion.
64. Whether is it mandatory on the part of Resolution Professional to issue

Notice of CoC Meeting to all Operational Creditors in terms of Section 24(3)(c) of
the IBC?
Case Name: Bhushan Shringarpure Vs. Mr. B.K. Mishra RP of Lakeland Chemicals (India) Ltd. –
NCLAT New Delhi
In this case, the RP did not issue notice to the Operational Creditors in terms of Section 24(3)(c) of
the Code. Even if notice had been given to the Operational Creditors even then they had no right to
vote in the meeting of the CoC in view of Section 24(4) of the Code but the question herein arises is
as to whether is it not mandatory on the part of the RP to issue notice to all the Operational
Creditors in terms of Section 24(3)(c) of the Code if it is found by him that their admitted claim is
more than 10%? NCLAT held that a bare reading of the Section 24(3)(c) shows that it is mandatory in
nature and it is incumbent upon the RP to serve notice to all the Operational Creditors of each
meeting of the CoC or if they elect their authorised representatives after notice is received by them,
then the notice of meeting to the authorised representatives. It is held that it is incumbent upon the
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RP to serve notice of each meeting of the CoC to the Operational Creditors or their representatives
if the amount of the aggregated due is not less than 10% of the debt.
65. Even in case of ex-parte order of NCLT despite service of notice, running of
the limitation for filing an appeal u/s 61 of IBC shall start from the date of
pronouncement of the order and it is not dependent on the communication of
the order to aggrieved person
Case Name: Sciknow Techno Solutions Ltd. Vs. Dinesh Kumar Gupta (Liquidator of Jarvis Infratech
Pvt. Ltd.) & Ors.
In this case, Appellant submits that the impugned order being ex-parte to the Appellant, Appellant
could have filed the appeal only after coming to know about the order, which he came to know on
08.01.2023 and from 08.01.2023 if limitation is computed, the Appeal being filed within 15 days
after expiry of the limitation, there is delay of only 14 days, which need to be condoned. NCLAT held
that the Appellant did not appear before the Adjudicating Authority despite service of notice, hence,
it will be treated that it was served and the Appellant could not be heard in saying that the order
dated 22.12.2022 is ex-parte and limitation to file appeal shall only begin when he has knowledge of
the order. This submission of the Appellant cannot be accepted, in view of what has been stated
above. In the V. Nagarajan’s Case two issues were framed; first issue in Para 16.1 framed was: “(i)
when will the clock for calculating the limitation period run for proceedings under the IBC”. The
Hon’ble Supreme Court after considering the extensively has clearly held that limitation for filing
Appeals shall commence from the date order is pronounced and the applicant is entitled to exclude
the period consumed for obtaining certified copy of the order, if it is filed within the limitation.
66. NCLAT allows to hear the appeal against the approval of Resolution Plan of
Suraksha Realty Ltd. in case of Jaypee Infratech Ltd. on additional farmers
compensation claim issue
Case Name: Yamuna Expressway Industrial Development Authority Vs. Monitoring Committee of
Jaypee Infratech Ltd.
NCLAT held that since order of the Adjudicating Authority dated 07.03.2023, which has virtually
extinguished the claim of the Appellant of additional farmers compensation by allocating an
amount of INR 10 lakhs, which according to the Respondents is the amount to which the Appellant
is entitled and the said judgment under challenge in this Appeal, we have found substantial ground
to entertain this Appeal and hear the Appeal. We are of the view that the impugned judgment of the
Adjudicating Authority, insofar as determination of the claim of the Appellant regarding additional
compensation, shall not be relied for any determination between the Appellant and the Corporate
Debtor regarding liability and entitlements of respective parties in respect of bearing of the
additional farmers compensation claim. In the meantime, we direct that impugned order dated
07.03.2023 insofar as it determines the claim of the Appellant regarding additional farmers
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compensation shall not be relied in determination of rights and liabilities of the Appellant and the
Corporate Debtor in the pending proceedings in Arbitration Case pending before the Commercial
Court. NCLAT makes it clear that pendency of this Appeal and the above interim order may not be
treated as any restraint in implementation of the Plan insofar as other aspects of the Plan are
concerned. List the Appeal for hearing on 29th May, 2023.
67. There is no personal liability of the son of the deceased Liquidator to supply
documents as was claimed by the Liquidator which could not be located in the
papers
Case Name: Mukesh Kumar Jain, Liquidator Trans Gulf Frozen Food Containers Pvt. Ltd. Vs.
Divyanshu Walia
The New Liquidator filed I.A. against the son of the deceased liquidator seeking direction to hand
over all the documents/records pertaining to the corporate debtor. The Adjudicating Authority
while passing the order has noticed the Reply given by the son of the Liquidator and in the replies,
details of documents sought by the new Liquidator has been handed over to the present
Liquidator. NCLAT held that whatever the documents were asked for from the son of the deceased
liquidator have been given in the Replies submitted by the son as has been noticed by the
Adjudicating Authority, hence, no reason to find any fault with the order of the Adjudicating
Authority disposing of the Application. It is always open for the present Liquidator to approach the
ex-management of the Corporate Debtor for any documents as required and not received by the
Liquidator. There is no personal liability of the son of the deceased Liquidator to supply documents
as was claimed by the Liquidator which could not be located in the papers. Furthermore, whatever
the documents were there with the son of the deceased liquidator has already been submitted.
68. The factum of litigation by Writ Petition in High Court by a third party and
suit by certain parties in the property cannot be ground for the Successful
Bidder of not making payment of balance amount
Case Name: ASJ Finsolutions Pvt. Ltd. Vs. Best Foods Ltd. Through Liquidator & Ors.
In this case, Liquidator issued the letter of intent on 16.11.2021. As per the letter, the balance
amount has to be deposited in 30 days or with interest upto 90 days. Balance amount was not
deposited by the Appellant and thereafter an application filed by the Appellant for issuing direction
to the Liquidator for claiming the chain documents of the property sold to the Appellant through e-
auction process initiated vide notice dated 25.10.2021 for verification before balance sale
consideration amounting to Rs.19,17,00,000/- be paid which has been rejected by Adjudicating
Authority. NCLAT held that the factum of litigation by Writ Petition in High Court by a third party and
suit by certain parties in the property cannot be ground for the Successful Bidder of not making
payment of balance amount. The balance amount was to be deposited within the time as required
in Schedule-I of Liquidation Regulation, 2016. This Appellate Tribunal while considering provisions
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of the Schedule-I of the Liquidation Regulation, 2016 in Potens Transmissions & Power Pvt. Ltd Vs.
Gian Chand Narang (2022) ibclaw.in 359 NCLAT has laid down that the said timeline is statutory.
69. Transaction entered by Corporate Debtor voluntary or due to pressure or

threat has no relevance while coming to the conclusion whether the
transaction is preferential or not, the intent of Corporate Debtor is not relevant
since Section 43 of IBC envisages statutory/deeming fiction
Case Name: GVR Consulting Services Pvt. Ltd. Vs. Pooja Bahry
NCLAT held that:
(i) The submissions of the Appellant on the ground that the transaction was entered into by
the Corporate Debtor due to pressure put on it has no relevance and shall not change the
nature of transaction from preferential transaction.
(ii) The expression “ordinary course of business” or “financial affairs of the Corporate Debtor”
has to be read “ejusdem generis”. The expression “financial affairs of the Corporate Debtor”
cannot be given an extended meaning.
(iii) The intent of the Corporate Debtor is not relevant since the Section 43 envisages statutory
fiction. Whether the Act is voluntary or not has no relevance while coming to the conclusion
whether transaction is preferential or not.
(iv) Judgement of the Hon’ble Supreme Court in “Anuj Jain” has clearly laid down about the
irrelevance of the motive in such transaction.
(v) Filing of composite application under Section 43, 44, 45, 46, 66, 67 and 60(5) of the Code
does not lead to any infirmity in the Application.
(vi) In Section 43(3), certain exception has been provided. Thus those transactions which fall as
exception under Sub-Section (3) can be taken out of sub-section 2 of Section 43, rest shall be
covered by deeming fiction.
70. Once a property is part of liquidation estate of Corporate Debtor under

liquidation, the provisions of IBC are applicable regarding the assets which
were in the ownership of the Corporate Debtor and Section 238 of the IBC
prohibited the applicability of any other law which was inconsistent with the
IBC
Case Name: Adinath Jewellery Exports Vs. Mr. Brijendra Kumar Mishra, Liquidator of Shrenuj & Co.
Ltd.
NCLAT held that once a property was part of the liquidation state of the Corporate Debtor under
liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership
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of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law
which was inconsistent with the IBC. The residuary jurisdiction is relevant during the CIRP when the
insolvency resolution of the corporate debtor is taking place, whereas in the present case the
liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its
powers under section 33(5) to get control and custody of the asset of the corporate debtor.
71. The date of default cannot be changed by Bank and the date of NPA cannot
be taken to be the date of default for the purpose of period of limitation for
filing CIRP application under IBC
Case Name: Ramdas Dutta Vs. IDBI Bank Ltd.
NCLAT held that
(i) on the issue whether the date of default can be changed by the Bank?, it has been held by
the Hon’ble Supreme Court in the case of Ramesh Kymal (2021) ibclaw.in 08 SC that the date
of default cannot be changed. It has also been held in the case of Laxmi Pat Surana (2021)
ibclaw.in 53 SC, Babulal Vardharji Gurjar [2020] ibclaw.in 16 SC, B.K Educational Services Pvt.
Ltd. [2018] ibclaw.in 32 SC and Jignesh Shah [2019] ibclaw.in 19 SC that the period of limitation
would be attracted from the date when the default occurs and not from the date of
declaration of NPA. Therefore, the date of NPA cannot be taken to be the date of default for
the purpose of limitation.
(ii) It has now been well settled by three judge bench of the Hon’ble Supreme Court, in the
case of Shanti Conductors Pvt. Ltd. (2019) ibclaw.in 201 SC, that Section 19 would come into
play if the payment is acknowledged in the handwriting of, or in a writing signed by the person
making the payment.
(iii) As regards the OTS, it has come on record that the OTS has occurred much after the expiry
of period of limitation, therefore, it cannot be taken into consideration for the purpose of
Section 18 to extend the period of limitation.
72. Whether the period of limitation for both Principal Borrower and Corporate
Guarantor shall be same for the purposes of filing IBC Section 7 application for
the Bank?
Case Name: Archana Deepak Wani Vs. Indian Bank
The scheme of I&B Code clearly indicate that both the Principal Borrower and the Guarantor
become liable to pay the amount when the default is committed. When default is committed by the
Principal Borrower the amount becomes due not only against the Principal Borrower but also
against the Corporate Guarantor, which is the scheme of the I&B Code. When we read with as is
delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the
Guarantor. The definition of default under Section 3(12) in addition to expression ‘due’ occurring in
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Section 3(11) uses two additional expressions i.e “payable” and “is not paid by the debtor or
corporate debtor”. The expression ‘is not paid by the debtor’ has to be given some meaning. As laid
down by the Hon’ble Supreme Court in Syndicate Bank vs. Channaveerappa Beleri & Ors., a
guarantor’s liability depends on terms of his contract. There can be default by the Principal
Borrower and the Guarantor on the same date or date of default for both may be different
depending on the terms of contract of guarantee. It is well settled that the loan agreement with the
Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the
Guarantor are two different transactions and the Guarantor’s liability has to be read from the Deed
of Guarantee.
73. Section 74 of Indian Contract Act, 1872 has no application in the case of
Auction conducted by the Liquidator under the IBC Liquidation Process
Regulations, 2016 and When the clauses of Tender document clearly empowers
Liquidator to forfeit the EMD/any payment on default by the H1 Bidder, no
exception can be taken to the action of the Liquidator in cancelling the sale and
forfeiting the amount deposited by H1 Bidder
Case Name: Westcoast Infraprojects Pvt. Ltd. Vs. Mr. Ram Chandra Dallaram Choudhary,
Liquidator of Anil Ltd.
In this landmark judgment, NCLAT held that
(i) It is also relevant to notice that Liquidator is statutorily entitled to fix the terms and
conditions of sale.
(ii) Section 74 of the Indian Contract Act has no application in the case of Auction conducted by
the Liquidator under the Liquidation Process Regulations, 2016.
(iii) When the clauses of the Process Document as noted above, clearly empowers the
Liquidator to forfeit the EMD and any payment made in event default is committed by the
Highest Bidder, no exception can be taken to the action of the Liquidator in cancelling the sale
and forfeiting the amount deposited by the Appellant.
74. When Resolution Plan specifically empowers Successful Resolution

Applicant to pursue the avoidance applications, the said provisions of the Plan
shall bind everyone including the erstwhile Administrator/RP
Case Name: Kapil Wadhawan Vs. Piramal Capital & Housing Finance Ltd. & Ors.
(i) The first submission raised by the learned Counsel for the Appellant is that after completion of
the CIRP, avoidance applications, which are not decided by that time, becomes infructuous and
cannot be proceeded any further. NCLAT held that Section 26 itself gives clear legislative intent that
avoidance applications are different stream than the stream of insolvency resolution process. We
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may also notice provision of Section 36, sub-section (3) (f), which also gives clear indication of the
statutory scheme that even after completion of the CIRP, the statute envisages recoveries through
proceedings for avoidance transactions.
(ii) Another submission which has been pressed by the learned Counsel for the Appellant is that
Successful Resolution Applicant cannot pursue the avoidance applications and if at all, the
avoidance applications can be pursued, it could have been only by the RP and that in the present
case the Administrator.
NCLAT held that when Resolution Plan specifically empowers the Successful Resolution Applicant to
pursue the avoidance applications, the said provisions of the Plan shall bind everyone including the
erstwhile Administrator. The submission of the learned Counsel for the Appellant cannot be
accepted that it is the erstwhile Administrator/ RP, who could alone, if at all, pursue the avoidance
application.
75. Requirement of a ‘registered’ assignment agreement in case of assignment

in favour of Asset Reconstruction Company(ARC) in accordance with the
procedure prescribed under Section 5 of the SARFAESI Act, 2002
Case Name: Naresh Kumar Aggarwal Vs. CFM Asset Reconstruction Pvt. Ltd.
NCLAT held that Section 5 of SARFAESI Act, 2002 is an enabling provision to empower the Asset
Reconstruction Company to acquire financial assets in the manner provided in Sub-section (1). Sub-
section (2) of Section 5 contains a deeming clause. Sub-section (2) provides that Asset
Reconstruction Company on such acquisition be deemed to be the lender and all the rights of such
bank or financial institution shall vest in such company. Judgments in Palm Products Pvt. Ltd. vs.
T.V.L. Narsimha Rao and Anr. (2021) ibclaw.in 115 NCLAT and Citi Securities & Financial Services Pvt.
Ltd. vs. Sudip Bhatacharya (2022) ibclaw.in 747 NCLAT were not a case of an Asset Reconstruction
Company, hence, in the above cases assignment of debt was not as per Section 5 of the SARFAESI
Act, 2002.
This is also distinguishable due to the reason that in the present case assignment is in favour of the
Asset Reconstruction Company in accordance with the procedure prescribed under Section 5 of the
SARFAESI Act, 2002. Thus, these judgments are clearly distinguishable.
76. NCLAT upholds admission of IBC Sec. 10 application and issue of

applicability of moratorium where aircrafts leases were terminated prior to
admission of Section 10 application need to be considered by NCLT
Case Name: SMBC Aviation Capital Ltd. Vs. Interim RP of Go Airlines (India) Ltd., Abhilash Lal
NCLAT upheld the decision of NCLT in Go Airlines (India) Ltd. and held that
(i) the mere fact that no notice was issued to the creditors or any opportunity was given to the
objectors before proceeding to hear, the Corporate Applicant, cannot be held to vitiate any
12.03.24 Page: 12
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procedure or violating the principles of natural justice, more so when objectors were heard by
the Adjudicating Authority.
(ii) In appropriate case where there is an Application under Section 65 of the Code before the
Adjudicating Authority, the Adjudicating Authority after initiation of proceedings under Section
10 and before passing any order on Section 10 Application notices that initiation is fraudulent
and malicious, the Adjudicating Authority is well within its jurisdiction to consider the
Application and if it is held and found that initiation is fraudulent and malicious, the
Adjudicating Authority is fully entitled to reject the said Application.
Further, NCLAT directed that
(i) The Appellant(s) as well as IRP are at liberty to make appropriate Application before the
Adjudicating Authority for declaration with regard to applicability of the moratorium on the
aircrafts with regard to which Leases in favour of the Corporate Applicant were terminated
prior to admission of Section 10 Application, which Application need to be considered and
decided by the Adjudicating Authority in accordance with law.
(ii) The Appellant(s) and the IRP are also at liberty to make an appropriate Application under
Section 60, sub-section (5) with regard to claim of possession and other respective claims of
both the parties relating to the aircrafts in question, which need to be decided by the
Adjudicating Authority in accordance with law.
77. No provisions in the Code, Regulations or even in the NCLT & NCLAT Rules,
which prescribes for the leave to file an appeal u/s 61 of IBC
Case Name: Trimex Industries Pvt. Ltd. Vs. Bhuvan Madan, RP of Sathavahana Ispat Ltd. & Anr.
NCLAT held that according to the Section 61 of IBC, right to appeal has been granted by the statute
to any person who is aggrieved by the order of the Adjudicating Authority. We could not find any
provisions form the Code, Regulations or even in the NCLT & NCLAT Rules, which prescribes for the
leave to file an appeal, therefore, such an application is definitely uncalled for and should not have
been filed. Thus, in view of the aforesaid discussion, we are of the considered opinion that these
applications filed by the Appellant/Applicant for seeking leave of this Tribunal to file an appeal is
totally misconceived and is not maintainable.
78. NCLAT is not vested with any power to review the judgment, however, in
exercise of its inherent jurisdiction NCLAT can entertain an application for
recall of judgment on sufficient grounds
Case Name: Union Bank of India (Erstwhile Corporation Bank) Vs. Dinkar T. Venkatasubramanian &
Ors.
NCLAT held that the three-member bench judgment in Agarwal Coal Corporation Pvt. Ltd. and K.L.J
Resources Ltd. & Anr. observing that the Tribunal does not have power to recall cannot be
12.03.24 Page: 13
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approved. The three-member bench judgments of this Tribunal insofar as observation that this
Tribunal has no power to review, no exception can be taken to that part of the judgment. We,
however, hold that the judgment laying down that this Tribunal has no power to recall the
judgment does not lay down correct law. It is also held that this Tribunal is not vested with any
power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can
entertain an application for recall of judgment on sufficient grounds.
79. Whether copy of Resolution Plan, which has been approved by the CoC but
awaits the approval of Adjudicating authority, can be given to a party who is
neither a Claimant nor a Creditor or a participant?
Case Name: Rupinder Singh Gill Vs. Three C Universal Developers Pvt. Ltd. Through RP Rakesh
Kumar Gupta
The issue involved in this case is as to whether copy of the Resolution Plan, which has been
approved by the CoC but awaits the approval of the Adjudicating authority, can be given to the
Appellant who is neither a Claimant, nor a Creditor or a participant? The other question also arises
in this case as to whether there is any provision in the Code for the purpose of giving a copy of the
Resolution Plan to the Appellant who is neither a Claimant, nor a Creditor or a participant, even
before the approval of Resolution Plan by the Adjudicating Authority?
80. Filing of a claim under a wrong category cannot be a substantial ground for
condoning the delay
Case Name: Mr. Toral Rathod Vs. Mr. Gopalsamy Ganesh Babu (RP of Milan Textile Enterprises Pvt.
Ltd.)
NCLAT held that the ground taken by the Counsel for the Appellant that it was initially filed under
Form-B as an Operational Creditor which was rejected, and thereafter the Appellant had
resubmitted her Claim under Form-C on 07.08.2022, does not strengthen or substantiate her case
as the timelines given under IBC are to be strictly adhered to and any latches on behalf of the
Appellant in filing, the claim under a wrong category cannot be a substantial ground for condoning
the delay. It is also significant to mention that the Appellant approached the Adjudicating Authority
with a further delay of 100 days, and the only reason that was given is that they were seeking legal
advise, which the Adjudicating Authority has rightly held is only a bald explanation and does not
construe a sufficient cause for the delay.
81. Whether an Asset Reconstruction Company (ARC) is required prior approval

of RBI for participating as a Resolution Co-Applicant under the IBC
Case Name: Puissant Towers India Pvt. Ltd. Vs. Neueon Towers Ltd. – NCLAT Chennai
12.03.24 Page: 14
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In this case, the Adjudicating Authority held that M/s Invent Assets Securitisation & Reconstruction
Pvt. Ltd. cannot submit resolution plan a s co-Applicant along with M/s Longview Resources (HK)
Ltd. Hong Kong, without the prior approval of RBI under Section 10(2) of SARFAESI Act. NCLAT held
that
(i) it is significant to mention that Section 238 of the Code, will prevail over any of the
provisions of the SARFAESI Act, 2002, if it is inconsistent with any of the Provisions of the Code,
2016 and therefore the Adjudicating Authority ought not to have placed reliance on Section
10(2) of the SARFAESI Act, 2002.
(ii) Keeping in view, the clarification given by the Counsel for RBI that the prior permission is
not required, this Tribunal is of the considered view that the Adjudicating Authority ought not
to have rejected the Resolution Plan, more so, when the principal objective of the Code is that
‘revival of the Corporate Debtor and Resolution’. Liquidation ought to be the last resort,
keeping in view the scope and spirit of the Code.
82. Whether a Resolution Professional can keep a claim in abeyance on the

basis that Arbitration Proceedings are pending, wherein, the counterclaim of
the Corporate Debtor is pending for determination
Case Name: Anheuser Busch Inbev India Ltd. Vs. Mr. Pradeep Kumar Sravanam RP East Godavari
Breweries Pvt. Ltd. – NCLAT Chennai
In this case, the Appellant is a Financial Creditor who furnished its claim before the Resolution
Professional and the same was kept in abeyance by the Resolution Professional, on the basis that
Arbitration Proceedings are pending, wherein, the counterclaim of the Corporate Debtor is pending
determination. NCLAT held that in the instant case, the very fact that the Appellant’s claim cannot
be admitted till the counterclaim of the Corporate Debtor is determined which may end in set off of
the sum payable to the Appellant / Petitioner, the plea of the Resolution Professional cannot be
brushed aside and in an emergency and also when a situation arises, the Resolution Professional is
within his power and limit to keep the claims in abeyance for plurality of reasons.
83. The pendency of proceedings before the DRT is not a bar for the Financial
Creditor to initiate CIRP against the Corporate Debtor, NCLT need not wait for
the decision of DRT while rendering its findings
Case Name: Mr. G. Sundaravadivelu Vs. Indian Overseas Bank
NCLAT, Chennai Bench held that
(i) The provisions of the Code, 2016 can be invoked even when it is known to the Financial
Creditor that there is no possibility of keeping the Company as a Going Concern. It is not the
property, which is at the foundation of the Code, it is the Cash Liquidity, which is the basis for
triggering the CIRP.
12.03.24 Page: 15
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(ii) The circumstances under which a Corporate Debtor could not repay the Financial Debt
need not be taken as a defence in a proceeding under the Code, 2016. What is essential is to
exhibit that the Debtor, had committed a default after the debt had become due and payable
by a Debtor and no more.
(iii) It is pointed out that the pendency of proceedings before the Debt Recovery Tribunal is not
a bar for the Financial Creditor to initiate an action against the Corporate Debtor. That apart,
an Adjudicating Authority need not wait for the decision of Debt Recovery Tribunal, while
rendering its findings.
84. Appellant who has filed an Appeal under Section 61 of IBC is entitled benefit
u/s 14 of the Limitation Act, 1963 for proceeding in the High Court under Article
226 which writ proceedings were also dismissed on the ground of availability of
the alternative remedy
Case Name: Vikram Bhawanishankar Sharma, Member of the Suspended Board of Directors of
Supreme Vasai Bhiwandi Tollways Pvt. Ltd. Vs. SREI Infrastructure Finance Ltd. & Anr.
NCLAT observed that the Appellant filed writ petition at the time when there was no notice of any
sitting of Vacation Bench in the winter vacation of Appellate Tribunal. Impugned Order has been
passed on 22.12.2022 and uploaded on 23.12.2022, it can not be denied that there was urgency on
the part of the Appellant for obtaining immediate relief hence it can not be said that filing of writ
petition by the Appellant before the Hon’ble High Court was not bona fide. Kalpraj Dharamshi
(2021) ibclaw.in 40 SC itself was a case where benefit of Section 14 of the Limitation Act was claimed
on the ground that proceedings under Article 226 were being prosecuted in the Hon’ble Bombay
High Court which benefit was extended by the Hon’ble Supreme Court and which benefit as per
Judgment of Hon’ble Supreme was clearly admissible to any Appeal under Section 61 of the Code.
The Judgment of the Hon’ble Supreme Court in Kalpraj Dharamshi (supra) being judgment directly
applicable in the facts of the present that i.e. exclusion of period during which the Writ Petition was
being prosecuted by the Appellant in an Appeal filed under Section 61 of the Code, we are of the
view and feel ourselves bound to follow the Judgment of Supreme Court.
85. Whether a shareholder of the Corporate Debtor has locus standi to

challenge the Resolution Plan
Case Name: Dr. Ravi Shankar Vedam Vs. Tiffins Barytes Asbestos and Paints Ltd.
NCLAT held that
(i) The Legislature in its wisdom, has curtailed the ‘Rights of the Shareholders’ based on the
established ‘Principles of Creditors’ in the control framework.
(ii) The Explanation to Section 30(2) of the Code, 2016 contemplates for ‘Deemed Approval’ of
the Shareholders of the Resolution Plan and its implementation
12.03.24 Page: 16
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(iii) Once a petition filed by a Financial Creditor/ Operational Creditor against the Corporate
Debtor is admitted, it becomes a collective Creditors Proceedings
(iv) The Foundational Principles of the Insolvency and Bankruptcy Code, cannot be disturbed
and this Tribunal is of the considered view that giving the Shareholder the locus to challenge
the approval of the Resolution plan tantamount to disturbing the Foundational Principles of
the Insolvency and Bankruptcy Code.
(v) the Code, 2016 is a distinct shift from ‘Debtor in Possession’ to ‘Creditor in Control’
Insolvency System, where the Shareholders have a limited role and are only confined to co-
operate with the Resolution Professional as specified under Section 19 of the Code.
86. The date of default by the Guarantor shall arise only when demand is issued
by the Bank to the Corporate Guarantor
Case Name: J.C. Flowers Asset Reconstruction Pvt. Vs. Deserve Exim Pvt. Ltd.
In this case, the issue before the NCLAT is whether the default on the part of the Corporate Debtor
i.e. Corporate Guarantor can be on any date prior to when the guarantee was invoked is the
question to be considered. NCLAT referred judgment in Pooja Ramesh Singh vs. State Bank of India
(2023) ibclaw.in 280 NCLAT and held that:
(i) The Guarantee Deed contemplates demand by the bank, hence, unless demand is made by
the bank to the Corporate Debtor, no default can be said to have been committed by the
Corporate Guarantor.
(ii) The date of default by the Guarantor shall arise only when demand is issued by the Bank to
the Corporate Guarantor. The fact that the Corporate Guarantor has given indemnity to the
Bank also shall operate only after default is committed by the Guarantor. Indemnity can be
enforced against the Corporate Guarantor but it cannot itself change the date of default on
part of the Guarantor.
87. The transaction of transfer of assets within the Group Companies will not
come within the umbrage of the fraudulent trading as per Section 66(1) of the
Code
Case Name: Renuka Devi Rangaswamy,IRP of M/s. Regen Infrastructure and Services Pvt. Ltd. Vs.
Mr. Madhusudan Khemka
NCLAT held that:
(i) under Section 66 of the Code, 2016, it is not essential to attract that there ought to be a
debtor and a creditor relationship.
(ii) for proving a fraudulent trading needs meeting the high standard of proof which is
attached to a fraudulent intent.
12.03.24 Page: 17
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(iii) a Director of a Company may be proceeded against for a wrongful trading because of the
reason of negligent failure of management.
(iv) dishonesty is an essential ingredient of fraudulent trading.
(v) the ingredients of Section 66 (1) and 66 (2) of the Code, 2016 operate in a different arena.
(vi) it is crystalline clear that the transaction of transfer of assets among / within the Group
Companies, ex-facie, will not come within the umbrage of the fraudulent trading as per
Section 66(1) of the Code, as opined by this Tribunal.
88. There is no provision in the IBC for Corporate Debtor to constitute CoC with
a single Operational Creditor
Case Name: V. Duraisamy IRP of M/s. H G S Diaries and Agro Ltd. Vs. Jeyapriya Fruits and
Vegetables Commission Agent
NCLAT there is no provision in the Code for the Corporate Debtor to constitute the CoC with a
single Operational Creditor, when it is seen from the record that despite the public announcement
being made inviting claims from its stakeholders, the IRP has not received a single claim from the
date of initiation of the Corporate Debtor into CIRP. As the CoC itself is not constituted and in the
light of the fact that not a single claim was received by the IRP.
89. Merely seeking an extension of the timeline to submit a scheme of

arrangement under section 230 of the Companies Act, 2013 without showing
any evidence of sincere and serious efforts in preparation and formulation of
such a scheme clearly shows that the request for extension of timeline is not
supported by concrete action
Case Name: Harish Sharma Vs. M/s. C & C Constructions Ltd.
NCLAT observed that the Appellant has not shown any proof of a scheme of compromise and
arrangement that is formulated and ready, and proposed for consideration nor has the Appellant
obtained the consent of 75% of the secured creditors of the corporate debtor in support of such a
scheme. Merely seeking an extension of the timeline without showing any evidence of sincere and
serious efforts in preparation and formulation of such a scheme clearly shows that the request for
extension of timeline is not supported by concrete action. In view of the fact that the 90 days’
timeline prescribed under the Regulation 2-B of the Liquidation Process Regulations, 2016 had
expired on 4.1.2023 and no evidence about readiness of the scheme was shown, we are of the clear
opinion that the Adjudicating Authority has not committed any error in passing the Impugned
Order.
12.03.24 Page: 18
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90. A Successful Bidder of sale as Going Concern can seek access of the
Adjudicating Authority and may pray for necessary directions in accord with
and in consonance with the process document in the liquidation proceedings
Case Name: Jasamrit Designers Pvt. Ltd. Vs. Mr. Gian Chand Narang, Liquidator of Apex Buildsys
Ltd.
NCLAT held that:
(i) When the process document clearly contemplated such consequences the said
consequences shall ensue on sale as going concern and if any roadblocks come into ways of
successful resolution applicant, necessary directions, clarifications can very well be issued by
the Adjudicating Authority on an Application filed under Section 60(5)(c) of the Code.
(ii) A successful bidder who is declared as successful bidder of sale as going concern can seek
access of the Adjudicating Authority and may pray for necessary directions in accord with and in
consonance with the process document in the liquidation proceedings.
91. Whether it is the discretion of Operational Creditor or the nature of the

Operational Debt, that determines the issuance of Demand Notice in Form-3 or
Form-4 under Section 8 of the Insolvency and Bankruptcy Code, 2016?
Case Name: Tejinder Pal Setia Vs. Kone Elevator India Pvt. Ltd. and Ors.
NCLAT held that the Operational Creditor is at liberty to submit Demand Notice either in Form-3 or
Form-4. When Notice is issued in Form-4, copy of the Invoice is required to be attached with the
Notice. The Demand Notice issued by the Operational Creditor was in Form-3, hence, no infirmity
can be found in the Demand Notice, if invoices were not attached. In the present case, the basis of
the Demand Notice was Supply Agreement and acknowledgement letter issued by the Corporate
Debtor. No invoices were referred to in the Demand Notice. Hence, submission of the Appellant
that Demand Notice should have been accompanied with the invoices cannot be accepted.
92. Although, no specific timelines for Auction have been given in the
Liquidation Process Regulations, 2016, normally Notice period of 30 days is
given to get best value
Case Name: Naren Seth Liquidator of Ciemme Jewels Ltd. Vs. Sunrise Industries
In this case, date of publication of final E-auction notice is 02.04.2022 with merely one working day
(Monday) to submit KYC, another three days upto 07.04.2022 to submit EMD of Rs. 1.15 Crores and
finally one more day upto 08.04.2022 to give bids. Thus, the entire liquidation process was
supposed to be completed in one week.
12.03.24 Page: 19
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NCALT held that

(i) although, no specific timelines have been given in the Liquidation Process Regulations,
2016, normally notice period of 30 days is given to get best value. In this connection, as a
referring point only, we would like to refer to the provision of sub-rule (6) of Rule 8 of the
SARFAESI Security Interest (Enforcement) Rules, 2002. This also indicates that sufficient time
say 30 days ought to have been give. Thus, we find the Liquidator acted in hurry in concluding
the E-auction.
(ii) NCLAT upheld the decision of AA wherein the E-auction was set aside and it was held that
the Liquidator must bear all expenses incurred for the auction. We also do not appreciate
conduct of the Liquidator in whole process as observed by the Adjudicating Authority.
93. In Project Wise Insolvency, Interim Resolution Professional/Resolution

Professional cannot seek any unpaid Fees/Costs from the members of the
Committee of Creditors of another project of the Corporate Debtor
Case Name: Mr. Ashok Kriplani Vs. Ms.Ramanathan Bhuvaneshwari RP
NCLAT held that having regard to the fact that the Appellant herein was appointed as IRP/RP in
C.P.(IB)No. 84/BB/2019, in another Project, viewed from any angle, the Appellant cannot seek any
unpaid Fees/Costs from the members of the Committee of Creditors of another project of the
Corporate Debtor. This Tribunal, is of the considered view that the Appellant has no locus standi to
make his claim in C.P.(IB) No.83/BB/2021 and therefore this Tribunal does not find any substantial
ground(s) to interfere with the well-considered order of the Adjudicating Authority in I.A. in C.P. (IB)
No.83/BB/2021.
94. If the Adjudicating Authority is going to dismiss the application as per

provisions contained Section 7 of the IBC reasons are mandatory
Case Name: Mukesh Kumar Vs. Ambrane India Pvt. Ltd.
NCALT held that in view of provisions for the admission of a petition under Section 7 of the IBC
there are certain relevant criteria. There must be debt and default. If an application fulfils the said
criteria, the Adjudicating Authority is to admit such application. However, proviso 1st to Section 7 (5)
speaks that only for rejection of an application reasons are required to be assigned. Meaning
thereby if an application fulfils certain criteria, the Adjudicating Authority is to admit the said
application and while admitting there is no requirement for assigning detailed reasons. However, if
the Adjudicating Authority is going to dismiss the application as per provisions contained Section 7
of the IBC reasons are mandatory. Accordingly it is evident that admission of an application under
Section 7, if fulfils certain criteria is a rule, however, rejection of such application is an exception.
12.03.24 Page: 20
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95. When there is no valid tenancy since unregistered Rent agreement beyond
12 months is not valid, Adjudicating Authority did not commit any error in
directing for handing over the possession of the factory premises to the
Resolution Professional
Case Name: Kuldeep Anopsinh Chudasma Vs. Sunil Kumar Agarwal RP of Yogiraj Spinning Ltd. &
Ors.
NCLAT held that the basis of the argument is the rent deed which is a rent deed for a period of 61
months, an unregistered document. It is settled law that no rent agreement beyond 12 months can
be executed by unregistered document. The Adjudicating Authority has rightly not relied on the
said rent deed to accept the Respondent No. 4 as a valid tenant. When there is no valid tenancy in
favour of Respondent No. 4, Adjudicating Authority did not commit any error in directing for
handing over the possession of the factory premises to the Resolution Professional.
96. The existence of security interest in assets of Corporate Debtor does not
preclude the assets to be dealt with or sold in the Resolution Plan
Case Name: Edelweiss Asset Reconstruction Company Ltd. Vs. Mr. Anuj Jain, RP of Ballarpur
Industries Ltd.
In this important judgment, NCLAT held that:
(i) Financial Creditor who is part of the CoC is prohibited from enforcing any security interest.
A third-party security holder like Appellant is equally bound by the provision of Section 14(1)(c)
and cannot claim any enforcement of security interest in the CIRP.
(ii) As per scheme of CIRP Regulation 37, security interest in assets of the Corporate Debtor
can be dealt with, modified, satisfied and there is no exclusion to the resolution plan with
regard to dealing of the security interest.
(iii) Despite Financial Creditor having security interest in the assets of the Corporate Debtor,
they can be dealt with in the resolution plan in any manner as per the commercial wisdom of
the CoC.
(iv) A third-party security interest holder is entitled to retain the security proceeds on the land
of security interest under Section 52 of the Code.
(v) In the present case, claim was filed by the Appellant and Appellant was part of the CIRP
process, hence, their security interest can very well be dealt with in the resolution plan. When
security interest of the Appellant has been extinguished by the Resolution Plan it was always
open for the Appellant to ask the Principal Borrower to furnish additional security to protect
the interest of the Lender.
12.03.24 Page: 21
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97. The benefit of Holidays can be availed only in period of limitation of 30 days,
holidays cannot be excluded in condonation period of 15 days, in appeal u/s 61
of IBC before NCLAT
Case Name: Sandeep Anand Vs. Gopal Lal Baser RP Wianxx Impex Pvt. Ltd.
In this case, an application is filed praying for condonation of delay. Under Section 61(2) proviso, the
jurisdiction to condone the delay conferred to NCLAT is only 15 days. The ground taken in
paragraph 5 of the affidavit is that 7th April was declared as a ‘Public Holiday’ and 8th and 9th being
holiday, the appeal is treated to be filed within 45 days.
NCLAT held that we are of the view that the benefit as claimed in paragraph 5 is not available which
benefit can be availed only with respect to the period of limitation provided with regard to period of
30 days. We, thus, are of the view that the delay in filing the appeal being beyond 15 days, the
application praying for condonation of delay has to be dismissed.
98. The Insolvency Code (IBC) nowhere prescribes that there should be a
written agreement between the parties to prove the loan and its disbursement
to be treated as Financial Debt
Case Name: Satish Balan Director of Balan and Chheda Developers Pvt. Ltd. Vs. Mrs. Neeta Navin
Nagda
The only issue which has been raised and need to be decided by NCLAT is that whether money
contributed by the Respondent No. 1 along with her nominees was in nature of financial debt or
investment by way of equity in the Corporate Debtor.
NCLAT held that
(i) It is for the Adjudicating Authority to look into the various documents, records and evidence
of default as furnished in part V of Form 1 of the application filed under Section 7 of the Code.
(ii) The Code nowhere prescribes that there should be a written agreement between the
parties to prove the loan and its disbursement to be treated as financial debts.
(iii) If there are acknowledgments by the Corporate Debtor and where the statements of
accounts of the Corporate Debtor are in position to proof disbursement of loan and payment
of interest, the absence of formal written agreement would not bar the Financial Creditor from
initiating the CIRP.
99. Whether mere entry in Balance Sheet of the amount of the outstanding
debt should be taken as acknowledgment or only debt without any stigma or
12.03.24 Page: 22
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adverse note denying the liability should be taken as acknowledgment

Case Name: Asset Reconstruction Company (India) Ltd. Vs. Uniworth Textiles Ltd.
NCLAT held that
(i) the period of petition before BIFR and AAIFR, once abated by the competent Judicial Forum
(AAIFR) such period ought to have been excluded by the Adjudicating Authority(NCLT).
(ii) Mere entry in the Balance Sheet cannot be taken as unqualified acknowledgment of the
debt. However, it may also not be correct to take every note or caveat regarding entries made
in the Balance Sheet as ground to denying acknowledgement of debt in order not to extend
the limitation period from such acknowledgment period.
It is therefore desirable that while looking such entries of debt amounting to acknowledgment, one
has to consider the overall scenario which may be evident from Director’s Report, Auditor’s Report,
notes to the accounts etc. It may also be relevant to consider the entire series of events starting
from such loans/ debts to the filing of application under section 7 of the Code, to gauge the true
intent of such entries and caveats, if any, which impact the intended acknowledgements or genuine
denial of liability on part of the Corporate Debtor. While doing this examination, it may be
worthwhile to look into the overall eco system of such transactions which may help in
understanding the impact on limitation period based on such acknowledgements.
100. Whether in appeal filed u/s 61 of IBC, by a third party who was not party to
the proceedings before Adjudicating Authority, an application seeking leave to
prefer the appeal is necessary to be filed and decided before entertaining the
Appeal?
Case Name: Trimex Industries Pvt. Ltd. Vs. Bhuvan Madan, RP of Sathavahana Ispat Ltd. & Anr.
NCLAT held that on examination of Section 61 of IBC it is evident that any person aggrieved by the
order of the Adjudicating Authority may prefer an appeal before this Tribunal whether he was party
before the Adjudicating Authority or not. It is settled principle of law that if a Statute states to do a
thing in a particular manner then it is to be done in the same manner not in any other way. Once
the act is unambiguous on the point of enabling any person aggrieved by the order of the
Adjudicating Authority to prefer an appeal, there may not be any reason to ask such person to file
an application seeking leave to file appeal. Further, held that considering the law laid down by
Hon’ble Supreme Court as we have discussed hereinabove as well as language of Section 61 of the
IBC and also non-availability of any other rules or regulations regarding seeking leave to file an
appeal, we are of the considered opinion that the law laid down by the Division Bench by its order
dated 24.05.2023 in the present appeal is correct law.
Disclaimer: While every effort is made to avoid any mistake or omission, this document including case-summary/brief
12.03.24 Page: 23
®
about the decision/ add. info/headnote/ judgment/order/ act/ rule/ regulation/ circular/ notification is being circulated on
the condition and understanding that the publisher would not be liable in any manner by reason of any mistake or
omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this document. The
authenticity of this text must be verified from the original source.
12.03.24 Page: 24

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IBC Laws | www.ibclaw.in

YEAR 2023 CASE DIGEST - PART II

54. Whether an application filed under Section 65 of the IBC is maintainable

against a Personal Guarantor, claims of all Creditors are taken care

around the execution of sale deed/interpretation of agreement to sale which

62. Liquidation value found by the Registered Valuers cannot be allowed to be

Case Citation: (2023) ibclaw.in 231 NCLAT

64. Whether is it mandatory on the part of Resolution Professional to issue

69. Transaction entered by Corporate Debtor voluntary or due to pressure or

70. Once a property is part of liquidation estate of Corporate Debtor under

74. When Resolution Plan specifically empowers Successful Resolution

75. Requirement of a ‘registered’ assignment agreement in case of assignment

76. NCLAT upholds admission of IBC Sec. 10 application and issue of

81. Whether an Asset Reconstruction Company (ARC) is required prior approval

82. Whether a Resolution Professional can keep a claim in abeyance on the

85. Whether a shareholder of the Corporate Debtor has locus standi to

89. Merely seeking an extension of the timeline to submit a scheme of

91. Whether it is the discretion of Operational Creditor or the nature of the

NCALT held that

93. In Project Wise Insolvency, Interim Resolution Professional/Resolution

94. If the Adjudicating Authority is going to dismiss the application as per

adverse note denying the liability should be taken as acknowledgment

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