CORPORATE INSOLVENCY RESOLUTION TRANSACTIONS ( As on 30th Sep 2017)

Admitted Closure by No. of Corporates

Appeal / Review Approval of Resolution Commencement of undergoing Resolutions
Plan Liquidation at the end of the
Quarter
376 14 2 7 353

INITIATION OF CORPORATE INSOLVENCY TRANSACTIONS ( As on Sep 2017)

No. of Resolutions Processes Initiated by Total
Financial Creditor Operational Creditor Corporate Debtor
122 167 87 376

REGISTRATION OF INSOLVENCY PROFESSIONAL AS ON 30TH SEPTEMBER 2017

City Enrolled with Total
The Indian Institute of Insolvency ICSI Insolvency Insolvency Professionals Agency of Institute of
Professional of ICAI Professional Agency Cost Accountants in India.
Delhi 131 103 29 263
Mumbai 133 53 16 202
Chennai 28 27 3 58
Kolkata 72 15 6 93
All India 639 371 97 1107
Anant Merathia, Advocate
Anant Merathia, Advocate
Prominent issues faced/settled under IBC
Pre Admission Post Admission
Freedom to initiate CIRP Settlement/Withdrawal
CoC and CIRP issues
Applicability of Limitation Act

Resolution Plan/Liquidation
Demand Notice-relevance

Bank Certificate-relevance Insolvency Professional issues

Initiation by workmen Personal guarantor v Moratorium
Position of Flat buyers

Jaypee Infra

Anant Merathia, Advocate

 Case Name RATIO
Neelkanth Township IBC doesn’t have express provision regarding applicability of Limitation Act.
ISSUES PRE-ADMISSION

Vs (But the SC has left the questions as to the applicability of Limitation act
Urban Infrastructure towards I&B code matters open)

Adjudication of Application – 14 days - Directory

Rectification of defects - 7 days - Directory and not Mandatory
J.K. Jute Mill case
Term of interim Resolution Professional – 30 Days – Mandatory.
Moratorium Period - 180+90 Days – Mandatory

Duty of the NCLT to decide whether the dispute raised is bona fide / real and
Mobilox
not spurious, hypothetical, illusory and misconceived - expanded the meaning
Vs
of “Dispute” by not limiting it only to existing or pending suits or arbitration
Kirusa
proceedings.

Innoventive Financial Creditor - enough to admit a company into CIRP, if FC is able to prove
Vs “Default”. Once Moratorium is declared the erstwhile directors of the
ICICI Bank & Anr company cannot represent on behalf of the company.
 Mother Pride Diary;
ISSUES POST-ADMISSION

SC has the power under Art 142 to entertain the case. SC

Lokhandwala Kataria &
had accepted the settlement between the parties and
several other cases
disposed of the order of the NCLT.

Instead of all matters relating to compromise coming to the

Uttara Food and Feeds
Supreme Court under Article 142, the relevant rules may be
v.
amended to include the inherent powers for NCLAT to
Moha Pharmachem
allow settlements post admission.

Alchemist Asset Re-Construction

Initiation of Arbitration proceedings after declaration of
Vs
Moratorium is Non – Est in Law.
Hotel Gauadavan (P) Ltd

Anant Merathia, Advocate

 Freedom to Initiate Corporate Insolvency
APPLICANT Vs RESPONDENT BENCH RATIO

Pendency of winding up in HC before admission is no bar debarring a

Ind. & Comm. Bank of China
Ahmedabad creditor from triggering the insolvency resolution u/s 7, 9, 10. There is
Vs. Alok Industries
nothing to prevent the financial creditors from triggering IRP u/s 7.

Initiation of proceedings under the SARFAESI Act or before the DRT is

not a ground for not commencing the IRP. Object of the Code is only to
Bharatbhai Vrajiialbhal Selani Vs.
Ahmedabad protect the genuine Corporate Debtors with a view to maximise their
State Bank of India
value of assets and find out a Resolution Plan - not to delay the other
recovery proceedings.

R.G. Shaw & Sons Vs Naviplast Existence of proceedings U/s. 138 of N.I Act, is not a ground to reject
NCLAT
Traders (P) Ltd. the application

Yogendra Vasupal Vs Jigsaw

NCLAT Existence of a proceeding relating to Bail shall not be a dispute
Solutions & Anr

Anant Merathia, Advocate

 CASE NAME
Neelkanth Township
Vs
Urban Infrastructure
LIMITATION
Speculum Plast v. PTC Techno
Parag Gupta v. B.K. Educational Services
Ashkay Infra Vs LDS Engineers
BENCH RATIO
Code doesn’t have express provision reg. applicability of
SC Limitation Act.
Limitation Act is not applicable in IBC - Reliance placed
on Bankruptcy Law Reforms Committee Report 2015
Separate time period provided under IBC for everything
- shows legislative intent on making the IBC a self-
contained complete Code
NCLAT
Right accures from 1st Dec 2016; hence cannot be
barred by limitation
AA given discretion in Sec 7 & 9 matters – if long delay –
to be explained and to see if laches
Anant Merathia, Advocate
 Demand Notice Form & Content and Service
CASE NAME BENCH RATIO
Appellate Tribunal - No Advocate, CA, CS in absence of
Jord Engineers; any authority of BOD and holding no position in relation
Bhagwan Motors NCLAT to the OC cannot issue a Demand Notice.
& Several others Legal Notice is different from IBC Demand Notice

Shriram EPC Limited
Vs
Rio Glass Solar Sa
Palogix Infrastructure Private Limited
Vs
ICICI Bank Limited
Anu Elastics (P) Ltd Vs Aggarwal Elastice
Demand Notice not given by the Operational Creditor
NCLAT but through an advocate / Law firm is not permissible.
A Power of Attorney holder cannot make an Demand
NCLAT
Notice.
On refusal of a notice by a party, it is deemed to be
NCLAT served but if the same is for insufficient or wrong
address the notice cannot deemed to be served.

Anant Merathia, Advocate

 BANK CERTIFICATE ISSUE
CASE NAME BENCH RATIO
Shriram EPC Limited NCLAT Bank Certificates from Bank which cannot be
Vs classified as a Financial institution, not acceptable
Rio Glass Solar Sa by NCLT

Smart Timings Steel NCLAT Filing of a Certificate from a Financial Institution as

Vs per the Insolvency and Bankruptcy Code, 2016 is
National Steel & Agro Industries Ltd mandatory

Bank had refused to give Bank Certificate to an OC;

Magicrete Building Solutions NCLT NCLT - “all citizens of the country are bound by the
Vs Mumbai statute governing the people of this country –
Prathiba Industries Limited Banks are not exempted under this statute”

Anant Merathia, Advocate

 WORKMEN

CASE NAME BENCH RATIO

Nitin Gupta NCLT Delhi CIRP can be initiated if Co. has defaulted in paying employee
Vs dues – approaching Labor Department does not bar an unpaid
Electro Magnetic (P) Ltd employee to invoke IBC- NCLT not a forum to decide what
amount is due towards the Workmen and it was the duty of the
COC and the IRP to decide the same.

C.Ganapathy NCLT, The Corporate Debtor was admitted into CIRP, for not paying
Vs Chennai the salary of the employee.
Aruna Hotels
J.K.Jute Mills Mazdoor Morcha NCLT, The Union of workers cannot present an application nor
Vs Allahabad become an Operational Creditor on behalf of all its workers.
Jugilal Kamalpat Jute Co.

Anant Merathia, Advocate

 POSITION OF FLAT BUYERS
CASE NAME BENCH RATIO
Balance Sheet of Builder showed money due with committed
Nikhil Mehta
returns – hence OC- Flat Buyers not Operational Creditors (many
Vs NCLAT
cases)
AMR Infra

NCLT had ruled that, notwithstanding the presence of an assured

Col. Vinod Awasty NCLT, return clause, a purchaser of a flat cannot be treated as a provider
Vs Principal of 'goods' or 'services' to the builder and therefore, does not qualify
AMR Infrastructure Limited bench as an 'Operational Creditor' and cannot initiate Insolvency Process
in that capacity.
Flat buyers cannot be treated as financial creditors since such debts
Rubina Chandra,
are not disbursed against the consideration for the time value of
Sajive kanwar &
money.
Mukesh Kumar NCLAT
Claimed to be an operational creditor, the NCLT, held that a flat
Vs
purchaser cannot be treated as operational creditor as the debt has
AMR Infrastructure Limited
not arisen out of provisions of goods, services or employment.
IDBI Bank Limited
NCLT, CD defaulted to IDBI Bank - Application for CIRP was admitted
Vs
Allahabad against JIL u/s 7 - IRP appointed.
Jaypee Infrastructure Limited
Anant Merathia, Advocate
 JAYPEE INFRA CASE- Supreme Court
Writ Petition - ground - proceedings under IBC would render the home-
buyers remediless. Prayer - S. 14 shall not curtail the rights of the flat buyers
as consumers under the Consumer Protection Act or alternatively declare
04.09.2017
the flat buyers as secured creditor. SC stayed the NCLT order.

Chitra Sharma IA filed for vacating earlier order on ground that the stay of NCLT order
resulted in Management being restored to JIL. SC ordered (i) the IRP to take-
v. over the management of JIL; (ii) appointment of representative of buyers in

11.09.2017
Union of India the CoC meeting; (iii) JAL to deposit Rs 2000 crores by 27.10.17; approval of
court for sale of any assets by JAL

SC appoints amicus curiae to assist the court and open a web-portal to

collect details of flat buyers. Matter has been listed for 22.11.2017
13.11.2017

On 16.08.2017 - IBBI came with a notification that apart from FC&OC – Flat
buyers can make claims and brought amendments to - CIRP Regulations 2016
Anant Merathia, Advocate

CASE NAME BENCH
Mother Pride Diary;
Lokhandwala Kataria
SC
& Several other cases
Consolidated Construction
Consortium Limited
Vs Chennai
Va Tech Wabag Limited
SETTLEMENT/WITHDRAWAL
RATIO
SC has the power under Art 142 to entertain the
case. SC had accepted the settlement between the
parties and disposed of the order of the NCLT.
Application admitted – CD settled OC – Joint
Memo filed - CD stated it had not defaulted any of
its payments towards its Financial Creditors. IRP
submitted – no other claims received – NCLT
recalled its order
Anant Merathia, Advocate
Aruna Chauhan & Ors. Delhi Financial Creditor arrived at a settlement with the respondent and withdrew the
Vs. M/s. BOP Projects petition. The NCLT dismissed the petition.

M/s. Dwarkesh Transport Ahmed. Operational Creditor sought permission to withdraw the petition on the ground of
Corporation settlement. The same was allowed by the NCLT.

Vedha Marketing Vs. G.K. Bengaluru A joint memo was filed by the parties stating the settlement of the matter..
Shelters Private Limited

Mundhra Bright Steel Vs. Kolkata Operational Creditor and Corp Debtor prayed to withdraw the petition on the
Gillanders Arbuthnot & ground of settlement.
Co. Ltd.
Rotomac Global Pvt. Ltd. Mumbai Consent Terms were arrived at between the parties. The NCLT dismissed the
Vs. Cane Agro Energy petition as withdrawn.
India Ltd.

SETTLEMENT/WITHDRAWAL PRE- ADMISSION

 Committee of Creditors and CIRP Issues
APPLICANT Vs RESPONDENT
M/s Raj Oil Mills Ltd. Vs. M/s
Edelweiss Asset Reconstruction
Company Ltd.
BASF India Limited
Vs
Mosmetro India (P) Ltd
BENCH RATIO
Agenda to approve the continuance of IRP was voted only by
61.84% of voting share. Therefore, a viable solution is to give
Mumbai
the preference to the decision taken by the largest percentage
in voting rights of the FCs in COC voting.
The NCLT directed the Creditors not to make payments from
the account or dispose properties of the Corporate Debtor
without the prior permission of the Insolvency Resolution
Chennai
Professional.

IOB NCLAT Once moratorium declared it is not open to any person

v. including FCs and Appellant Bank to recover any amount from
IRP, Amtek the account of the Corporate Debtor, nor it can appropriate
any amount towards its own dues. The Bank has to file its
claims before IRP and can seek to be included in CoC
 RESOLUTION PLAN/LIQUIDATION
CASE NAME BENCH RATIO
NCLT ordered liquidation - after the borrowers and lenders failed to
Hyderabad come up with a plan to revive operations-independent valuation report
VNR Infrastructure
valued Rs 80 crore - loan Rs 1,000 crore.

NCLT had accepted the resolution plan which was accepted by more
Synergies Dooray Automotive Hyderabad than 90% of the Committee of Creditors
Limited (Under challenge before NCLAT)

Prowess International Private NCLT, NCLT had accepted the resolution plan which was accepted by the
Limited Kolkata Committee of Creditors – OC paid in this plan

Application u/s 10 rejected - considering the case of public money

Anrak Aluminum Vs SBI Hyderabad invested + total spend being Rs 5712 Cr; national interest – pursue with
State Govt & revive project. Liberty given to file afresh after exploring

Anant Merathia, Advocate

 IRPs
CASE NAME BENCH RATIO
IRP faced resistance from CD , CA and Lenders. Tribunal held lenders
NCLT
Rolex Cycles V. Hero Steels were totally non co-operative with IRP holding meetings of CoC and
Hyderabad
Limited directed CA to hand over the books.

Ordered Police Protection to IP as the promoter was not co-operating

R.S.Polychem V. Ekdantam NCLT,
and there was possible threat to life.
Infrastructure Delhi

Police assistance given; directed CD to furnish the book of account,

Central Bank of India and
NCLT Chennai list of financial and operational creditors and assets to the IRP.
SBI V. Ashok Magnetics

IDBI Bank Limited V. Lanco NCLT IP must refrain from accepting too many assignments, if he is unlikely
Infratech Limited Hyderabad to be able to devote adequate time to each of his assignment.

Code does not empower the AA to suggest any name or appoint an

Sandeep Reddy & Anr Vs
NCLAT Interim Resolution Professional of its own choice (NCLAT left the
Jaycon Infrastructure
Question open)
 CASE NAME BENCH RATIO

Banks restrained from selling the assets of the

NCLT
Veesons Energy Personal Guarantor during the moratorium
CHENNAI
period. (Pending in NCLAT)

Schwitzer Systemtek India Assets of the Personal Guarantor will not fall
NCLAT
AND within the ambit of Moratorium.
Alpha & Omega Diagnostics (P) Ltd

MORATORIUM PROTECTS GUARANTORS?

Anant Merathia, Advocate
“Justice isn’t about fixing the past; it’s about healing the past's future.”
― Jackson Burnett

Anant Merathia , Advocate

anant@merathiacorp.com
Ph: +91 99405 20500