IBC - NCLAT Fornightly Summary (September 16, 2023 ' September 30, 2023)

• Published date: 04 April 2024
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-Structuring, Corporate and Company Law, Insolvency/Bankruptcy, Trials & Appeals & Compensation
• Law Firm: Argus Partners
• Author: Ms Arka Majumdar, Juhi Wadhwani, Ayush Chaturvedi and Vikram Chaudhuri

The following is a snapshot of the important orders passed by the National Company Law Appellate Tribunal ("NCLAT"), under the Insolvency and Bankruptcy Code, 2016 ("Code"), during the period between September 16, 2023 to September 30, 2023. For ease of reference, the orders have been categorized and dealt with in the following categories i.e.,Pre-admission stage, Corporate Insolvency Resolution Process ("CIRP") stage, Liquidation stage, and Miscellaneous.

PRE-ADMISSION STAGE

1. In Jumbo Chemical and Allied Industries Private Limited v. Arjun Industries Limited (Company Appeal (AT) (Insolvency) No. 948 of 2022), the NCLAT held that the extension of limitation afforded by acknowledgement of debt in the balance sheets of corporate debtor is not affected by mere mentioning of details of litigation emanating from the debt in the 'notes to the account' and the directors' report.

2. In Pradeep Madhukar More v. Central Bank of India (Company Appeal (AT) (Insolvency) No.837 of 2023), the NCLAT held that where the default took place post the expiry of the period covered under Section 10A of the Code, merely because the NPA was identified to be a date falling within the period covered under Section 10A to comply with the circular issued by the Reserve Bank of India, would not make a CIRP petition filed basis such debt barred by Section 10A.

3. In D. Srinivasa Rao v. Stressed Assets Stabilization Fund (Company Appeal (At) (Ch) (Ins.) No. 159/2023 (IA Nos. 527 & 967/2023)), the NCLAT held that while computing limitation period for initiating CIRP under section 9 of the Code in the event the corporate debtor was under the protection of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), the financial creditor would be entitled to claim exclusion of such period as was allowed under Section 22(5) of SICA. Interestingly, the NCLAT also seemed to have suggested that suspension of such benefit of exclusion would also be extended to the additional period of 180 days from the date of repeal of SICA during which period the corporate debtor had an option of submitting itself to the Adjudicating Authority.

4. In Mascot Capital and Marketing Private Limited v Savair Energy Limited (Company Appeal (At) (Insolvency) No. 309 of 2023), the NCLAT allowed maintainability of a section 7 application on the basis of a memorandum of understanding identifying an amount invested in a joint venture arrangement to be financial debt and thus raising an issue...