Legal News & Views

In Flat Buyers Association Winter Hills – 77, Gurgaon Vs. Umang Realtech Pvt. Ltd through IRP & Ors.,  several interesting issues were addressed. One of them being a  Secured  Creditor cannot be provided with the flat/apartment by preference over the allottees for whom the project has been approved: Reason: A  Secured  Creditor  such  as  financial  institutions/banks, cannot be provided with the asset (flat/apartment) by preference over the allottees (Unsecured Financial Creditors) for whom the project has been approved. Their claims are to be satisfied by providing the flat/apartment. While satisfying the allottees, one or other allottee may agree to opt for another flat/apartment or one tower or other tower if not allotted to any other. In such case their agreements can be modified by the Interim Resolution Professional/ Resolution Professional with the counter signature of the Promoter and the allottees, so that the allo...

In Flat Buyers Association Winter Hills – 77, Gurgaon Vs. Umang Realtech Pvt. Ltd through IRP & Ors.,  several interesting issues were addressed. One of them being CIRP against a real estate company is limited to a project as per approved plan by the Competent Authority and not other projects which are separate at other places for which separate plans approved. Reason: In CIRP  against  a  real  estate,  if allottees (Financial Creditors) or Financial Institutions/Banks (Other Financial Creditors) or Operational Creditors of one project initiated CIRP against the Corporate Debtor (real estate company), it is confined to the particular project, it cannot affect any other project(s) of the same real estate company (Corporate Debtor) in other places where separate plan(s) are approved by different authorities, land and its owner may be different and mainly the allottees (financial creditors), financial institutions (financial creditors, opera...

In Nahar Builders Ltd Vs. Housing Development and Infrastructure Ltd, application was filed by Nahar Builders for leave to withdraw the deposited amount of Rs. 8 crores furnished by the Respondent as per court order pending Arbitration. The Applicant claimed that since Arbitration proceeding has been completed and there is an Award in favour of Nahar Buidler of this amount plus interest, the Applicant should be allowed to withdraw this amount and accrued interest for partial or perhaps even complete satisfaction of Nahar Builders’ award. The opposition from HDIL is that since there is a moratorium that has came in to play in view of the insolvency proceedings under the Insolvency & Bankruptcy Code, 2016, the amount of Rs. 8 crores deposited in this Court is ‘the property of HDIL’ within the meaning of Section 14 of the IBC.  The High Court allowing the withdrawal held that once an amount is deposited in this Court, it is placed beyond the reach of either party wit...

In Oriental Bank of Commerce Vs. M/s Ruchi Global Limited, the Corporate Debtor resisted the application filed by the Financial Creditor Bank stating that as per the Inter-Se agreement the Applicant Bank should have given notice to the Lead Bank and then filed the application before the NCLT which has not done. The NCLT agreeing with the Corporate Debtor, appeal was filed before the NCLAT. The NCLAT observed that the Agreement being Inter-se between the Banks, the Corporate Debtor cannot take benefit of the Clauses in that agreement, which are binding only the Banks. If there is a default by any member of the Consortium, it would be a matter for the other banks to be aggrieved with and Corporate Debtor cannot take benefit of the same to raise grievance. If the Appellant Bank did not act in tune with the Consortium Agreement it may be matter of consideration for other Bank/s of the Consortium and/or Reserve Bank of India. However, there is nothing which Bars filing of Sect...

In S.S. Polymers Vs. Kanodia Technoplast Limited, appeal was filed against order of NCLT, wherein the Appellant (S.S. Ploymers) filed application u/s 9 of the Code for initiation of CIRP against M/s Kanodia Technoplast Limited (Corporate Debtor). The Adjudicating Authority (NCLT), Court No.IV, New Delhi, rejected the application on the ground that there is no debt payable and there is no default. NCLAT holding the application as having been filed with malicious intent  observed that before the admission of an application under Section 9 of the I&B Code, the ‘Corporate Debtor’ paid the total debt. The application was pursued for realisation of the interest amount, which, according to us is against the principle of the I&B Code, as it should be treated to be an application pursued by the Applicant with (to realise only Interest) for any purpose other than for the Resolution of Insolvency, or Liquidation of the ‘Corporate Debtor’ and which is barred in view of Sectio...

In Dr. Vishnu Kumar Agarwal  vs M/s. Piramal Enterprises Ltd., one of the questions arise for consideration before the NCLAT was whether the ‘Corporate Insolvency Resolution Process’ can be initiated against two ‘Corporate Guarantors’ simultaneously for the same set of debt and default? The NCLAT held that there is no bar in the ‘I&B Code’ for filing simultaneously two applications under Section 7 against the ‘Principal Borrower’ as well as the ‘Corporate Guarantor(s)’ or against both the ‘Guarantors’. However, once for same set of claim application under Section 7 filed by the ‘Financial Creditor’ is admitted against one of the ‘Corporate Debtor’ (‘Principal Borrower’ or ‘Corporate Guarantor(s)’), second application by the same ‘Financial Creditor’ for same set of claim and default cannot be admitted against the other ‘Corporate Debtor’ (the ‘Corporate Guarantor(s)’ or the ‘Principal Borrower’). Further, though there is a provision to file joint application under Section ...

In KERALA STATE ELECTRICITY BOARD REP. BY ITS SECRETARY & ANR. vs  PRINCIPAL SIR SYED INSTITUTE FOR TECHNICAL STUDIES & ANR, the issue before the Supreme Court was the tariff notification issued by the Kerala State Electricity Regulatory Commission  segregating Self-Financing Educational Institutions (SFEI) from Government run and Government Aided Private Educational Institutions and subjecting the former to a higher category of tariff. It was urged that tariff for SFEIs could not be brought under the head “Commercial”.  Referring to various judgments, the court decided that SFEIs are not permitted to indulge in profiteering but that does not imply they cannot generate reasonable revenue surplus to enable them to continue with their activities. While an educational institution in our ordinary perception may not be performing functions similar to the other entities who undertake business ventures, a tariff fixing body is not required to proceed on the basis of...

In SSIPL LIFESTYLE PRIVATE LIMITED vs VAMA APPARELS (INDIA) PRIVATE LIMITED & ANR., CS (COMM) 735/2018, I.As. 15576/2018, 2756/2019, 2757/2019 & 2758/2019, the question before the Delhi High Court was whether there is a limitation period prescribed for filing of an application under Section 8 of the Arbitration and Conciliation Act? To this question the court also decided to seek answer to whether the limitation for filing of the written statement as prescribed in the Civil Procedure Code, 1908 as also the Commercial Courts Act, 2015 would be applicable for filing of a Section 8 application. The court referring to various judgments observed that under the unamended provision, the objection as to the existence of the arbitration clause could be taken anytime (i) prior to the filing of the written statement (ii) in the written statement (iii) along with the written statement. So long as the written statement was not filed, Section 8 application could be filed. The Legislatur...

In ANUJ JAIN INTERIM RESOLUTION PROFESSIONAL FOR JAYPEE INFRATECH LIMITED Vs AXIS BANK LIMITED, CIVIL APPEAL Nos. 6777-6797 OF 2019, the issue was the Appellate Tribunal setting aside the order passed by the NCLT, on the application moved by the Interim Resolution Professional in the Corporate Insolvency Resolution Process concerning the Corporate Debtor Company viz., Jaypee Infratech Limited seeking avoidance of certain transactions, whereby the corporate debtor had mortgaged its properties as collateral securities for the loans and advances made by the lender banks and financial institutions to Jaiprakash Associates Limited, the holding company of JIL, as being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code, 7 2016. The NCLT had also approved the IRB' s decision ejecting the claims of such lenders of JAL to be recognized as financial creditors of the corporate debtor JIL on the strength of the mortgage created...