Law College Notes & Stuffs

Exclusive group for Law Students

Join Us Here for More Materials

Law College Notes & Stuffs
25 Supreme Court Judgments on Insolvency and Bankruptcy
Code 2016

Find More at [Link]

1. Corporate Law
2. Articles

vinaipal
| Corporate Law - Articles
17 Aug 2019
6,657 Views
0 comment

Article summarises 25 Landmark Supreme Court Judgments On

Insolvency And Bankruptcy Code 2016

SUPREME COURT JUDGMENTS

ON

INSOLVENCY AND BANKRUPTCY CODE 2016

Sr Date Name Of Citation/Dt  of Ratio

No of The Judgment
Judg‐ Parties
ment

  21- Bank Of AIR2017SC1735 If the reference made by an applicant to

1 02- New York BIFR is rejected at threshold by Registrar
2017 Mellon without adjudication by a Bench on the
London ground that the applicant company is not
Branch. Vs “industrial company”, such rejection is
Zenith In‐ non est and without jurisdiction ,  there‐
fotech fore such reference is deemed to be
Limited pending since such order is  without jur‐
isdiction and hence application to NCLT
can be filed as per section 252 of SICA.
 Find More at [Link]

2 24- Lokhand‐ 2019(1)CTC238 There is no power with NCLT orNCLAR to

07- wala record the compromise once the Applic‐
2017 Kataria ation is admitted. But Supreme Court ex‐
Construc‐ ercising powers under Article 142, re‐
tion  Vs corded the compromise and put a
Nisus Fin‐ quietus to litigation.
ance And
Investment
Managers
Llp

3 31- Innovent‐ (2018) 1 SCC 407 Maharashtra Relief Undertakings

08- ive Indus‐ (Special Provisions Act),1958  cannot
2017 tries Ltd. stand in the way of the corporate insolv‐
Vs. Icici ency resolution process under the Code.
Bank & The non-obstante clause, in the widest
Anr. terms possible, is contained in Section
238 of the Code, so that any right of the
corporate debtor under any other law
cannot come in the way of the Code.

4 19- Surendra Judgment Proviso to sub-section (5) of Section 7

09- Trading dt.19.09.2017 or proviso to sub-section (5) of Section 9
2017 Company or
Vs. Jug‐
gilal Kam‐ proviso to sub-section (4) of Section 10
lapat Jute to remove the defects within seven days
Mills Co. is directory  and on  failure, applications
Ltd. & Ors. can not  to be rejected.
5 21- Mobilox   Without going into the merits of the
09- Innova‐ 2018(1)SCC353 dispute, If appellant has raised a plaus‐
2017 tions ible contention requiring further invest‐
Private igation which is not a patently feeble
Limited Vs. legal argument or an assertion of facts
Kirusa unsupported by evidence and if the  de‐
Software fense is not spurious, or mere bluster, or
Private  plainly frivolous or vexatious , dispute
Limited does truly exist in fact between the
parties, which may or may not ultimately
succeed, on the ground that the dispute
does not exist, the Application can not
be allowed to proceed u/s  (5)(ii)(d) of
Section 9 of code.

7 23- Alchemist AIR2017SC5124 Whether arbitration proceedings can be

10- Asset Re‐ continued once the Insolvency Petition
2017 construc‐ is admitted and moratorium starts. The
tion Com‐ mandate of the new Insolvency Code is
pany L. Vs. that the moment an insolvency petition
Hotel is admitted, the moratorium that comes
Gaudavan into effect under Section 14(1)(a) ex‐
pressly interdicts institution or continu‐
ation of pending suits or proceedings
against Corporate Debtors. And Arbitra‐
tion proceedings will also be hit by
moratorium.

Find More at [Link]

 Find More at [Link]

8 13- Uttara Judgment Whether, in view of Rule 8 of the I&B

11- Foods And dt.13.11.2017 (Application to Adjudicating Authority)
2017 Feeds Rules, 2016, the National Company Law
Private Appellate Tribunal could utilize the in‐
Limited Vs. herent power recognized by Rule 11 of
Mona the National Company Law Appellate
Pharma‐ Tribunal Rules, 2016 to allow a com‐
chem promise before it by the parties after ad‐
mission of the matter.
In case of compromises, Supreme Court
 may utilise its powers under Article 142
of the Constitution of India. Therefore
the relevant Rules may be amended by
the competent authority so as to include
such inherent powers to record com‐
promise by NCLT or NCLAT.

9 15- Macquarie AIR2018SC498 i)Expression “an operational creditor

12- Bank Lim‐ may on the occurrence of a default de‐
2017 ited Vs. liver a demand notice…..” under Section
Shilpi 8 of the Code must be read as including
Cable an operational creditor’s authorized
Technolo‐ agent and lawyer, as has been fleshed
gies Ltd. out in Forms 3 and 5 appended to the
Adjudicatory Authority Rules.
ii) that the   provision of removing the
defects within seven days is directory
and not mandatory in nature. However,
the applicant while refilling the applica‐
tion after removing the objections, file
an application in writing showing suffi‐
cient case as to why the applicant could
not remove the objections within seven
days.
 Find More at [Link]

10 09- Chitra 2018(145)CC425 As a result of the amendment brought

08- Sharma Vs about in the definition of ‘financial debt’,
2018 UOI amounts raised from allottees under real
estate projects are deemed to be
amounts “having a commercial effect of
a borrowing”. Hence outstanding
amounts to allottees in real estate pro‐
jects are statutorily regarded as financial
debts. Such allottees are brought within
the purview of the definition of ‘financial
creditors’.

11 10- Pr. Com‐ Judgment Income-tax dues, being in the nature of

08- missioner dt.10.08.2018 Crown debts, do not take precedence
2018 Of Income even over secured creditors, who are
Tax Vs private persons.
Monnet Is‐
pat And
Energy Ltd

12 14- K. Kishan 2018(4)Comp.L.J. Insolvency and Bankruptcy Code, 2016

08- Vs. Vijay 165 (hereinafter referred to as “the Code”)
2018 Nirman can not be invoked in respect of an oper‐
Company ational debt where an Arbitral Award has
Pvt. Ltd. been passed against the operational
debtor, which has not yet been finally ad‐
judicated upon and when matter   which
are pending in a Section 34 petition
challenging the said [Link] is be‐
cause thus there is a dispute which
exists.
 13 14- State Bank Judgment dt. Section 14 of the Insolvency and Bank‐
08- Of India Vs 14.08.2018 ruptcy Code, 2016, which provides for a
2018 V. Ra‐ moratorium for the limited period men‐
makrish‐ tioned in the Code, on admission of an
nan & Anr insolvency petition, will not apply to a
personal guarantor of a corporate debtor.
The moratorium referred to in Section 14
can have in  no manner of application to
personal guarantors of a corporate
debtor.

6 04- Arcelormit‐ AIR2018SC5646 Certain class of persons are Ineligible  f

10- tal India to submit resolution plans after the in‐
2018 Private troduction of Section 29A into the In‐
Limited Vs solvency and Bankruptcy Code, 2016
Satish Ku‐ (hereinafter referred to as “the Code”),
mar Gupta with effect from 23.11.2017.
& Ors Any person who wishes to submit a res‐
olution plan, if he or it does so acting
jointly, or in concert with other persons,
which person or persons happen to
either manage or control or be pro‐
moters of a corporate debtor, who is
classified as a non-performing asset and
whose debts have not been paid off for a
Find More at [Link] period of at least one year before com‐
mencement of the corporate insolvency
resolution process, becomes ineligible
to submit a resolution plan. Any person
who wishes to submit a resolution plan
acting jointly or in concert with other
persons, any of whom may either
manage, control or be a promoter of a
corporate debtor classified as a non-
performing asset in the period above
mentioned, must first pay off the debt of
the said corporate debtor classified as a
non-performing asset in order to be‐
come eligible under Section 29A(c).
14 11- B.K. Educa‐ Judgment dt. The Limitation Act is applicable to ap‐
10- tional Ser‐ 11.10.2018 plications filed under Sections 7 and 9 of
2018 vices the Code from the inception of the Code.
Private Article 137 of the Limitation Act gets
Limited Vs attracted. “The right to sue”, therefore,
 Parag accrues when a default occurs. If the de‐
Gupta And fault has occurred over three years prior
Associates to the date of filing of the application,
the application would be barred under
Article 137 of the Limitation Act, save
and except in those cases where, in the
facts of the case, Section 5 of the Limit‐
ation Act may be applied to condone the
delay in filing such application.

15 23- Transmis‐ Judgment dt. IBC is not intended to be substitute to a

10- sion Cor‐ 23.10.2018 recovery forum. It is also laid down that
2018 poration whenever there is existence of real
Vs Equip‐ dispute, the IBC provisions cannot be
ment invoked.
Conduct‐
ors

Find More at [Link]

 Find More at [Link]

16 12- Jaipur 2019(213)CC25 Cases that fall under Section 20 of the

12- Metals & SICA, are dealt with separately under
2018 Electricals Rule5 (2), they cannot be treated as peti‐
Employees tions that have been filed under Section
Organisa‐ 433(f) of the Companies Act, 1956,
tion Vs. which are separately specified under
Jaipur Rule 6. The High Court is therefore not
Metals & correct in treating petitions that are pur‐
Electricals suant to Section 20 of the SIC Act as be‐
Ltd. ing pursuant to Section 433(f) of the
Companies Act, 1956 and applying Rule
6 of the 2016 Transfer Rules. The effect
of the omission of Rule 5(2) is not to
automatically transfer all cases under
Section 20 of the SIC Act to the NCLT, as
otherwise, a specific rule would have to
be framed transferring such cases to the
NCLT, as has been done in Rule 5(1). It is
thus clear that under the scheme of Sec‐
tion 434 (as amended) and Rule 5 of the
2016 Transfer Rules, all proceedings un‐
der Section 20 of the SIC Act pending
before the High Court are to continue as
such until a party files an application be‐
fore the High Court for transfer of such
proceedings post 17.08.2018. Once this
is done, the High Court must transfer
such proceedings to the NCLT which will
then deal with such proceedings as an
application for initiation of the corporate
insolvency resolution process under the
Code. It is thus clear that under the
scheme of Section 434 (as amended)
and Rule 5 of the 2016 Transfer Rules,
all proceedings under Section 20 of the
SIC Act pending before the High Court
are to continue as such until a party files
an application before the High Court for
transfer of such proceedings post
17.08.2018.  
 Find More at [Link]

18 22- Forech In‐ Judgment dt Rules 26 and 27 clearly refer to a pre ad‐
01- dia Ltd Vs 22.01.2019 mission scenario as is clear from a plain
2019 Edelweiss reading of Rules 26 and 27 of Compan‐
Assets Re‐ ies (Court)Rules , which make it clear
construc‐ that the notice contained in Form No. 6
tion Co. has to be served in not less than 14 days
Ltd before the date of hearing. Hence, the
 expression “was admitted” in Form No.
6 only means that notice has been is‐
sued in the winding up petition which is
then “fixed for hearing before the Com‐
pany Judge” on a certain day. Even if the
Notice is served u/r 26 , any party can
apply to High Court for transfer of pro‐
ceedings to the NCLT. It is therefore cor‐
rect to interpret that the notice referred
to in Rules 26 and 27 must be after
admission.

19 25- Swiss Rib‐ AIR2019SC739 Financial creditors are clearly different

01- bons Pvt. from operational creditors and therefore,
2019 Ltd. & Anr. there is obviously an intelligible differ‐
Vs UOI entia between the two which has a direct
relation to the objects sought to be
achieved by the Code. Constitutional
validity of different provisions upheld.

17 29- Swaraj In‐ 2019(3)SCC620 Even when award for recovery is ob‐
01- frastruc‐ tained from DRT in OA, winding up Peti‐
2019 ture Pvt. tion can be filed under Companies Act.
[Link] Ko‐
tak
Mahindra
Bank Ltd.
20 31- Vijay Ku‐   Resolution professional is required to
01- mar Jain Judgment  provide all relevant documents includ‐
2019 Vs Stand‐ dt.31.01.2019 ing the insolvency resolution plans in
ard question to members of the suspended
Chartered Board of Directors of the corporate
Bank & Ors debtor in each case so that they may
meaningfully participate in meetings
held by the committee of creditors
[“CoC”]. The  meeting of the CoC  will in‐
clude the  members of the suspended
Board of Directors of the corporate
debtor as participants.

21 05- K Sashid‐ Judgment Resolution plan of the concerned cor‐

02- har Vs In‐ dt.5.2.2019 porate debtor    not being approved by
2019 dian Over‐ requisite percent of voting share of the
seas Bank financial creditors; and in absence of any
& Ors alternative resolution plan presented
within the statutory period of 270 days,
the inevitable sequel is to initiate liquid‐
ation process under Section 33 of the
Code.

Find More at [Link]

 Find More at [Link]

22 02- Dharani 2019(5)SCC480 The  Reserve Bank of India [“RBI”]

04- Sugars Circular issued on 12.02.2018, by which
2019 And Chem‐ the RBI promulgated a revised frame‐
icals Ltd. work for resolution of stressed assets  is
Vs. Union  struck down and declared as ultravires
Of India & Section 35AA of the Banking Regulation
Ors. Act as a whole, and be declared to be of
no effect in law. Consequently, all ac‐
tions taken under the said circular, in‐
cluding  actions by which the Insolvency
Code has been triggered must fall along
with the said circular. As a result, all
cases in which debtors have been pro‐
ceeded against by financial creditors un‐
der Section 7 of the Insolvency Code,
only because of the operation of the im‐
pugned circular will be proceedings
which, being faulted at the very
inception, are declared to be non-est.

23 30- Jk Jute AIR2019SC2138 A trade union would come within the

04- Mill Maz‐ definition of “person” under Section
2019 door 3(23) of the Code.  A trade union would
Morcha Vs   be an operational creditor, joint petition
Juggilal could be filed under Rule 6 read with
Kamlapat Form 5 of the Insolvency and Bankruptcy
Jute Mills (Application to Adjudicating Authority)
Company Rules, 2016, with authority from several
Ltd workmen to one of them to file such pe‐
tition on behalf of all.
24 23- Bikram Judgment dt.  Authorities who leased the plots can not
07-  Chatterji & 23.07.2019 recover the outstanding dues by sale of
2019 Ors. Vs. flats to third parties or by demolishing
Union Of buildings on leased lands which have
India & been booked for selling to home buyers.
Ors. Inaction on the part of authorities to re‐
cover their dues can not be ground to
sell the flats and realize their dues which
have been booked for sale by home buy‐
ers and part consideration paid. The
Banks also can not lay hands on flats
booked by home buyers due to their lack
of monitoring of use of funds provided
for construction of flats.

Find More at [Link]

 25 09- Pioneer Judgment The amendments by inserting  Explana‐
08- Urban dt.09.08.2019 tion to Section 5(8)(f)  made deem allot‐
2019 Landand tees of real estate projects to be
Infrastruc‐ “financial creditors” so that they may
ture Ltd Vs trigger the Code, under Section 7
UOI thereof, against the real estate de‐
veloper id upheld. In addition, being fin‐
ancial creditors, they are entitled to be
represented in the Committee of Credit‐
ors by authorised representatives are
constitutionally valid.
Remedies that are given to allottees of
flats/ apartments are therefore concur‐
rent remedies, such allottees of
flats/apartments being in a position to
avail of remedies under the Consumer
Protection Act, 1986, RERA as well as
the triggering of the Code.

Section 5(8)(f) as it originally appeared

in the Code being a residuary provision,
always subsumed within it allottees of
flats/apartments. The explanation to‐
gether with the deeming fiction added by
the Amendment Act is only clarificatory
of this position in law

Tags: bankruptcy code, IBBI

Kindly Refer to Privacy Policy & Complete Terms of Use and Disclaimer.