Adjudicating Authority for corporate persons [ Section 60 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Adjudicating Authority for Corporate Persons NCLT shall be the Adjudicating authority for corporate authority [ Section 60(1) of IBC, 2016 ] The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. Transfer of Pending Cases [ Section 60(2) of IBC, 2016 ] Without prejudice to sub- section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor shall be filed before such National Company Law Tribunal. Transfer of Cases [ Section 60(3) of IBC, 2016 ] An insolvency resolution process or liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporate debtor. NCLT shall have power of DRT [ Section 60(4) of IBC, 2016 ] The National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub- section (2). Jurisdictional power of Adjudicating authority [ Section 60(5) of IBC, 2016 ] Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Period of moratorium excluded for purpose of limitation [ Section 60(6) of IBC, 2016 ] Notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded. Relevant Case Laws GE Power India Ltd. Vs. NHPC Ltd. 2020 (6) TMI 692, Delhi HC Dated 26.06.2020 Clause (c) sub-section (5) of section 60 of the Code vests the jurisdiction in AA to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in AA while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the AA. Embassy Property Development Pvt. Ltd. Vs. State of Karnataka Ors. 2019 (12) TMI 188 - SUPREME COURT Dated 03.12.2019 Though the AA and the NCLAT have jurisdiction to enquire into questions of fraud, however, they would not have jurisdiction to adjudicate upon disputes such as those arising under the Mines Minerals (Development and Regulation) Act, 1957, and the rules thereunder, especially when the disputes revolve around decisions of statutory or quasi-judicial authorities, which can be corrected only by way of judicial review of administrative action. M. Srinivas Vs. Ramanathan Bhuvaneshwari Ors. 2019 (11) TMI 290 - NCLAT Dated 24.07.2019 If the AA is satisfied that there are circumstances suggesting that the business of a CD is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner oppressive to any of its members, and that the affairs of the CD ought to be investigated, after giving a reasonable opportunity of being heard to the parties concerned, it may refer the matter to the Central Government for investigation into the affairs of the CD. IBBI Vs. Rishi Prakash Vats Ors. 2019 (8) TMI 629 - NCLAT Dated 11.07.2019 Once a disciplinary proceeding is initiated by IBBI on the basis of evidence on record, it is for the disciplinary authority i.e. IBBI to close the proceedings or pass appropriate orders in accordance with law. Such power having been vested with IBBI and in absence of such power being vested with AA, the AA cannot quash the disciplinary proceedings initiated by IBBI. Ilam Chand Kamboj Vs. ANG Industries Ltd. [CA (AT) (Ins.) No. 253 of 2019 and I.A. No. 995 of 2019] NCLAT order dt. 02.08.2019 The AA is not supposed to pass any adverse observations, even prima facie, against the RP, without giving an opportunity to him as to why in view of certain act, the matter be not referred to the IBBI. Union of India Vs. Maharashtra Tourism Development Corporation Anr. 2020 (2) TMI 390 - NCLAT Dated 02.12.2019 Section 212 of the Companies Act, 2013 does not empower the NCLT or AA to refer the matter to the Central Government for investigation by Serious Fraud Investigation Office (SFIO) even if it notices the company defrauding creditors and others. However, in terms of section 213(b) of the said Act, it can direct the Central Government to investigate through inspectors and after investigation and if case is made out, it may decide the matter to be investigated by SFIO. It was held that the AA is not competent to straight away direct any investigation to be conducted by the SFIO. Committee of Creditors of Metalyst Forging Ltd. Vs. Deccan Value Investors LP Ors. 2020 (2) TMI 1319 - NCLAT Dated 07.02.2020 The Code does not confer any power and jurisdiction on the AA to compel specific performance of a resolution plan by an unwilling resolution applicant. State Bank of India Vs. V. Ramakrishnan Anr. 2018 (8) TMI 837 - SC Dated 14.08.2018 Section 60 of the Code in sub-section (1) thereof, refers to insolvency resolution and liquidation for both CDs and personal guarantors, the AA for which shall be the NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located. The scheme of section 60(2) and (3) is clear that the moment there is a proceeding against the CD pending under the Code, any bankruptcy proceeding against the individual personal guarantor will, if already initiated before the proceeding against the CD, be transferred to the NCLT or, if initiated after such proceedings had been commenced against the CD, be filed only in the NCLT. State Bank of India Vs. D. S. Rajendra Kumar 2018 (6) TMI 763 - NCLAT Dated 18.04.2018 An order of moratorium will be applicable only to the proceedings against the CD and the personal guarantor, if pending before any court of law/tribunal or authority. However, this order of moratorium will not be applicable on filing of applications for triggering CIRP under sections 7 or 9 or 10 of the Code against the guarantor or the personal guarantor under section 60(2). Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta Ors. 2019 (11) TMI 731 - SC Dated 15.11.2019 The limited judicial review available to AA can in no circumstance trespass upon a business decision of the majority of the CoC. The residual jurisdiction of the AA under section 60(5)(c) cannot, in any manner, whittle down section 31(1) of the Code, by the investment of some discretionary or equity jurisdiction in the AA outside section 30(2) of the Code, while adjudicating a resolution plan. Ferro Alloys Corporation Ltd. Vs. Rural Electrification Corporation Ltd. 2019 (1) TMI 579 - NCLAT Dated 08.01.2019 Without initiating any CIRP against the principal borrower, it is always open to the FC to initiate CIRP under section 7 against the corporate guarantors, as the creditor is also the FC qua corporate guarantor. Arcelormittal India Pvt. Ltd. Vs. Satish Kumar Gupta and Ors. 2018 (10) TMI 312 - SC Dated 04.10.2018 The non-obstante clause in section 60(5) is designed for a different purpose i.e. to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a CD covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings. Amandeep Singh Bhatia Ors. Vs. Vitol S.A. Anr. 2018 (10) TMI 1086 - NCLAT Dated 30.08.2018 The AA is empowered to direct the ex-directors not to leave the country without its prior permission. Vishnu Kumar Agarwal Vs. Piramal Enterprises Ltd . 2019 (2) TMI 316 - NCLAT Dated 08.01.2019 There is no bar in the Code against filing of two applications under section 7 simultaneously, against the principal borrower as well as the corporate guarantor or against both the guarantors. However, once for same set of claim, application under section 7 filed by the FC is admitted against one of the CDs (i.e. principal borrower or corporate guarantor), second application by the same FC for same set of claim and default cannot be admitted against the other CD (i.e. corporate guarantor or the principal borrower). Prasad Gempex Vs. Star Agro Marine Exports Pvt. Ltd. Anr. 2019 (6) TMI 460 - NCLAT Dated 02.05.2019 The AA has no jurisdiction to pass any order with regard to any matter pending before the court of criminal jurisdiction. Jotun India Pvt. Ltd. Vs. PSL Ltd. 2018 (1) TMI 433 - HC, Bombay Dated 05.01.2018 NCLT is not a court subordinate to the HC and hence as prohibited by the provisions of section 41(b) of the Specific Relief Act, 1963, no injunction can be granted by the HC against a CD from institution of proceedings in NCLT. Skillstech Services Pvt. Ltd. Vs. Registrar, National Company Law Tribunal, New Delhi Anr. 2021 (1) TMI 718 - HC, New Delhi Dated 13.01.2021 The question as to whether the NCLT has jurisdiction to entertain a particular case or not cannot be determined by the Registrar, NCLT in its administrative capacity. The Registrar, NCLT is bound to place the matter before the appropriate bench of the NCLT, for the said question to be judicially determined. Kalinga Allied Industries India Pvt. Ltd. Vs. Hindustan Coils Ltd. Ors. 2021 (1) TMI 388 - NCLAT Dated 11.01.2021 When the application for approval of resolution plan is pending before the AA, at that time the AA cannot entertain an application of a person who has not participated in CIRP even when such person is ready to pay more amount in comparison to the successful resolution applicant. If a resolution plan is considered beyond the time limit then it will make a never ending process. Gujarat Urja Vikas Nigam Ltd. Vs. Amit Gupta Ors. 2021 (3) TMI 340 - SC Dated 08.03.2021 i. NCLT/NCLAT can exercise jurisdiction under section 60(5)(c) of the Code to stay termination of contracts solely on account of CIRP being initiated against the CD. ii. NCLT has the jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the CD; however, in doing so, the NCLT and NCLAT must ensure that they do not usurp the legitimate jurisdiction of other courts and tribunals. iii. RP can approach the NCLT for adjudication of disputes that are related to the insolvency resolution process. However, for adjudication of disputes out of the insolvency, the RP must approach the competent authority. iv. NCLT cannot do what the Code consciously did not provide it the power to do. v. The jurisdiction of the NCLT cannot be invoked in matters where a termination may take place on grounds unrelated to the insolvency of the CD. vi. It cannot even be invoked in the event of a legitimate termination of a contract based on an ipso facto clause, if such termination will not have the effect of making certain the death of the CD. vii. NCLT to be cautious in setting aside valid contractual terminations which would merely dilute the value of the CD, and not push it to its corporate death. Alok Kaushik Vs. Bhuvaneshwari Ramanathan and Ors. 2021 (3) TMI 1242 - SC Dated 15.03.2021 AA is sufficiently empowered under section 60(5)(c) of the Code to make a determination of the amount which is payable to an expert valuer as an intrinsic part of the CIRP costs, even in a situation where the CIRP is eventually set aside by the AA or by the Appellate Authority, as the case may be. Ranjeet Singh vs. M/s Karan Motors Private Limited 2021 (8) TMI 910 - NCLAT Dated 18.08.2021 Both NCLT and NCLAT work under the Code where there is no equity jurisdiction, and they are bound by the provisions of the Code while adjudicating the matters under the Code.