NCLAT Fortnightly: Important orders on IBC (September 16, 2023 – September 30, 2023)

The article provides a brief look at important orders passed by the NCLAT under the IBC during the period between September 16 and September 30, 2023.
NCLAT Fortnightly Sept 16-30
NCLAT Fortnightly Sept 16-30

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, that is, 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 the acknowledgement of debt in the balance sheets of a corporate debtor is not affected by the 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 on a date falling within the period covered under Section 10A to comply with the circular issued by the Reserve Bank of India, it 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 the 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 of whether a non-financial debt could be converted into financial debt by way of a subsequent written arrangement.

5. In Raju Jagtap v. Jayesh Steel Private Limited (Company Appeal (AT)(Insolvency) No. 525 of 2023), the NCLAT held that once the presence of a plausible pre-existence of dispute is established, the Adjudicating Authority is not required to carry on a detailed investigation and enter into final adjudication in relation to a pre-exiting dispute in a Section 9 application.

6. The NCLAT in Krystal Stone Exports Limited v. Stressed Assets Stabilization Fund & Ors. (Company Appeal (AT) (Insolvency) No. 879 of 2023 & I.A. No. 4048 of 2023) held that the Adjudicating Authority was wrong to pass an ex-parte order of admission against the corporate debtor when the corporate debtor was unaware of the proceedings due to non-effective service of notice. 

Further, the NCLAT held that an application for the recall of a NCLT order being a statutory remedy, an appeal lies against such rejection of application for recall even where the original admission order has not been appealed against.

7. In Rakesh Kumar (Suspended Director of Suchi Paper Mills Limited) v. Flourish Paper & Chemicals Limited (Company Appeal (AT)(Insolvency) No. 1161 of 2022 & I.A No.4940 of 2022 & 2552, 2733 of 2023), the NCLAT held that disputes surrounding claims and counter-claims cannot be adjudicated or determined by the Adjudicating Authority given their summary jurisdiction.

CIRP Stage

1. In Deputy Commissioner of Income Tax v. Anuj Jain, IRP of Jaypee Infratech Limited (Company Appeal (AT) (Insolvency) No.549 of 2023), the NCLAT held that a claim filed by the income tax department cannot be rejected merely because an appeal is pending in relation to such claim.

The NCLAT further observed that where the liability is determined during pre-CIRP period but such liability were to become due only in future, a resolution plan cannot extinguish such liability which is to arise at the future.

2. In Soneko Marketing Private Limited v. Girish Sriram Juneja (Company Appeal (AT) (Insolvency) No. 807 of 2023 & I.A. No. 2721 of 2023), the NCLAT held that a statutory provision which casts a duty on a public authority on which public has no control is directory in nature. Applying the aforesaid principle, the NCLAT held that while obtaining of necessary approval by the Competition Commission of India (“CCI”) is mandatory for consummation of a notifiable transaction, the requirement of obtaining such approval from the CCI prior to the approval of the resolution plan by the CoC is ‘directory.'

3. In Saptarshi Nath v. Kapil Dev Taneja (Company Appeal (AT) (Insolvency) No. 1356 of 2022), the NCLAT held that even where a transaction has been identified to be a preferential transaction, unless there is a finding to the effect that the management was the beneficiary to such a preferential transaction, a direction under Section 44(1)(d) of the Code seeking the return of benefits accumulated out of preferential transaction does not lie against the management.

4. In Ashique Ponnamparambath v. Vibin Vincent (Company Appeal (AT)(CH) (Ins.) No. 195/2023), the NCLAT held that existence of an antecedent debt is not a pre-requisite for maintainability of a preferential transaction, as long as such transaction puts a creditor, surety or guarantor in a beneficial position and such transaction was made during the relevant look back period.

5. In Assistant Commissioner of Commercial Taxes v.  Alok Kaislash Saksena, Resolution Professional of Associate Décor Limited (Company Appeal (AT) (CH) (Ins) No.302/2023 (IA No.968/2023), the NCLAT upheld the views of the Adjudicating Authority holding that the claim of the appellant (Commercial Taxes) would not be considered at par with secured creditors under Section 82 of the Karnataka Goods and Services Act, 2017, Section 82 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Section 20 of the Integrated Goods and Services Tax Act, 2017.

6. In Kakkattu Philip Francis v. IDBI Bank Limited (Company Appeal (AT) (Insolvency) No. 698 of 2023), the NCLAT observed that mere settlement with the financial creditor who has filed the Section 7 application would not result in withdrawal of the admission order based on such settlement where the committee of creditors has already been constituted and such withdrawal has not been approved by a 90 percent affirmative vote of the committee of creditors.

Liquidation Stage

1. In Vinod Kumar Kothari v. Sneha Techno Equipments Private Limited (Company App. (AT) (Ins) No. 316 of 2023 & I.A. No. 1079 of 2023), the NCLAT held that even where the liquidation proceedings had been initiated prior to the introduction of IBBI (Liquidation Process) (Amendment) Regulations, 2019 notified on July 25, 2019, revising clause 12 of Schedule I of the IBBI (Liquidation Process) Regulations, 2016 which provided for an outer period of 90 days to receive the auction consideration, in the expression of interest which was issued post the amendment, the liquidator could not have specified a shorter time period for the deposit of such money.

2. In Ajay Kumar Agarwal v. Mr. Krishna Kumar Chhaparia, (Company Appeal (AT) (Insolvency) No. 1250 of 2023), the NCLAT held that where the liquidator had to reduce the reserve price on account of non-participation of interested bidders, such auction process cannot be faulted merely because the reserve price based on which the final auction took place, was lower than the stamp duty market rate.

3. In V.K. Abdul Rahim v. Jasin Jose (Company Appeal (AT) (CH) (INS.) No. 299 of 2023), the Chennai bench of the NCLAT held that in absence of any stay order, mere challenging of the liquidation order by way of an appeal was not a ground to not file the claim within stipulated period.


1. The NCLAT, in Pan Pacific Engineering Services Private Limited v. Ayyappa Hydro Power Limited (Company Appeal (AT) (Insolvency) No. 1239 of 2023) held that when the MSME order was passed during the Section 10A period, no CIRP application is maintainable for a default that took place during that period.

2. In Sheetal Impex Private Limited v. Shree Swastic Sales Corporation Private Limited (Comp. App. (AT) (Ins.) No. 640 of 2023), the NCLAT observed that the event of a ‘tax deduction at source’ cannot extend the limitation period for the proceedings under the Code.

About the authors: Arka Majumdar is a Partner; Juhi Wadhwani is a Senior Associate; Vikram Chaudhuri and Ayush Chaturvedi are Associates at Argus Partners.

Arka Majumdar, Juhi Wadhwani, Vikram Chaudhari, Ayush Chaturvedi
Arka Majumdar, Juhi Wadhwani, Vikram Chaudhari, Ayush Chaturvedi
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