The jurisprudence on the basis for pay-outs to dissenting secured financial creditors (“Secured DFCs”), under an approved resolution plan, has been in the flux for a while now. The issue remains pending before a larger bench of the Hon’ble Supreme Court, pursuant to reference made by a coordinate bench, vide an order
Recently, the Supreme Court, in the case of Gaurav Agarwal vs CA Devang P. Sampat, has issued notice to the parties for adjudicating the crucial question of law pertaining to the ‘Period of Limitation’ for preferring an appeal under Section 61 of Insolvency and Bankruptcy Code, 2016 (“the Code”).Continue Reading Limitation under Section 61 of Insolvency and Bankruptcy Code: Too Strict Interpretation of the Law?
The resolution process for real estate companies is anything but simple, given the complexities involved and the plethora of parties with varied and conflicting interests. One such issue was whether local industrial development authorities, in particular the New Okhla Industrial Development Authority (“NOIDA”), should be classified as financial creditors or operational creditors, by virtue of the lease deeds they enter into with various corporate debtors.
The question has now finally been answered. The Hon’ble Supreme Court of India vide its judgment dated May 17, 2022, in the case of New Okhla Industrial Development Authority v. Anand Sonbhadra[1], has now declared that NOIDA is not a financial creditor and would be classified as an operational creditor under the Insolvency and Bankruptcy Code, 2016 (the “Code”). The issue involved in the Anand Sonbhadra (supra.) judgment was whether 90 year leases entered into between NOIDA and real estate companies give rise to a financial or operational debt in the event that corporate insolvency resolution proceedings are initiated against such real estate companies.Continue Reading NOIDA stands in the shoes of an operational creditor
Since the introduction of the Insolvency and Bankruptcy Code, 2016 (“Code/IBC”), the courts and tribunals in India have had to constantly assess the application of the Code vis-à-vis other central and state legislations in light of the non-obstante clause under Section 238 of the Code. The courts have time and again reiterated that the Code would have an overriding effect over other legislations to the extent of being repugnant to the matters exhaustively dealt with under the Code. The courts have re-affirmed the primacy of the Code based on the premise that the IBC is a ‘complete and consolidated code in itself.’ For example, in Innoventive Industries Ltd. vs. ICICI Bank and Ors. (“Innoventive”), the Hon’ble Supreme Court upheld the primacy of the Code over the Maharashtra Relief Undertakings (Special Provisions) Act, 1958 and in Directorate of Enforcement vs. Manoj Kumar Agarwal & Ors (“Manoj Kumar Agarwal case”), the Hon’ble National Company Law Appellate Tribunal (“NCLAT”) noted that the provisions of the Code shall override the attachment of the properties of the Corporate Debtor under Sections 5 and 8 of the Prevention of Money Laundering Act, 2002.[1]
Continue Reading Karnataka High Court’s Judgment in Dreamz Infra India Limited v. Competent Authority: Yet another manifestation of primacy of the IBC
The Supreme Court’s judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors vs. NBCC (India) Ltd. & Ors.[1] (“Jaypee Decision”) has laid down some new requirements whilst reinforcing several old ones in relation to the insolvency resolution regime of the country. In this article, we examine and discuss the implications of the rights of dissenting financial creditors as held in the Jaypee Decision on the corporate insolvency resolution process.
Continue Reading ‘CASH ONLY’ to dissenting financial creditors – Supreme Court in Jaypee
On February 26, 2020, the Hon’ble Supreme Court delivered its judgment in the Jaypee matter, bringing to a close the long drawn litigation between two sets of competing creditor claims i.e. those advanced by certain creditors of Jaypee Infratech Limited (JIL) and those of its holding company, Jaiprakash Associates Limited (JAL).
In its ruling, the Supreme Court addressed two key issues:
Continue Reading The `Jaypee Judgement’ – Assessing it’s impact on the Indian financing landscape
The Supreme Court in Pioneer Urban Land and Infrastructure Limited vs. Union of India (Pioneer Judgment)[1], has upheld the constitutionality of the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (Amendment Act)[2]. Through the Amendment Act[3], the ‘real estate allottees’ (home buyers), as defined under Section 2(d) of the Real Estate (Regulation and Development) Act, 2016 (RERA), were brought within the ambit of ‘financial creditor’ under the Insolvency and Bankruptcy Code, 2016 (IBC).
A three judges’ bench headed by Hon’ble Mr. Justice Rohinton Nariman disposed off a batch of over 150 petitions filed by the real estate developers challenging the constitutional validity of the Amendment Act. The Supreme Court also held that the RERA has to be read harmoniously with the IBC and, in the event of a conflict, the IBC will prevail over the RERA.Continue Reading Home Buyers = Financial Creditors: Supreme Court Reigns
The Insolvency and Bankruptcy Code, 2016 (IBC) has been widely considered a landmark legislation that has brought about a paradigm shift in the recovery and resolution process.Continue Reading 2019 IBC Amendment Bill: Swift Action for Course Correction
The Supreme Court’s decision in K. Sashidhar v. Indian Overseas Bank and Ors.[1]addressed a critical issue in the corporate insolvency resolution process (CIRP) – i.e. the scope of judicial scrutiny over a commercial decision taken by the committee of creditors (“CoC”) to approve or reject a resolution plan.
Continue Reading Sashidhar v. Indian Overseas Bank and Ors. – Commercial Wisdom Reigns Supreme
The authors instructed Mr. Tushar Mehta, Solicitor General of India, on behalf of the respondent Banks and Financial Institutions in the proceeding before the Supreme Court.
The Supreme Court’s decision in Swiss Ribbons v. Union of India upholding the constitutionality of the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC or the Code) is a landmark in the development of the Code.
Continue Reading Swiss Ribbons v. Union of India – The Foundation for Modern Bankruptcy Law