In a recent decision in the case of Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. and Another, the Supreme Court of India (“Supreme Court”) has held that the rents receivable by a borrower which was assigned to a lender of a lease rental discounting facility would not be treated as an asset of the borrower, and thus fall outside the purview of the asset and security freeze order of the National Company Law Appellate Tribunal (“NCLAT”).

Brief Facts

In the recent case of Vistra ITCL (India) Limited & Ors. v. Mr. Dinkar Venkatasubramanian & Anr., the Supreme Court re-affirmed the legal position that persons who are merely beneficiaries of security by a corporate debtor do not qualify as financial creditors in the corporate insolvency resolution process (“CIRP”) of the corporate debtor. However, the Supreme Court also held that a resolution plan cannot dilute the security interest provided by the corporate debtor in favour of such beneficiaries.

Brief Facts

In a judgement of the Hyderabad bench of the National Company Law Tribunal (“NCLT”) in the cases of PTC India Financial Services Ltd. v. Vikas Prakash Gupta & Ors.1 and Indo Unique Flame Limited v.

In the case of State Bank of India v. Moser Baer Karamachari Union & Ors., the Supreme Court of India (“Supreme Court”) has upheld the order of the National Company Law Appellate Tribunal (“NCLAT”) in the matter of State Bank of India v. Moser Baer Karamachari Union & Anr. (“Moser Baer Case”).

In the case of IL&FS Infrastructure Debt Fund v. McLeod Russel India Limited, the Kolkata bench of the National Company Law Tribunal (“NCLT”) held that in order to determine whether a shortfall undertaking will qualify as an instrument of guarantee as defined under Section 126 of the Indian Contract Act, 1872 (“Contract Act”), one has to look into the intention of the parties as reflected in the terms of such undertaking.