In the winter of 2015, the Indian Legislature sought to tackle the persistent problem of bad debts affecting Indian financial institutions and trade creditors by enacting the Insolvency and Bankruptcy Code, 2016 (“Code”), which was finally notified in May 2016. The key purpose of the enactment was to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons / entities. 

Prelude

India and the United Arab Emirates (‘UAE’) have witnessed dynamic bilateral relations in the recent past. Leadership of both countries have endeavoured to bolster ties of the two economies which has aligned India to achieve its insatiable ambition of emerging as a USD 5 trillion economy.

Key Highlights

I. Supreme Court: Scope of intervention by High Courts in cases of orders passed by the National Company Law Tribunal

II. Supreme Court: State legislature cannot enact law which affects the jurisdiction of the Supreme Court

III. Supreme Court: Difference between inadequacy of reasons in arbitral award and unintelligible awards

IV. NCLT: RP can take possession of a corporate debtor's assets which are subject matter of litigation to facilitate the corporate insolvency resolution process

THE ISSUE

In a recent judgment, i.e., on 17 January 2020, the Indian appellate insolvency tribunal, namely, the National Company Law Appellate Tribunal (NCLAT) held in M. Ravindranath Reddy v. G. Kishan, that the lease of immovable property cannot be considered as supply of goods or rendering any services and therefore the due amount cannot fall within the definition of operational debt under the Insolvency and Bankruptcy Code, 2016 (Code).

Key Points:

No provision in the Code or insolvency regulations dictates that the bid of any Resolution Applicant has to match liquidation value of the estate of the Corporate Debtor. If the resolution plan has been approved by the Committee of Creditors by application of their commercial sense, as well as the plan has been considered as proper in terms of Section 30 of the Code, the Adjudicating Authority cannot interfere or re-assess the same under Section 31 of the said Code.

INTRODUCTION 

The Supreme Court has recently in its judgment dated 21 January 2020, in the case of Standard Chartered Bank v MSTC Limited [SLP (C) No 20093 of 2019], provided clarity on the interplay between the provisions of Recovery of Debts and Bankruptcy Act 1993 (RDB Act) and Limitation Act 1963 (Limitation Act). Supreme Court has in doing so refused to condone a delay of 28 days in filing of a review application by the government borrower entity against a decree in favour of the bank.  

BRIEF BACKGROUND: 

INTRODUCTION  

With the much awaited-judgment in the Insolvency and Bankruptcy regime; the Supreme Court of India (hereinafter “SC” or “apex court”) cleared off the long-standing confusions encompassing the Insolvency and Bankruptcy Code, 2016 (hereinafter the “Code” or “IBC”) with its landmark in Committee of Creditors of Essar Steel Ltd. v. Satish Kumar Gupta & Orsi on November 15, 2019.  

In a big move to strengthen norms for the Insolvency Resolution Professionals (IRP‘s), the governing body for the Insolvency Professionals, the ‘Insolvency and Bankruptcy Board of India (herein referred to as ‘the Board’) has notified amendments to the (i) the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 and (ii) the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016.

The terms of the transaction documents for mergers and acquisitions are often dictated by the economics of investment and the bargaining position of the parties. The terms so contractually agreed upon must, however, always be within the operative legal framework. Liquidation Preference (“LP”) is a tool often used to embolden investors seeking security of their investment. LP is crucial, especially where the investors anticipate exit at a value lower than their initial investment.

The National Company Law Appellate Tribunal (“NCLAT”) vide its order dated 23.09.2019 passed in the matter ofVinayaka Exports and another Vs. M/s. Colorhome Developers Pvt. Ltd., overturned the decision of the National Company Law Tribunal, Chennai Bench (“NCLT”) dismissing an application filed by two financial creditors under Insolvency and Bankruptcy Code (“Code”) owing to the pendency of a civil suit and pre-existing dispute between the parties.

FACTS: