The Insolvency and Bankruptcy Code 2016 has been evolving immensely since its inception. Through this Quarterly Journal the firm aims to share recent updates and landmark Judgements pertaining to the Code.

Recovery Certificate Holder Can Initiate CIRP As Financial Creditor Under IBC: Supreme Court

The Principal Bench of National Company Law Appellate Tribunal (“NCLAT”) in its recent order, Rakesh Kumar Jain v. Jagdish Singh Nain & Ors., has inter alia held that Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) does not bar passing of any orders under Section 66 of the IBC against the resolution professional during operation of the moratorium imposed under Section 14 of the IBC.

The Supreme Court of India (“Supreme Court”) in Sundaresh Bhatt, Liquidator of ABG Shipyard vs. Central Board of Indirect Taxes and Customs has held that the Customs Act, 1962 (“Customs Act”) and the Insolvency and Bankruptcy Code, 2016 (“IBC”) act in their own spheres. In case of any conflict, the IBC would override the Customs Act.

A 3-Judge Bench of the Supreme Court in its judgment dated 26 August 2022 has held that the provisions of the Insolvency and Bankruptcy Code, 2016 will prevail over the provisions of the Customs Act, 1962.

In a recent judgment in the case of ABG Shipyard, the Supreme Court has decided an extremely relevant question of law concerning the liquidation process under the Insolvency & Bankruptcy Code, 2016 (“IBC”).

Background

The regime under the Insolvency and Bankruptcy Code, 2016 (“IBC”), is largely creditor centric. In fact, extraordinary as it may sound, corporate insolvency resolution process (“CIRP”) under IBC is nothing short of a puppet show, with the Committee of Creditors (“CoC”) as the puppet master. The CoC, comprising of financial creditors of the corporate debtor, is paramount in terms of making the most significant decisions of the process and plays a vital role in resolving the debt.

On August 11, 2022, a two-judge bench of the Hon’ble Supreme Court in the case of Bank of Baroda vs Parasaadilal Tursiram Sheetgrah Pvt. Ltd. has observed that the time limit of 45 (forty-five) days prescribed under Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“Act”) is provided for quick enforcement of the security.

Brief Facts & Procedural History

On 27 July 2022, the National Company Law Appellate Tribunal (NCLAT) in Zoom Communications Private Limited v Par Excellence Real Estate Private Limited, Company Appeal (AT) (Insolvency) No. 619 of 2022 upheld the order of the National Company Law Tribunal, New Delhi (NCLT) dated 17 May 2022 dismissing an application to initiate Corporate Insolvency Resolution Process (CIRP) on the ground that the debt appeared suspicious and collusive in nature.

Background

2016年インド破産倒産法の下、事業債権者と金融債権者の取り扱いに差が生じていることについては、発足当初から重要な懸念点として取り上げられてきました。金融債権者は、企業債務者と純粋に金銭的な取り決めを行っている者であるのに対して、事業債権者は、企業債務者が供給した商品又は提供したサービスの対価として金銭的債権を有する者とされます。インドの破産倒産法関連で近年争われた事例に、企業債務者の破産手続を開始するための最低基準額である1,000万ルピーの債務不履行金額を満たすか否かの判断において、「利息」を「主たる事業債務」に含めることができるか？というものがあります。

会社法審判所(NCLT)では様々な異なる見解が示されていましたが、会社法上訴審判所(NCLAT)は、Mr. Prashant Agarwal v. Vikash Parasrampuria (Prashant Agarwal Judgment)において、最低基準額1,000 万ルピーの計算の際、利息分を含めることできるかという問題について、明確にしました。

Brief Facts – 概要

Premise

Since the advent of the Insolvency & Bankruptcy Code, 2016 (“IBC”), the insolvency law regime in India has been consolidated and uniformized. Courts have repeatedly held that the IBC is a code in itself and that one need not look elsewhere in deciding matters under it.