When the Insolvency & Bankruptcy Code, 2016 (“IBC”) was notified in 2016, one of its most talked about provisions was the limited scope of adjudication and consequently narrow jurisdiction conferred upon the National Company Law Tribunal (“NCLT”) in deciding insolvency cases. In fact, the provisions of the Code in respect of financial creditors were viewed by many as draconian and unconstitutional as the NCLT, prior to commencement of insolvency process, is required to only examine a debt and default and nothing else.
Facts and Background
The Supreme Court has on 11 April 2022 dismissed a Special Leave Petition against the decision of the High Court of Tripura at Agarthala, wherein the High Court had held that the distinction of decree holders as creditors from ‘financial creditors’ and ‘operational creditors’, is intelligible and takes forward the purpose of the Insolvency and Bankruptcy Code, 2016, without being discriminatory or arbitrary.
Jasmine Buildmart Pvt. Ltd. i.e., the corporate debtor (Jasmine) introduced a Gurgaon based housing project i.e., Krrish Provence Estate. The homebuyers of Krrish Provence Estate made an application for initiation of corporate insolvency resolution process (CIRP) against Jasmine before the National Company Law Tribunal (NCLT) as Jasmine could not complete the project even after a period of eight years. Additionally, the homebuyers sought a refund of approximately INR 69 million on the grounds of inordinate delay.
Vigilantibus, et non dormientibus, jura subveniunt is a noted maxim which means ‘the laws assist those who are vigilant, not those who sleep over their rights‘ . This is a pertinent principle which applies predominantly while determining if a particular cause of action has been espoused within the limitation period.
Decided on 18 January 2022| Supreme Court of India
This article was first published in India Business Law Journal on 4 March 2022
Introduction:
Between the lines... For Private Circulation-Educational & Information purpose only Vaish Associates Advocates… Distinct. By Experience. I. NCLAT: No possibility negotiating the resolution plan in the intervening period between approval by the CoC, and pending the approval of the NCLT. The Hon’ble National Company Law Appellate Tribunal, New Delhi (“NCLAT”) has in its judgment dated January 27, 2022, in the matter of Union Bank of India v. Kapil Wadhawan and Others [Company Appeal (AT) (Insolvency) No.