INTRODUCTION
This newsletter covers key updates about developments in the Insolvency Law during the month of May 2021.
We have summarized the key judgments passed by the Supreme Court of India (SC), the National Company Law Appellate Tribunal (NCLAT) and various benches of the National Company Law Tribunals (NCLT). Please see below the summary of the relevant regulatory developments.
1) NO INTERFERENCE IN THE DECISION OF THE LIQUIDATOR TAKEN IN THE BEST INTEREST OF A CORPORATE DEBTOR.
The Insolvency and Bankruptcy Code, 2016 has restructured the economy by promoting its objectives namely the maximization of value of assets, promotion of entrepreneurship, availability of credit and balancing the interests of the stakeholders. Since the commencement and effect of the Insolvency and Bankruptcy Code, 2016 (IBC) on 28 May 2016, the Adjudicating Authorities have upheld the objectives of IBC through a catena of judgements. One such case is the matter concerning Indian Overseas Bank v. RCM Infrastructure Ltd. and Ors. [Company Appeal (AT) (Insolvency) No.
With the exponential increase in the number of Covid-19 cases in the second wave of the pandemic and the overall economic slowdown, demands are being made for further tweaks the insolvency regime equipped to tide over the crisis.
On May 21, 2021, the Apex Court of India, in the case of Lalit Kumar Jain vs. Union of India & Ors.1, upheld the validity of the Centre’s notification dated November 15, 2019, allowing banks to proceed against personal guarantors for recovery of loans given to a company under the Insolvency and Bankruptcy Code, 2016 (IBC) (“Notification”).
The COVID-19 pandemic has led successful resolution applicants to seek withdrawals of, or modifications to, approved resolution plans. This article examines the Supreme Court’s recent judgment on claims of force majeure in the resolution process of Amtek Auto.
INTRODUCTION:
Abstract
The question whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments (NI) Act can be said to be covered by the moratorium provision, namely, Section 14 of the Insolvency and Bankruptcy Code (IBC) has been a crucial issue in the legal domain. Various High courts have had dissenting opinion in relation to this concerning matter. However the Apex court has now put an end to all doubts and confusions.
Law of Limitation prescribes the time limit for different types of suits for which an aggrieved person can approach the court for redressal. For Insolvency applications, the limitation period is 3 years.
A three-judge Bench of the Supreme Court (SC), by a common judgement in Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal (15 April 2020, Civil Appeal No 323 of 2021) and related matters, has held that the for the purposes of Insolvency and Bankruptcy Code, 2016 (IBC), balance sheet entries could constitute an acknowledgment of debt under Section 18 of the Limitation Act, 1963 (Limitation Act).