Rainbow Papers: The Judgment
In State Tax Officer (1) v. Rainbow Papers Ltd., 2022 SCC OnLine SC 1162 ("Rainbow Papers"), the Supreme Court dealt with the question as to whether the provisions of the Insolvency and Bankruptcy Code, 2016, ("IBC") (specifically Section 53) overrides Section 48 of the Gujarat Value Added Tax Act, 2003 ("GVAT Act").
Section 48 of the GVAT Act provides as follows.
Section 48. Tax to be first charge on property:
The changes corresponding to the proposals are suggested in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and the IBBI (Liquidation Process) Regulations, 2016. The draft regulations have been annexed to the proposals.
Comments on the proposals and the draft regulations have been sought by November 28, 2023.
The Board’s proposals are as follows: –
Registration of corporate debtor’s real estate projects under RERA
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
While the Insolvency and Bankruptcy Code, 2016 (“IBC”) provides for insolvency resolution and liquidation of ‘corporate persons’, it excludes ‘financial service provider’ (“FSP(s)”) from the said provision.
On 31 October, 2023, in Sanjay Kumar Agarwal v State Tax Officer 1, 2023 SCC OnLine SC 1406, the Supreme Court of India (SC) in the exercise of its powers of review under Article 137 of the Constitution of India, (Rainbow Review) affirmed the view expressed by another bench of the SC in State Tax Officer (I) v. Rainbow Papers Limited 2022 SCC OnLine SC 1162 (Rainbow Judgment) that may have far reaching effects on the treatment of dues to the Government or governmental authorities in insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC).
In an application filed by Vishram Narayan Panchpor, resolution professional of Blue Frog Media Private Limited (“Corporate Debtor”) in the matter of M/s Blue Frog Media Private Limited1 for approval of a resolution plan, the Mumbai bench of the National Company Law Tribunal (“NCLT Mumbai”) ruled that the object of Section 29A of the Insolvency and Bankruptcy Code, 2016 (“IBC”) requires a resolution professional to conduct adequate due diligence on a prospective resolution applicant and its related parti
The changes proposed seek to address the existing issues and safeguard the interests of stakeholders. The comments on the proposals and the draft regulations may be shared by November 10, 2023.
The sixteen proposals put forward by the Board are as follows: –
No verification of prospective bidders
In the matter of Mr. Shantanu Prakash vs. Mr. Mahendar Singh Khandelwal (resolution professional of Educomp Solutions Limited) and others, while disposing of an interim application filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), the New Delhi bench of the National Company Law Tribunal (“NCLT New Delhi”) held that a guarantor can question the valuation at which the security pledged by the borrower with its secured creditor is enforced.
Brief Facts
The original version of this article was first published in the Trilegal Quarterly Roundup
Key Developments
1. Supreme Court clarifies that under Insolvency and Bankruptcy Code, 2016, creditors hold priority over government dues
The original version of this article was first published in the Trilegal Quarterly Roundup
Key Developments
1. Additional disclosure requirements and compliances for certain foreign portfolio investors