October, 2023 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS * Supreme Court: Dissenting opinion of an arbitrator cannot be treated as an award if the majority award is set aside. * Delhi High Court: When there are two interconnected agreements with conflicting arbitration clauses, the clause contained in the main agreement should be given primacy. * Supreme Court: Admission of claims after the resolution plan has been accepted by CoC would result in making CIRP prolonged and inefficacious.
In a significant decision, the NCLAT in the case of Agarwal Polysacks Ltd. vs K. K. Agro Foods & Storage has recently held that a written financial contract is not the only basis for proving the financial debt. Financial debt can be proved from other relevant documents such as the balance sheet entries of the financial creditor, the corporate debtor’s balance sheet and the Form 26AS showing TDS deductions on the interest.
Brief Facts
In a recent decision the NCLAT, in the case of IDBI Trusteeship Services Ltd. vs. Direct Media Distribution Ventures Pvt. Ltd. held that even if the creditor realizes certain amounts after the original date of default / invocation, the date of a subsequent demand notice (for the adjusted amount) cannot be treated as the “date of default” for purposes of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
Brief Facts
On October 3, 2023, the Ministry of Corporate Affairs (“MCA”) issued a notification exempting transactions, arrangements or agreements under the Cape Town Convention (as defined below), relating to aircraft, aircraft engines, airframes and helicopters from moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) (“Notification”).
The Ministry of Corporate Affairs (“MCA”) issued a notification on October 03, 2023 under Section 14(3)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), exempting the applicability of moratorium under Section 14(1) of the IBC to transactions, arrangements or agreements under the Cape Town Convention on International Interests in Mobile Equipment (“Convention”) and the Protocol to the Convention on Inte
The National Company Law Appellate Tribunal, Principal Bench, New Delhi (“NCLAT”) has in the case of SVA Family Welfare Trust & Anr v. Ujaas Energy Limited & Ors inter alia held that a resolution plan can contain a clause which extinguishes security interest, such as personal guarantees, after paying compensation to the financial creditor in whose favour such security interest was created.
INTRODUCTION
One of the biggest changes brought in by the Insolvency and Bankruptcy Code, 2016 (“Code”) was the demarcation between treatment of interest vis-à-vis financial debt and operational debt. Over time, Courts have interpreted the Code with the aim to strengthen the foundation and resolve uncertainties. One such exercise, which has greatly impacted the insolvency regime, is the inclusion of interest in operational debt.
PHASE 1 – EXCLUSION OF INTEREST
I. INTRODUCTION
On October 3rd, 2023, the Ministry of Corporate Affairs (MCA) amended Section 14(1) of the Insolvency and Bankruptcy Code, 2016 thereby exempting the transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters in the aviation industry from the operation of the moratorium imposed upon the admission of an insolvency plea.
Introduction