The National Company Law Tribunal (“NCLT”) is an adjudicating authority in India responsible for deciding matters related to amalgamations, mergers, insolvency and restructuring processes. In deciding such matters, one critical function of the NCLT is to balance the commercial objectives of companies with the interests of public stakeholders and regulators, ensuring that corporate restructurings do not compromise public interest.

Introduction

On November 07, 2024, the Supreme Court of India (“Court”) in its judgment in State Bank of India & Ors. vs. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr.,^[1] directed the liquidation of Jet Airways (India) Limited (“Jet”), bringing an end to the five-year long saga of efforts to revive the beleaguered airline.

On November 7, 2024, a 3 (three) judge bench of Hon’ble Supreme Court of India (“Supreme Court”) delivered their judgment in the matter of State Bank of India and Ors. vs. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch and Anr.1,inter alia, ordering liquidation of Jet Airways (India) Limited (“Jet Airways”).

Recently, in State Bank of India v. India Power Corporation Ltd., Civil Appeal 10424 of 2024, the Hon’ble Supreme Court adjudicated upon the issue of certified copy of Order that is filed along with the appeal. 

The Hon’ble Supreme Court analysed several provisions of NCLT Rules and NCLAT Rules and held as follows:

i) Both the certified copy submitted free of cost as well as the certified copy which is made available on payment of cost are treated as “certified copies” for the purpose of Rule 50 of NCLT Rules.

On July 23, 2024, the finance minister presented a budget focused on job creation, tax reforms, and support for micro, small and medium enterprises (“MSMEs”). For the Insolvency and Bankruptcy Code, 2016 (“IBC”) two reforms were announced: the establishment of an integrated technology platform to facilitate improved outcomes and the strengthening of tribunals and appellate tribunals, including the creation of additional tribunals some of which would be exclusively designated for matters under the Companies Act, 2013.

A recent ruling involved the petitioner challenging an income tax reassessment notice issued after the approval of a resolution plan by the National Company Law Tribunal (NCLT). The Hon’ble High Court of New Delhi in the case of Asian Colour Coated Ispat Limited v. Additional Commissioner of Income Tax and Ors.,(2024 SCC OnLine Del 5459), dated August 7, 2024, held that once a resolution plan is approved under the Insolvency and Bankruptcy Code (IBC), 2016, income tax reassessment for periods before the plan’s approval is impermissible.

India’s Insolvency and Bankruptcy Code, 2016 (code), has revolutionised the country’s approach to insolvency, establishing a structured framework for resolving distressed assets while incorporating elements of inclusivity and accessibility. This legislation has become fundamental for businesses and financial institutions, especially as India further integrates into the global economy. The code’s protection of foreign creditors is particularly significant, as it ensures that foreign investors can confidently engage with the Indian economy without hindrance or undue trepidation.

Recently, the High Court of Delhi, reinforced the application of Section 32A of the Insolvency and Bankruptcy Code, 2016 (“IBC“). Section 32A of the IBC states that the liability of a corporate debtor (“CD“) for an offence committed prior to commencement of the corporate insolvency resolution process (“CIRP”) shall cease and the CD shall not be prosecuted for such an offence from the date the resolution plan (“Plan“) has been approved by the adjudicating authority (“AA”).

The promulgation of the Insolvency and Bankruptcy Code, 2016 (IBC) introduced the categorization of creditors as either “financial” or “operational”. The rights and powers of creditors as either financial or operational creditors though treated equally at the stage of initiation of proceedings under IBC, undergo a sea change once proceedings under IBC stands initiated.

March, 2024 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS * NCLT: Corporate insolvency resolution process cannot be initiated under Section 7 of IBC based on transfer agreement for purchase of debentures from financial creditors. ⁎ NCLAT: Security for refund of advance amount cannot change the nature of transaction for supply of goods into financial debt.