In the previous quarter, the Supreme Court pronounced important judgements on the admission of insolvency applications filed by financial creditors and the validity of resolution plans not providing for payment of statutory dues to government authorities. In arbitration law, the Supreme Court clarified the scope of the court’s power to grant interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, and assess the arbitrability of a dispute in an application filed for appointment of the arbitrator.
Between the lines... For Private Circulation-Educational & Information purpose only Vaish Associates Advocates… Distinct. By Experience. I. Supreme Court: The actual gain or loss is immaterial, but the motive for making a gain is essential. The Supreme Court (“SC”) has, in its judgment dated September 19, 2022, in the case of Securities and Exchange Board of India v. Abhijit Rajan [Civil Appeal No. 563 of 2020], held that in deciding cases pertaining to insider trading, the actual gain or loss is immaterial, but the motive for making a gain is essential.
Recently on August 28, 2022, a three-judge bench of the Supreme Court of India delivered a judgement in R.K. Industries (Unit-II) LLP vs. H.R. Commercials Private Limited and Others[1], interpreting the provisions of IBC concerning the powers of the liquidator vis-à-vis mode of sale of assets by the liquidator.
In a recent decision, a 3 (three) judge bench of the High Court of Bombay (“Bombay High Court”) in the case of Jalgaon Janta Sahakari Bank Ltd. & Anr. v. Joint Commissioner of Sales & Anr, has held that the dues of secured creditors would rank superior to dues of state government upon sale of a secured asset under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) and Recovery of Debts and Bankruptcy Act, 1993 (“RDDB Act”).
The Polyvocal Court
In its decision in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd., a bench of three Judges of the Supreme Court held that “Harmonious construction of clause (10) of Section 3 of the I&B Code read with clauses (20) and (21) of Section 5 thereof would reveal, that even a claim in respect of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority would come within the ambit of ‘operational debt’.
The Hon’ble Supreme Court vide its order dated May 18, 2022 in Indian Overseas Bank Versus M/S Rcm Infrastructure Ltd. And Another[1] observed that the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) cannot be continued once the Corporate Insolvency Resolution Process (CIRP) has been initiated and moratorium is ordered under the Insolvency and Bankruptcy Code, 2016.
On August 3, 2022, a division bench of the Hon’ble Bombay High Court (“High Court”) comprising of Justice K.R. Shriram, and Justice A.S. Doctor in the case of Phoenix ARC Pvt. Ltd. & Anr. v.
Since the enactment of the Insolvency and Bankruptcy Code in 2016 (“IBC, 2016), the judiciary has been very active in settling disputes and addressing the gaps arising from this controversial legislation. Recently, yet another dispute arising out of a technical gap in the IBC has been resolved by the Apex Court in the case of M/s Consolidated Construction Consortium Limited v. M/s Hitro Energy Solutions Private Limited.1
Brief facts of the case
Mani Gupta, Aman Choudhary and Saumya Upadhyay, Sarthak Advocates & Solicitors
This is an extract from the 2023 edition of GRR's The Asia-Pacific Restructuring Review. The whole publication is available here.
In summary