FAQ' IBC - Case Laws Basis

Faq’s – basis of decided
case laws
Insolvency Bankruptcy Code,
2016
Goyal Divesh & Associates
In this Editorial the author shall deliberate on the decided case

laws of Insolvency and Bankruptcy Code, 2016. Author shall
endeavor to prepare the analysis of important case laws of IBC,
2016 decide in 2018 in FAQ’s basis.
DIVESH GOYAL Mob: +918130757966
Practicing Company Secretary csdiveshgoyal@gmail.com
GOYAL DIVESH& ASSOCIATES
FAQ’S – IBC – DECIDED CASES

A. CASE A:
Whether Pendency of Proceedings or initiation of action under SARFAESI Act is a
ground for rejection of application u/s 7 of IBC?
NCLT Bench New Delhi Bench

Corporate Debtor Basic India Limited
Operational Creditor Bank of India
Dated 12th October, 2018
FACTS:
The corporate debtor approached the applicant (Bank of India) for sanction of various
credit facilities to the corporate debtor. Consequently, applicant bank sanctioned financial
facilities to the corporate debtor, which had been renewed / enhanced from time to time.
The corporate debtor acknowledged sanction of the facilities and the same was continued
to be enjoyed by the corporate debtor against hypothecation and mortgage of properties
and creation of charge on the entire fixed and current assets of the company.
As the corporate debtor failed to pay the debt, the petitioner bank issued a demand notice
under section 13(2) of SARFAESI Act, 2002.
The corporate debtor raised objections challenging maintainability of the instant

application filed under section 7 of the Code that action had already been initiated by
applicant under the provision of SARFAESI Act; hence, instant application was not
maintainable.
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RULLING:
It is well settled that pendency of proceedings and initiation of action under SARFAESI Act
cannot be an impediment or bar to initiate the Corporate Insolvency Resolution Process
under Section 7 of the Code.
Therefore, one can opine that pendency or initiation of action under SARFAESI ACT is not
an ground for rejection of application under IBC.
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B. CASE B:
Whether non-cooperation of suspended management and non –availability of assets
in Company can be an ground for initiation of Liquidation process?
Bench NCLT, Ahmedabad Bench

Corporate Debtor J.R. Diamonds (P.) Ltd.
Operational Creditor Vinod Tarachand Agarwal
Dated 1st October, 2018
FACTS:
The Counsel for the applicant submitted that there remained no possibility to bring a
revival plan for the Corporate Debtor Company, because RP did not receive adequate
cooperation/necessary assistance from the member of suspended management/board
because of their non-availability. Moreover, the company at present does not possess
immovable/tangible assets and there are some assets only in form of stock, shares, etc. and
it is expecting some refund of income tax paid from the Income Tax Department.

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Therefore, as per the applicant there is no scope for waiting further for a viable Resolution
Plan or to explore for potential Resolution applicants despite sincere efforts were already
made by the RP and the Committee of Creditors by inviting expression of interest dated
21.06.2018 in Form G, but no one came forward for submitting such Resolution Plan.
RULLING:
Having heard arguments of the Ld. Counsel for the applicant and by going through the
material available on record in respect of the present IA, this Adjudicating Authority is of a
considered view that a liquidation order may be passed in respect of Corporate Debtor J.R.
Diamonds Pvt. Ltd. Since there is 100% voting of the members of the CoC favouring
liquidation process, the present IA No. 309 of 2018 deserves to be allowed.
C. CASE C:
Whether pendency of proceedings before DRT can be bar to initiate CRP?
Bench NCLT, New Delhi Bench

Corporate Debtor Pixion Media (P.) Ltd.
Operational Creditor Indian Overseas Bank
FACTS:
The respondent corporate debtor approached the applicant bank for sanction of term loan. By
that time the corporate debtor was already availing credit facilities from a number of financial
institutions. The applicant financial creditor after perusing the documents and information as
submitted by the corporate debtor, sanctioned a term loan, which was subsequently brought
under the consortium of bank

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However, soon after the Joint documentation the corporate debtor started committing default in
servicing of the interest and committed default in repayment of loan. Consequently the account
of the corporate debtor was declared as a Non Performing Asset on 2-3-2012 in terms of RBI
guidelines
The respondent corporate debtor failed to clear the outstanding dues and did not adhere to the
terms and conditions of the loan agreements. Consequently, applicant bank had initiated action
against the corporate debtor under DRT.
RULLING:
Pendency of proceedings before Debt Recovery Tribunal an cannot be an impediment or bar to
initiate Corporate insolvency resolution process.
D. CASE D:
In case where winding up proceedings are pending with High Court, then whether a
Creditor not being part of such petition can approach to Tribunal under IBC?
Bench NCLT, Kolkata Bench

Jai Balaji Industries Ltd
FACTS:
The State Bank of India filed application under section 7 for initiating Corporate Insolvency
Resolution Process (CIRP) against the corporate debtor alleging existence of default in
repayment of loan advanced to the corporate debtor.
The applicants being operational creditor of corporate debtor were opposing petition on ground
that petition wending against same corporate debtor had already been admitted and is already in

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progress before the High Court and unless the said petition pending before High Court was
finally decided, there could not be a parallel proceeding continuing before Tribunal.
The financial creditor submitted that winding up proceedings filed before the High Court had
two stages namely: First stage, wherein application for winding up was filed and the High Court
may admit such application on reasonable grounds, directing issue of advertisement inviting all
creditors to participate in the winding up process. And the Second stage, wherein the High Court,
after hearing all creditors who participated in the winding up process, on being reasonably
satisfied, pased final orders of winding up/liquidation. According to the SBI the winding up
proceeding in the present case was in the first stage whereby the creditors were invited to
participate in the said proceeding post advertisement. And so, the Tribunal was not barred in any
manner from hearing the application filed under section 7.
The winding up proceeding as against the corporate debtor has been initiated long before the date
of filing of the Application by the financial creditor in this case in hand. It is significant note here
that in pursuance of the advertisement, the financial creditor did not join in the winding up
proceedings and approached Tribunal for invoking section 7 as against the corporate debtor
pending winding up proceedings initiated by the High Court.
The corporate debtor was undergoing winding up proceedings and winding up petitions being
already admitted and the High Court has not transferred the winding up proceeding before the
NCLT, all the creditors are bound to join in the winding up proceedings so as to make their
claims in the said proceedings. Secured and unsecured creditors have already joined in the said
proceedings. Where a winding up proceedings is initiated in an application under section 433(e)
of the Companies Act, 1956 by the High Court, an application filed under section 9 was held not
maintainable in the above cited order.

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(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in
Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer: The
entire contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore. Users
of this information are expected to refer to the relevant existing provisions of
applicable Laws. The user of the information agrees that the information is not a
professional advice and is subject to change without notice. I assume no
responsibility for the consequences of use of such information. IN NO EVENT
SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR
INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN
CONNECTION WITH THE USE OF THE INFORMATION

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Faq’s – basis of decided

Goyal Divesh & Associates

In this Editorial the author shall deliberate on the decided case

FAQ’S – IBC – DECIDED CASES

NCLT Bench New Delhi Bench

The corporate debtor raised objections challenging maintainability of the instant

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

Bench NCLT, Ahmedabad Bench

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

Bench NCLT, New Delhi Bench

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

Bench NCLT, Kolkata Bench

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

Twitter: @DiveshGoyal04 Whatsapp: 8130757966

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