[Pranjal Doshi is an MCL Candidate, University of Cambridge] The foundation of an enduring banking industry lies in robustly crafted recovery mechanisms. It promotes the stable existence of the borrower-lender relationship. Incongruously, non-performing assets (“NPAs”) have grown substantially in India from 9.2% (September 2016) to 10.2% (September 2017)[1], amounting to ₹8,36,782 crores (October...
Can Liquidator’s Outreach Grab Guarantor’s Assets?
[Sikha Bansal is a Senior Associate at Vinod Kothari & Company and Shreya is a B.A., LL.B. (Hons.) student at Rajiv Gandhi National University of Law, Punjab. The authors can be reached at [email protected]] In Punjab National Bank v. Vindhya Vasini Industries Limited, [C.P. ( IB)-1170(MB)] the issue before the National Company Law Tribunal (“NCLT”), Mumbai Bench was whether a...
Financial Exposure of Secured Creditors and the Relevance of Vertical Comparison in Resolution
[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt. Ltd.] An effective conduct of the corporate insolvency resolution process calls for an insight into the ranking of claims of various creditors. In most resolution plans, one finds that the financial creditors are paid a particular value as settlement of claims, and no specific provision exists as to how this amount is to be...
Supreme Court Rules on Mandatory Procedure under the SARFAESI Act
[Partha N. Mansukhani is a Fourth Year B.A. LL.B (Hons.) student at Symbiosis Law School, Pune] The Supreme Court last month in a decision in ITC Limited v. Blue Coast Hotels Ltd. & Ors clarified that section 13(3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 (the “Act”) is not merely directory, but in fact mandatory...
SARFAESI Amendment: The “Qualified Buyers” Confusion Remains
[Akhileshwari Anand Raj is a 3rd year B.Com LL.B (Hons.) student at Gujarat National Law University, Gandhinagar] The amendments last year to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) were long overdue. They sought to ensure that the various banking and recovery laws were in consonance with each other, and they also...
Why the RBI and IBBI Need to Work Together to Effectively Handle the Resolution of Stressed Assets
[Anirudh Gotety is a 4th year student pursuing B. B. A., LL. B. (Business Law Honours) at National Law University, Jodhpur. He can be contacted at [email protected]] The introduction of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has led to a paradigm shift in the debt recovery mechanism in India. The IBC was a much-needed legislation given the plethora of central and state laws...
Application Under SARFAESI: Supreme Court’s Liberal Approach
[Guest post by Richa Saraf, Assistant Legal Advisor at Vinod Kothari & Co.] In the case of M.D. Frozen Foods Exports Pvt. Ltd. v. Hero Fincorp Ltd.,[1] the Supreme Court held that there was no illegality in a non-banking finance company (“NBFC”) invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) for recovery of...
Strict Interpretation or Purposive Interpretation? Analysing the Sanjeev Shriya Case
[Guest post by Deeksha Malik, who is a is a fifth-year student of National Law Institute University, Bhopal. An earlier post on the topic is available here.] Ever since the Insolvency and Bankruptcy Code, 2016 (the “Code”) came into force, the Indian judiciary has been dealing with a number of cases that have required it to interpret various provisions of the Code. A review of the relevant...
Liability of Personal Guarantors of a Corporate Debtor during the Corporate Insolvency Resolution Process
[Guest post by Param Pandya, Research Fellow, Corporate Law and Financial Law, Vidhi Centre for Legal Policy, New Delhi. The views expressed by the author are personal.] On September 6, 2017, the Allahabad High Court in the case of Sanjeev Shriya vs. State Bank of India (“Sanjeev Case”) decided the question of the liability of personal guarantors of a company where moratorium under section 14 of...
Restrictive Remedy under Section 14 of the SARFAESI Act
[Guest post by Richa Saraf, Assistant Legal Advisor, Vinod Kothari & Co.] In a recent ruling of the Calcutta High Court in Union Bank of India & Anr. v. State of West Bengal & Ors. (September 1, 2017), the object and intention behind section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “Act”) was discussed. The...
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