[Soundarya Rajagopal and Palak Sheth are 4th year B.Com. LL.B. (Hons.) students at Gujarat National Law University, Gandhinagar] In Jaipur Trade Expocentre Pvt. Ltd. v. Metro Jet Airways Training Pvt. Ltd. (“Jaipur Trade”), a full-bench of the National Company Law Appellate Tribunal (“NCLAT”) held that dues in relation to lease and license of immovable property constitute ‘operational debt’ under...
Supreme Court Decision in Vidarbha: Return to the Pre-IBC Era
[Abhismita Goswami is a Trainee Associate at Mindspright Legal, Mumbai] An application for initiating a corporate insolvency resolution process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”/ “Code”) can be filed with the National Company Law Tribunal (“NCLT”) by the financial creditors (“FCs”) and operational creditors (“OCs”) of a corporate debtor (“CD”), under section 7 and...
SC Clarifies Discretionary Nature of Section 7(5)(a), IBC for Admission of Application
[Anshita Dave and Abhyudaya Yadav are 4th year B.A., LL.B. (Hons.) students at Dharmashastra National Law University, Jabalpur] The issue concerning the nature of section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 (the “Code”) has been addressed by the Supreme Court of India in its recent decision in Vidharbha Industries Power Ltd v. Axis Bank Ltd. (12 July 2022), wherein the Court has...
Redefining the Contours for Admitting an Application by Financial Creditors
[Kavya Lalchandani is a Master of Corporate Law student at University of Cambridge] In a judgement dated 12 July 2022, in Vidarbha Industries Power Limited v. Axis Bank Limited, the Supreme Court (SC) ruled that admission of the application under section 7(5) of the Insolvency and Bankruptcy Code (IBC or the Code) which is made by a financial creditor is discretionary while admission of an...
The Conundrum of Inter-se Priorities between Secured Creditors in Liquidation
[Arvind Tiwari is a IV year student at the National Law University, Delhi] The recent ruling of the National Company Law Appellate Tribunal (“NCLAT”) in Oriental Bank of Commerce v. Anil Anchalia has rekindled the debate concerning the significance of inter-se priorities among secured creditors in the process of liquidation. In this matter, it was held that once a secured financial...
Debunking Special Situation Funds: Is India Ready for the Vultures?
[Aditya Shekhar and Abhishek Choudhary are Vth year B.A., LL.B. (Business Law Hons.) students at National Law University, Jodhpur] The need for inclusion of special situation fund [“SSF”] in the Indian financial market was felt due to India’s bad debt problem. It is evident from the recent trend and eagerness of financial institutions to sell off their non-performing assets [“NPA”], which...
The Supreme Court Reiterates the Status of Recovery Certificates under the IBC
[Abhyudaya Yadav and Adhiraj Lath are 4th year B.A., LL.B. (Hons.) students at Dharmashastra National Law University, Jabalpur] Recently, the Supreme Court of India (“Court”) in Kotak Mahindra Bank Ltd. v. A. Balakrishnan dealt with the issue of whether the issuance of a recovery certificate by a Debt Recovery Tribunal (“DRT”) can be treated as a “financial debt” within the meaning of section...
Scrutinizing the Status of Settlement Agreements Under the IBC
[Neelabh Niket is a 4th Year B.A., LL.B. (Hons.) student at Hidayatullah National Law University in Raipur] On 3 June 2022, the New Delhi Bench of the National Company Law Tribunal (NCLT) in Ahluwalia Contracts (India) Limited v. Logix Infratech Private Limited (Ahluwalia) rekindled the debate on the commencement of the Corporate Insolvency Resolution Process (CIRP) by creditors on the premise of...
Supreme Court on Commercial Wisdom of the Committee of Creditors
[Rohit Sharma is a Partner at Mamta Binani & Associates, Mumbai] In a judgment dated 3 June 2022 in Vallal RCK v. Siva Industries and Holdings Limited, the Supreme Court sought to hold, once again, that the commercial wisdom of the Committee of Creditors (‘CoC’) is supreme. Apart from the paramountcy of the commercial wisdom of the CoC, the Court also noted the tremendous importance of...
Can Government Companies be Brought under the Aegis of the IBC?
[Shradha Sharma is a banking and finance lawyer at a law firm in India] Government companies are defined under section 2(45) of the Companies Act, 2013 (“Act”) to mean any company in which not less than 51 percent of the paid-up share capital is held by the central government or state government(s), or partly by the central government and partly by one or more state governments, and includes the...
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