Case 1: Sunil Kumar Jain v. Sundaresh Bhatt [Civil Appeal No. 5910 Of 2019, Decided on 19 April, 2022]
In this case, the NCLAT had rejected an appeal made by the employees of ABG Shipyard Limited. They had been seeking relief for their claim of unpaid salary during the CIRP period and before. The NCLT had previously denied their claim, and the NCLAT upheld this decision. The employees then filed an appeal against the NCLAT’s order.
The question before the Supreme Court was whether the wages or salaries of employees who did not work at all during the CIRP period should be considered and included in the costs of the CIRP.
The Supreme Court noted that the salaries or wages of employees of the corporate debtor during the CIRP period may be included in the CIRP costs, subject to two conditions. Firstly, it must be proven that the Interim Resolution Professional or Resolution Professional managed the company’s operations as a going concern during the CIRP, and secondly, that the employees actually worked during the CIRP period.
The court ruled that in such a scenario, the salaries or wages of those employees who worked during the CIRP period while the resolution professional managed the company’s operations as a going concern should be paid as part of the CIRP costs. Furthermore, these payments must be made in full first, in accordance with Section 53(1)(a) of the IB Code.
The court also stated that even If the resolution professional has not submitted wage or salary claims as part of the CIRP costs, the claims made by the appellant’s employees must still be considered and assessed by the liquidator. The liquidator is responsible for determining whether the company was a going concern during the CIRP period and how many employees actually worked during this time.
Case 2: Maitreya Doshi v. Anand Rathi Global Finance Ltd. [Civil Appeal No. 6613 Of 2021, Decided on 22 September, 2022]
In this case, an appeal was filed with the Supreme Court against the NCLAT’s order, which allowed for CIRP proceedings to be initiated against both corporate co-borrowers under Section 7 of the IBC.
The respondent, a non-banking financial company (Financial Creditor), had granted a loan to Premier Limited (“Premier”) through three Loan-cum-Pledge Agreements. The appellant, a director in Premier and Doshi Holdings, claimed that Doshi Holdings had pledged shares it held in Premier as collateral for the loan to the Financial Creditor.
When Premier failed to make repayments according to the Loan-cum-Pledge Agreements, the Financial Creditor filed a petition under Section 7 of the IBC to initiate CIRP against Premier for defaulting on the loan. The Financial Creditor also filed a petition against Doshi Holdings under Section 7 of the IBC for the same claim based on the same loan documents.
The NCLT approved both CIRP applications. However, an appeal was filed against the NCLT’s order allowing the initiation of CIRP against Doshi Holdings. The NCLAT dismissed the appeal and upheld the order for the initiation of the petition under Section 7 of the IBC. As a result, the appellant filed an appeal with the Supreme Court against the NCLAT’s decision.
The appellant argued that the Financial Creditor did not disburse any funds to Doshi Holdings under the Loan-cum-Pledge Agreements. Instead, the loans were disbursed to Premier, and Doshi Holdings did not use any portion of the disbursed funds. According to the appellant, Doshi Holdings did not meet the definition of a corporate debtor, and therefore, CIRP cannot be initiated against it. The appellant relied on the fact that the definition of “financial debt” in Section 5(8) of the IBC does not include a pledge to support their argument.
The respondent's counsel argued as follows:
(a) Doshi Holdings acted as both a co-borrower and pledgor in the Loan-cum-Pledge Agreements, pledging its shares in Premier to the Financial Creditor.
(b) The appellant signed documents on behalf of Doshi Holdings in its capacity as a co-borrower, and the appellant served as the director of both Premier and Doshi Holdings.
(c)The Loan-cum-Pledge Agreements describe Premier and Doshi Holdings as borrowers.
(d) The definition of a corporate debtor does not require the disbursal of funds to the corporate debtor as a precondition. The essential requirement for an entity to be considered a corporate debtor is that it owes a debt to any person, not that funds must be disbursed to the entity in question.
Following a hearing of both parties, the Supreme Court rejected the appellant’s request and upheld the NCLAT’s decision. The court ruled that if two borrowers or corporate entities meet the definition of corporate debtors, then CIRP can be initiated against both of them. However, the same amount cannot be recovered from both corporate debtors. If some of the outstanding dues are recovered from one corporate debtor, the remainder can be recovered from the other corporate debtor who is the co-borrower.
Case 3: Narinder Garg v. Kotak Mahindra Bank Ltd. [Writ Petition (Civil) No.93 Of 2022, Decided on 28 March, 2022]
In this case, writ petition was filed in the Supreme Court seeking to:
Quash the criminal complaints filed against the corporate debtors and its directors under Section 138 of the Negotiable Instruments Act, 1881 because the resolution plan had been approved by the Committee of Creditors (CoC) under Section 30(4) of the IBC.
Dismiss the criminal complaint initiated after the NCLT issued a moratorium order, as it cannot proceed even if the old management and its director take over the corporate debtor.
The Supreme Court held that Section 14 of the IBC does not prohibit the commencement or continuation of a cheque bounce case against individuals named in Section 141 of the Negotiable Instruments Act during the moratorium period. This section only prohibits the initiation or continuation of a cheque bounce case against the corporate debtor during the moratorium period.
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CYBER CRIME AGAINST INTELLECTUAL PROPERTY
PROTECTION FROM EMPLOYMENT DISCRIMINATION
ANALYSIS OF CONFLICT BETWEEN TRIPS AND CBD
AN OVERVIEW OF INTELLECTUAL PROPERTY RIGHT ISSUES IN CYBERSPACE
LOK ADALATS- ‘AN ADR MECHANISM’
INTERFACE BETWEEN IBC AND OTHER STATUTES