India Asset Growth Fund and Ors. Vs CMRS projects Pvt Ltd (23.06.2020- NCLT Bangalore)
The Hon’ble Tribunal decided on the matter specifically bearing in mind the intent of the Insolvency and Bankruptcy Code (IBC) and the parameters while considering admitting a Corporate Debtor (CD) into Corporate Insolvency Resolution Process (CIRP) in light of the prevalent economic slowdown due to COVID-19. The Forum went another step and took into consideration the current economic crisis and went onto pass a judgment impacting all stressed companies in a beneficial manner.
The NCLT went on to hold that, initiation of CIRP of the Corporate Debtor is not justified and parties must resolve the issue. The financial creditors are required to reconsider the settlement proposal due to severe economic conditions and the Corporate Debtors is in going concern. The respondent was directed to extend full cooperation for settlement efforts.
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NCLAT Suo moto order passed on 30.03.2020
The NCLAT in exercise of powers conferred by R.11 of the Company Law Appellate Tribunal Rules 2016 r/w decision rendered in “Quinn Logistics India Pvt Ltd vs Mack Soft Tech Pvt Ltd” passed the following order:
- Corporate insolvency resolution process shall be suspended until further notice
- Interim order/stay order passed by NCLAT under IBC, 2016 shall continue until next date of hearing
This order passed was a boon to both the creditors and debtors, here is what the NCLAT felt during the pandemic:
“Having regard to the hardships faced by various stakeholders and also the legal fraternity, which go beyond filing appeals/ cases which has already been taken care of the Hon’ble Apex Court by extending the period of limitation with effect from March 15th, 2020 till further order/s in terms of order dated 23rd March, 2020 in Suo Motu WP (CIVIL) NOS. 03/2020, inasmuch as certain steps required to be taken by various authorities under IBC,2016 or to comply with various provisions and to adhere to the prescribed timelines for taking the Resolution Process to its logical conclusion in order to obviate and mitigate such hardships.”
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Rajive Kaul vs. Vinod Kumar Kothari & Ors.(NCLAT order passed on 23.03.2020)
The NCLAT held that it is an axiomatic principle in law that a company in liquidation acts through the liquidator and the liquidator steps into the shoes of the board of directors of the company under liquidation for the purpose of discharging its statutory duties.
It was further held that the liquidator is armed with requisite powers to remove the nominee directors and is entitled to nominate the directors, and the company is enjoined to act upon the replacement proposal of the existing nominee directors.
The NCLAT also observed that Section 19 of the Code is similar to Section 284 of the Companies Act, 2013. Section 19 imposes an obligation on the personnel and promoters of a corporate debtor to extend all assistance and cooperation that the insolvency resolution professional may require in the management of the affairs of the corporate debtor.
It clarified that the word “personnel” refers to directors, managers, key managerial personnel, designated partners and employees, if any, of the corporate debtor by means of Section 5(23) of the Code.
