THE YEAR 2016-2018

LANDMARK CORPORATE LAW JUDGEMENTS

S NO. NAME OF THE CASE WITH CASE BRIEF

CITATION
1. Macquarie Bank Limited v. Shilpi Hamera International Private Limited
Cable Technologies Limited executed an agreement with the Appellant,
(Supreme Court), Civil Appeal No. Macquarie Bank Limited, Singapore, by
15135 of 2017, decided on which the Appellant purchased the original
December 15, 2017 supplier’s right, title, and interest in a supply
agreement in favor of the Respondent. The
Respondent agreed to the supply of goods by
the terms and conditions contained in the said
sales contract.
Since amounts under the bills of lading were
due for payment, the Appellant issued a
statutory notice under sections 433[2] and
434[3] of the Companies Act, 1956. After the
enactment of the Code, the Appellant issued a
demand notice under section 8 of the Code[4]
to the contesting Respondent, calling upon it
to pay the outstanding amount. The contesting
Respondent stated that nothing was owed by
them to the Appellant. They further went on
to question the validity of the purchase
agreement dated in favor of the Appellant.
The Appellant initiated the insolvency
proceedings by filing a petition under section
9 of the Code.[5] The National Company Law
Tribunal (“NCLT”) rejected the petition
holding that section 9(3)(c) of the Code was
not complied with, since no certificate, as
required by the said provision, accompanied
the application filed under Section 9.
the Supreme Court was confronted with two
pertinent questions about the Insolvency and
Bankruptcy Code, 2016
(“Code“): firstly, whether, about an
operational debt, the provision contained in
Section 9(3)(c)[1] of the Code is
mandatory; secondly, whether a demand
notice of unpaid operational debt can be
issued by a lawyer on behalf of the
operational creditor.
A fair construction of Section 9(3)(c), in
consonance with the object, sought to be
achieved by the Code, would lead to the
conclusion that it cannot be construed as a
threshold bar or a condition precedent.
The Court, therefore, held that a conjoint
reading of section 30 of the Advocates Act,
1961 (right of advocates to practice) and
sections 8 and 9 of the Code together with the
Adjudicatory Authority Rules and Forms
thereunder would yield the result that a notice
sent on behalf of an operational creditor by a
lawyer would be in order. The expression “an
operational creditor may on the occurrence of
a default deliver a demand notice…..” under
section 8 of the Code must be read as
including an operational creditor’s authorized
agent and lawyer, as has been fleshed out in
 Forms 3 and 5 appended to the Adjudicatory
Authority Rules.
2. Lokhandwala Kataria vs Nisus
Finance And Investment In this case, it was held that the Supreme
Court in this paramount case held that
given Rule 8 of the Insolvency and
Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, the NCLAT could not
utilize the inherent power recognized by Rule
11 of the NCLAT Rules, 2016.

3. Mobilox Innovations Private In this case, the appellant was appointed b the
Limited v. Kirusa Software Private TV program “Nach Baliye” for the voting.
Limited (Supreme Court), Civil For this purpose, the appellant spends a lot of
Appeal No. 9405 of 2017 decided on amounts and developing software too. But the
21.9.2017 respondents denied giving money since the
appellant disclosed on the social media
platform that he works for the ‘nach baliye’
and breached NDA.
The question that arises before the bench-
Whether the expression “and” occurring in
Section 8(2)(a) may be read as “or”?
The court held that the expression “and”
occurring in Section 8(2)(a) may be read as
“or” to further the object of the statute and/ or
to avoid an anomalous situation – once the
operational creditor has filed an application,
which is otherwise complete, the adjudicating
authority must reject the application under
Section 9(5)(2)(d) if notice of dispute has
been received by the operational creditor or
there is a record of dispute in the information
 utility – So long as a dispute truly exists in
fact and is not spurious, hypothetical or
illusory, the adjudicating authority has to
reject the application – A “dispute” is said to
exist, so long as there is a real dispute as to
payment between the parties that would fall
within the inclusive definition contained in
Section 5(6).

4. Innoventive Industries Ltd. v. ICICI After Innoventive entered into financial

Bank & Anr. (Supreme Court), Civil difficulties due to labor problems, it agreed
Appeal Nos. 8337-8338 of 2017 upon a corporate debt-restructuring plan with
decided on August 31, 2017 the creditors. On December 07, 2016, ICICI
Bank initiated a corporate insolvency
resolution process (the “CIRP”) under the
Code, and in that response, the corporate
debtor took shelter under the Maharashtra
Relief Undertaking (Special Provisions) Act,
1958 (the “Maharashtra Act”) under which
InnoCentive’s liabilities were suspended by
way of the moratorium. The National
Company Law Tribunal (the “NCLT”)
admitted ICICI Bank’s application initiating
the CIRP by holding that the Code would
prevail over the Maharashtra Act given
the non-obstante clause under section 238 of
the Code. The NCLT also declared a
moratorium obligatory by the Code. On
appeal, although the National Company Law
Appellate Tribunal (the “NCLAT”) did not
disturb the findings of the NCLT, on the point
 of law, it did not find any
repugnancy between the Code and the
Maharashtra Act. It is against the order of the
NCLAT that Innoventive appealed to the
Supreme Court.
The court here ruled that the previous
directors, who are no longer managing, will
no longer hold an appeal on behalf of the
corporation until an insolvency professional
has been named to administer the firm. The
Insolvency and Insolvency Code, 2016, is an
Act to consolidate and update, inter alia: rules
on company restructuring and insolvency –
The Insolvency and Bankruptcy Code is an
exhaustive code of parliamentary law on the
issue of company insolvency.
5. Surendra Trading Company vs The NCLAT query concerned whether it was
Juggilal Kamlapat Jute Mills obligatory or directory to assess the nature of
a default and to approve or deny the
submission, for a period of 14 days, under
Section 9(5). NCLAT retains a continuing
disposition, an assist weapon in the timely
discharge of justice, and is a directory in the
mandate of Section 7, or Sub-Section (5) of
Section 9 or Sub-Section (4) of Section 10.
The query, as to whether the seven-day period
for correcting the defects under proviso of
Section 9 of subsection (5) is compulsory or a
directory, also appeared (with the Supreme
Court). The court held that the same is a
directory and not mandatory.
6. K.Kishan vs M/S Vijay Nirman In that, it can be demonstrated to the court
Company Pvt. Ltd. that the term of ninety days plus the
discretionary time of thirty days has ended,
after which no application has been made
under Section 34 or a late petition under
Section 34 has been filed The court found that
a case can arise where an application for an
arbitrator’s award can clearly and unevenly
barred by limitation, The insolvency process
can only be implemented in such obvious
cases. There may be additional cases in which
a petition under Section 34 has been brought
before the wrong court and the petitioner may
then claim that the limitation bar laid down in
Section 34(3) of the Arbitration Act is applied
to Section 14 of the Limitation Act. It is also
clear, in these cases, that without an award on
the applicability of Article 14 of the
Limitation Act, the insolvency procedure
cannot be implemented.
7. Transmission Corporation Of vs The only argument put forward by an
Equipment Conductors And Cables experienced advocate of the respondent
before the Court of Justice was that the
Supreme Court of Punjab and Haryana did
not consider time-barred while setting aside
the remand order issued by the District Judge
Additional. Consequently, under these
invoices, the respondent had a valid claim.
This argument is incompatible. The Arbitral
Council has not received an award for
 invoices in Sl. 1-57 as of today. Any other
court order and these invoices are not
available. Indeed, the Arbitral Council
rejected the defendant’s claim as time was not
allowed. It is relevant to note that the intimate
has requested the Arbitral Council to establish
the amount the appellant should pay. The
Arbitral Council specifically rejected this
application as not viable, however. However,
The Court also mentioned the Mobilox
Innovations Private Ltd. vs Kirusa Software
Private Ltd. case where the IBC did not
consider itself to be a substitute for a forum
for remediation, and where a real dispute
exists it did not invoke the IBC provisions.
8. Jk Jute Mill Mazdoor Morcha vs By a contested ruling, the Supreme Court held
Juggilal Kamlapat Jute Mills that the NCLAT is not correct in refusing to
examine how the syndicate is defined
under Section 3(23) of the Code as a ‘person.’
Likewise, NCLAT does not make the point
that a trade union would not be an operational
creditor because no corporate debtors’
services are provided by the trade union.
What is clear is that it represents its
employees, to whom the employer can pay
dues, which surely are debts due to services
rendered by each employee, who collectively
represent the syndicate. Equally, to state that
for each workman there will be a separate
cause of action, a separate claim, and a
separate date of default would ignore the fact

9. Anand Rao Korada Resolution vs The Supreme Court dismissed the contested
M/S Varsha Fabrics (P) Ltd.
10. Atma Ram Properties Pvt. Ltd. vs This appeal involves an important question of
The Oriental Insurance Co. Ltd.
that a joint petition could be filed under Rule
6 read with Form 5 of the Insolvency and
Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, with authority from
several workmen to one of them to file a such
petition on behalf of all. For all these reasons,
we allow the appeal and set aside the
judgment of the NCLAT.
provisional orders of the Court of Appeal
dated 14.08.2019 and 05.09.2019 passed by
the Odisha High Court and held that it should
not have audited the property of corporate
debtors as soon as the proceedings under the
International Business Center had begun and
that NCLT was ordering the declaration of a
moratorium. After the initiation of the CIRP,
the High Court issued the contested Interim
Orders on 14 August 2019 and 05 Sep 2019.
The moratorium was declared by the NCLT
on 06.2019, and the High Court was not
justified to make a hearing of the corporate
debtor’s assets before the NCLT with the
orders of 14.08.2019 and 05.09.2019. If the
company’s assets are alienated during the
pending IBC proceedings, the interest of all
parties will be seriously threatened. The sale
or wind-up of respondent No. 4’s assets is
now subject to the IBC’s provisions.
law as to whether property tax recoverable
from the tenant under Section 67(3) of the
New Delhi Municipal Council Act, 1994 (for
short ‘NDMC Act’) as arrears of rent by the
landlord/owner can be considered to be
forming part of the rent for Signature Not
Verified seeking eviction or ejectment of such
tenant who defaults in Digitally signed by
VISHAL ANAND.
It was held that the bar created by the
provisions in the Rent Control Act pertains to
“normal tax on a building” occupied by
tenants. A bar containing in Section 7(2) in
the Rent Act pertains to normal tax on a
building occupied by a tenant while Section
121(1) of the Corporation Act deals with the
particular contingency where the property tax
levied for the tenanted premises if more than
the amount which would have been levied,
had the assessment been made based on the
rent payable by the tenant to the landlord. The
Court held that landlord is entitled to recover,
under Section 121 of the Corporation Act, the
enhanced amount of house tax from the tenant
notwithstanding the contract of tenancy and
the provisions of sub-section (2) of Section
7 and Section 4 of the Rent Act. The Court
has not considered the question relating to the
eviction of a tenant under the provisions
of the Rent Act where protection is accorded
to the tenant from eviction.
the Rent Act is an earlier Act when compared
 to the NDMC Act, it is a special enactment
about the matter in issue and has a non-
obstante clause. The NDMC Act is not a
special enactment insofar as the landlord-
tenant issue is concerned and it
contains Section 411 which provides that
other laws are not to be disregarded. Section
67(3) of the NDMC Act merely gives a right
to recover the tax in respect of the premises as
rent. It does not override the Rent Act insofar
as obviating the effect of Section 7(2) of the
Rent Act. In our opinion, the tax recoverable
from the tenant under Section 67(3) of the
NDMC Act as arrears of rent by the appellant
cannot be considered to be forming part of the
rent to seek eviction/ejectment of the
respondent who defaults in payment of such
recoverable tax as rent.
11. K.S. Rangasamy v. State Bank of The court held that “For the reasons aforesaid,
India & Anr.(NCLAT Chennai), we are not inclined to interfere with the
Company Appeal (AT) (Insolvency) impugned order dated 13th June 2017.
No. 83 of 2017, Dated: 06/03/2018 However, as we find that the Appellant has
taken the plea that the ‘Corporate Debtor’ is
ready to pay the total amount with 9% interest
p.a. in 12 equal monthly installments, it will
be open to the ‘Financial Creditor’ to settle
the dispute, if the ‘Resolution Applicant’
proposes ‘lesser amount’ and ‘more time’
than the ‘amount and time’ proposed by the
Appellant. In such case, it will be also open to
the concerned person to move before an
 appropriate forum to make the settlement
absolute.” If the offer of the promoters is
better than the resolution plan, leeway has
been provided to approach the appropriate
forum to get the settlement recorded.”

12. Indian Overseas Bank & Ors. v. The Hyderabad bench of the NCLT, in an
Kamineni Steel & Power India insolvency petition against Kamineni Steel &
Private Limited (NCLAT Delhi), Power India, allowed a resolution plan
Company Appeal (AT) (Insolvency) approved by 66.67% of its committee of
No. 335 of 2017, decided on creditors (CoC). The Hyderabad NCLT said
04.01.2018 in its order that Section 30 (4) does not say
whether the such percentage is out of the total
voting share of the financial creditors or those
present during meetings of the CoC. “Since
IBC is a new code and still evolving, the
above percentage has to be read with various
circulars issued by the Reserve Bank of India.
The National Company Law Appellate
Tribunal (NCLAT) has struck down an order
passed by the bankruptcy court that approved
a resolution plan for Kamineni Steel &
Poeven though it failed to receive the
mandatory 75 percent vote share, a pre-
requite according to the Insolvency and
Bankruptcy Code (IBC) to get the plan
endorsed by the court.
13. Alchemist Asset Reconstruction An arbitration proceeding cannot be started
Company Limited v. M/s Hotel after the imposition of the moratorium and
Gaudavan Private Limited & Ors. the effect of Section 14(1)(a) is that the
(Supreme Court), Civil Appeal No. arbitration that has been instituted after the
16929 of 2017, decided on October aforesaid moratorium is not innocent
23, 2017

14. Black Pearl Hotels Pvt. Ltd. v. The duty of determination of an instrument
Planet M. Retail Ltd. (Supreme or, to explicate, to determine when there is a
Court), Civil Appeal 2973-2974 of contest a particular document to be specific,
2017, decided on February 17, 2017 the adjudication has to be done by the judge
after hearing the counsel for the parties. It is a
part of the judicial function and hence, the
same cannot be delegated.

15. Nikhil Mehta & Sons (HUF) & Ors. The NCLAT has ruled that a purchaser of real
v. M/s AMR Infrastructures Ltd. estate, under an ‘Assured-return’ plan, would
(NCLT Delhi), C.P NO. (ISB)- be considered as a ‘Financial Creditor’ for
03(PB)/2017, decided on 23.01.2017 IBC and is, therefore, entitled to initiate a
corporate insolva ency process against the
builder, in case of non-payment of such
‘Assured/Committed return’ and non-delivery
of unit. The Appetite plant had booked a
residential unit, office space, and a shop,p in a
project being developed by AMR. The unit
never came to be delivered to the Appellant.
The Appellant had an MoU with AMR,
whereby AMR had assured
‘Assured/Committed returns’ to him, from the
date of execution of the MoU till the handing
over of the physical possession of the unit(s).
This was ostensibly done in view
ogiventantial down payment made by the
Appellant. The Assured returns were paid for
some time, however, the payments dwindled
and then stopped altogether. Despite various
demands, no further payments were made by
the Builder. This constrained the Flat buyer to
initiate the Insolvency process against the
Builder. The NCLT dismissed the Application
on the singular premise that the agreement in
question rly a ‘pure and simple agreement of
sale and purchase of a piece of property and
has not acquired the status of financial debt as
the transaction does not have consideration
for the time value of money. The NCLT held,
that disbursal of monies ‘against the
consideration for the time value of money was
an essential precondition for the debt to
qualify as a ‘financial debt’. At the NCLAT,
it was argued that through this mechanism of
‘Assured returns’, a huge amount of money
was mobilized by AMR to ensure the
development of the project, without any
collateral or security. In absence of this
scheme, AMR would have been constrained
to procure this amount from financial
 institutions at extremely high-interest rates.
Instead, this amount was secured from
unsuspecting buyers on the guarantee and
under the garb of ‘Assured/Committed
returns’. The NCLAT, reversing the decision
of the NCLT, ruled in favor of the Flat Buyer
and held it to be a ‘Financial Creditor’. The
operative part of the decision reads: “It is
clear that Appellants are ‘investors’ and has
chosen ‘committed return plan. The
Respondent in their turn agreed upon to pay
monthly committed return to investors.”
NCLAT further went on to rule that the ‘debt’
in this case was disbursed against the
consideration for the ‘time value of money
which is the primary ingredient that is
required to be satisfied for an arrangement to
qualify as ‘Financial Debt’ and for the lender
to qualify as a ‘Financial Creditor’, under the
scheme of IBC.

16. State Bank Of India vs V. The present appeals revolve around

Ramakrishnan on 14 August 2018
whether Section 14 of the Insolvency and
Bankruptcy Code, 2016, which provides for a
moratorium for the limited period mentioned
in the Code, on the admission of an
insolvency petition, would apply to a personal
guarantor of a corporate debtor.
The Supreme Court observed that a
plain reading of Section 14 of the IBC,
which refers to four matters that may be
prohibited once the moratorium comes
into effect, leads to the conclusion that
the moratorium can have no manner of
application to personal guarantors of a
corporate debtor. Turning down the
arguments of the Personal Guarantor,
the Supreme Court observed that
Section 60(2) of the IBC merely locates
the NCLT which has territorial
jurisdiction in insolvency proceedings
against the corporate debtors. Further,
under Section 60(3) of the IBC, if any
bankruptcy proceeding against the
individual personal guarantor is
initiated before initiating the
proceeding against the corporate debtor,
such proceeding pending in any court or
tribunal will be transferred to the NCLT
where the proceeding against the
corporate debtor is initiated. Hence,
Section 2(e) of the IBC, as amended by
the Amendment Act, 2018, when it
refers to the applicability of the IBC to
a personal guarantor of a corporate
debtor, would apply only for the limited
purpose as contained in Sections 60(2)
and 60(3), as stated herein above.
About Section 31 of the IBC, the
Supreme Court observed that this
Section only states that once a
resolution plan, as approved by the
committee of creditors, takes effect, it
shall be binding on the corporate debtor
as well as the guarantor. This is for the
reason that otherwise, under Section
133 of the Indian Contract Act, 1872,
any change made to the debt owed by
the corporate debtor, without the
surety’s consent, would relieve the
guarantor from payment. The Supreme
Court observed that a separate
moratorium is applicable in the case of
personal guarantors under Sections 96
and 101 of the IBC. The protection of
moratorium under these provisions is
far greater than that of Section 14 of the
IBC in respect of the debt. Section 14
refers only to debts due by corporate
debtors, which are limited liability
companies, whereas insofar as firms
and individuals are concerned,
guarantees are given in respect of
individual debts by persons who have
unlimited liability to pay them and a
moratorium against such persons are
available only under Part III of the IBC.
The Supreme Court observed that the
object of the IBC is not to allow the
guarantors to escape from an
independent and co-extensive liability
to pay off the entire outstanding debt,
 which is why Section 14 is not applied
to them. It is for this reason that the
moratorium mentioned in Section 101
of the IBC would cover such persons, as
such a morathe torium is about the debt
and not the debtor.
17. ArcelorMittal India Private ltd. vs Corporate Insolvency proceedings were
Satish Kumar Gupta on 4 October initiated against Essar Steel India Limited
2018 (“ESIL”) under the admission of a petition
filed under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (“IBC”) before the
National Company Law Tribunal,
Ahmedabad Bench (“NCLT”). Consequently,
the Interim Resolution Professional (Satish
Kumar Gupta (“the Respondent”) in the
above petition) was appointed and he called
for a resolution plan proposal from interested
parties.
The Court, finally, held that both AMIPL and
Numetal were ineligible to submit resolution
plans by Section 29A (c) of the IBC.
However, upon the request of the Committee
of Creditors of ESIL, the Court has exercised
its extraordinary power under Article 142 of
the Constitution and has granted one more
opportunity to AMIPL and Numetal to pay
off the NPAs of their related corporate
debtors within a period of 2 (two) weeks from
the date of receipt of the Judgment by the
proviso to Section 29A (c) of the IBC. If such
payments are made within the aforesaid
 period, both resolution applicants can re-
submit their resolution plans (submitted
earlier) to the Committee of Creditors who are
required to consider and decide within 8
(eight) weeks from the date of the judgment.
In the event the Committee of Creditors fails
to make such a decision with the requisite
majority, ESIL shall go into liquidation.
18. Chitra Sharma Vs UOI As a result of the amendment brought about
2018(145)CC425 in the definition of ‘financial debt’, amounts
raised from allottees under real estate projects
are deemed to be amounts “having a
commercial effect of a borrowing”. Hence
outstanding amounts to allottees in real estate
projects are statutorily regarded as financial
debts. Such allottees are brought within the
purview of the definition of ‘financial
creditors.
19. Pr. Commissioner Of Income Tax Income-tax dues, being like Crown debts, do
Vs Monnet Ispat And Energy Ltd not take precedence even over secured
Judgment dt.10.08.2018 creditors, who are private persons.

20. B.K. Educational Services Private The Limitation Act applies to applications
Limited Vs Parag Gupta And filed under Sections 7 and 9 of the Code from
Associates Judgment it. 11.10.2018 the inception of the Code. Article 137 of the
 Limitation Act gets attracted. “The right to
sue”, therefore, accrues when a default
occurs. If the default has occurred over three
years before the date of filing of the
application, the application would be barred
under Article 137 of the Limitation Act, save
and except in those cases where, in the facts
of the case, Section 5 of the Limitation Act
may be applied to condone the delay in filing
such application.

21. Jaipur Metals & Electricals

Employees Organisation Vs. Jaipur Cases that fall under Section 20 of the SICA,
Metals & Electricals Ltd. are dealt with separately under Rule5 (2), they
2019(213)CC25 cannot be treated as petitions that have been
filed under Section 433(f) of the Companies
Act, 1956, which are separately specified
under Rule 6. The High Court is therefore not
correct in treating petitions that are under
Section 20 of the SIC Act as being under
Section 433(f) of the Companies Act, 1956,
and applying Rule 6 of the 2016 Transfer
Rules. The effect of the omission of Rule 5(2)
is not to automatically transfer all cases under
Section 20 of the SIC Act to the NCLT, as
otherwise, a specific rule would have to be
framed transferring such cases to the NCLT,
as has been done in Rule 5(1). It is thus clear
that under the scheme of Section 434 (as
amended) and Rule 5 of the 2016 Transfer
Rules, all proceedings under Section 20 of the
 SIC Act pending before the High Court are to
continue as such until a party files an
application before the High Court for transfer
of such proceedings post 17.08.2018. Once
this is done, the High Court must transfer
such proceedings to the NCLT which will
then deal with such proceedings as an
application for initiation of the corporate
insolvency resolution process under the Code.
It is thus clear that under the scheme of
Section 434 (as amended) and Rule 5 of the
2016 Transfer Rules, all proceedings under
Section 20 of the SIC Act pending before the
High Court are to continue as such until a
party files an application before the High
Court for transfer of such proceedings post
17.08.2018.

22. Bank Of New York Mellon London If the reference made by an applicant to BIFR
Branch. Vs Zenith Infotech Limited is rejected at the threshold by Registrar
AIR2017SC1735 without adjudication by a Bench on the
ground that the applicant company is not an
“industrial company”, such rejection is honest
and without jurisdiction, therefore such
reference is deemed to be pending since such
order is without jurisdiction and hence the
application to NCLT can be filed as per
section 252 of SICA.

23. Alchemist Asset Reconstruction Whether arbitration proceedings can be

 Company L. Vs. Hotel Gaudavan continued once the Insolvency Petition is
AIR2017SC5124 admitted and the moratorium starts. The
mandate of the new Insolvency Code is that
the moment an insolvency petition is
admitted, the moratorium that comes into
effect under Section 14(1)(a) expressly
interdicts institution or continuation of
pending suits or proceedings against
Corporate Debtors. And Arbitration
proceedings will also be hit by the
moratorium.

24. Uttara Foods And Feeds Private Whether, given Rule 8 of the I&B
Limited Vs. Mona Pharmachem (Application to Adjudicating Authority)
Judgment dt.13.11.2017 Rules, 2016, the National Company Law
Appellate Tribunal could utilize the inherent
power recognized by Rule 11 of the National
Company Law Appellate Tribunal Rules,
2016 to allow a compromise before it by the
parties after admission of the matter. In case
of compromises, Supreme Court may utilize
its powers under Article 142 of the
Constitution of India. Therefore the relevant
Rules may be amended by the competent
authority to include such inherent powers to
record compromise by NCLT or NCLAT.