TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Supreme Court upholds resolution plan approval, clarifies NCLT and NCLAT jurisdiction limits under IBC Sections 43, 45, 50, 66</h1> <h3>PIRAMAL CAPITAL AND HOUSING FINANCE LIMITED (FORMERLY KNOWN AS DEWAN HOUSING FINANCE CORPORATION LIMITED) Versus 63 MOONS TECHNOLOGIES LIMITED & OTHERS</h3> PIRAMAL CAPITAL AND HOUSING FINANCE LIMITED (FORMERLY KNOWN AS DEWAN HOUSING FINANCE CORPORATION LIMITED) Versus 63 MOONS TECHNOLOGIES LIMITED & OTHERS - ... 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered were:(i) Whether the Resolution Plan (RP) approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) was in contravention of any law, requiring intervention by the National Company Law Appellate Tribunal (NCLAT) under Section 61 of the Insolvency and Bankruptcy Code (IBC).(ii) What constitutes Avoidance Applications under Chapter III and applications for Fraudulent or Wrongful trading under Section 66 of the IBCRs.(iii) What are the mandatory requirements under Section 30(2) of the IBC and Regulation 38 of the Regulations, 2016Rs.(iv) What is meant by maximization of the value of the assets of the Corporate Debtor (CD)Rs.(v) Whether NCLAT should have entertained the appeals filed by 63 Moons and interfered with the commercial wisdom of the CoCRs.(vi) Whether the RP violated the provisions of the Reserve Bank of India Act (RBI Act) or the National Housing Bank Act (NHB Act) concerning the repayment of depositsRs.(vii) Whether the ex-promoters had any right to participate in CoC meetings or access the RPRs.2. ISSUE-WISE DETAILED ANALYSIS(i) Avoidance ApplicationsThe IBC provides for Avoidance Applications under Chapter III for Preferential, Undervalued, and Extortionate Credit transactions. Section 66, under Chapter VI, pertains to Fraudulent or Wrongful trading. The Court clarified that the powers of the Adjudicating Authority in these applications are distinct, with Section 66 focusing on contributions to the assets of the CD by those involved in fraudulent trading.(ii) Mandatory Requirements of Section 30(2) of the IBC and Regulation 38The RP must comply with Section 30(2) and Regulation 38, ensuring payment of insolvency resolution process costs, debts of operational creditors, and management of the CD post-approval. The CoC's approval of the RP is based on feasibility, viability, and compliance with these requirements.(iii) Maximization of the Value of the Assets of the Corporate DebtorThe CoC's role is to ensure maximization of the CD's assets, which is not explicitly defined in the IBC but is crucial in the approval of RPs. The CoC must consider all measures for asset maximization as per Regulation 37 of the Regulations, 2016.(iv) NCLAT's Intervention in the 63 Moons AppealsThe NCLAT's decision to interfere with the RP approved by the CoC and NCLT was found to be erroneous. The Court emphasized the limited scope of judicial review by NCLAT under Section 61, which should not extend to questioning the commercial wisdom of the CoC, especially when the RP meets all legal requirements.(v) Resolution Plan's Compliance with RBI Act and NHB ActThe Court found no violation of the RBI Act or NHB Act in the RP's distribution mechanism. Sections 36(A) of the NHB Act and 45(QA) of the RBI Act do not mandate full repayment of deposits, and no orders were issued under these sections to require such repayment.(vi) Rights of Ex-PromotersThe ex-promoters, having been superseded under the RBI Act, had no right to participate in CoC meetings or access the RP. The RBI's supersession of the Board of Directors resulted in the vacation of their offices, distinguishing their situation from directors merely suspended under the IBC.3. SIGNIFICANT HOLDINGSThe Court reiterated the primacy of the CoC's commercial wisdom in the insolvency resolution process, with limited judicial review by NCLT and NCLAT. It emphasized that the CoC's decisions, made after thorough examination and expert consultation, should not be second-guessed by judicial bodies unless there is a contravention of the law.Key principles established include the distinct treatment of Avoidance Applications and applications under Section 66, the non-mandatory nature of full deposit repayment under the RBI and NHB Acts, and the lack of rights for ex-promoters to participate in the CIRP after supersession by the RBI.The Court concluded by affirming the NCLT's approval of the RP and dismissing the appeals challenging the RP's provisions and the rights of ex-promoters.
TaxTMI 
TaxTMI 
