11 June 2021
We are pleased to share our knowledge alert for the month of May 2021 relating to latest developments in Indian insolvency law. Snapshot of the May 2021 Newsletter is enclosed below.
ORDER PASSED BY THE SUPREME COURT OF INDIA (“SC”)
SC upholds validity of the Notification dated 15 November 2019, allowing banks to proceed against personal guarantors for recovery of loans given to a company.
In Lalit Kumar Jain v. Union of India & Others, the SC upheld the validity of the Notification dated 15 November 2019 issued by the Indian Government. This Notification had brought into force certain provisions of the Insolvency and Bankruptcy Code (“IBC”) allowing banks to proceed against personal guarantors for recovery of loans given to a company. The Order is a win for banks and lenders as it allows them to seek recovery of dues from guarantors of loans, even while insolvency proceedings against the companies are still pending.
ORDER PASSED BY THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL (“NCLAT”)
CIRP can be initiated simultaneously or one after another against a corporate debtor as well as the corporate guarantor.
In Kanwar Raj Bhagat, Suspended Director of Gujarat Hydrocarbons and Power SEZ Ltd. v. Gujarat Hydrocarbons and Power SEZ Ltd. through Insolvency Resolution Professional, Rakesh Kumar Agarwal, the NCLAT held that a creditor can simultaneously, or one after another, initiate CIRP against a corporate debtor as well as the corporate guarantor to recover the remaining dues. NCLAT had noted that IBC has no aversion to simultaneous proceeding against a corporate debtor and corporate guarantor.
ORDER PASSED BY THE NATIONAL COMPANY LAW TRIBUNAL (“NCLT”)
No interference in the decision of the liquidator taken in the best interest of a corporate debtor.
In Basavaraj Koujalagi & Ors. v. Sumit Binani, Liquidator of Gujarat NRE Coke Limited, the NCLT, Kolkata Bench, held that a decision taken by a liquidator in the best interest of the corporate debtor in liquidation cannot be interfered as the liquidator is responsible for the affairs of the company in liquidation.
TO READ THE DETAILED INSOLVENCY LAW KNOWLEDGE ALERT, PLEASE CLICK HERE.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
