123 National Company Law Appellate Tribunal judgments explained in plain English: what was decided, the law applied and why it matters. Page 5 of 6.
NCLAT rules that a SEBI delisting order renders a promoter ineligible under Section 29A(f) of the IBC, overriding the moratorium protection. This precedent bars resolution applicants with market access prohibitions, regardless of the corporate debtor's insolvency status, impacting promoter-led resolution plans.
NCLAT rules that development rights granted to a corporate debtor under a development agreement remain part of its asset pool during CIRP, notwithstanding alleged termination. Any transfer of such rights during the moratorium is void ab initio, reinforcing the sanctity of asset inclusion in insolvency resolution and protecting creditor interests.
The NCLAT has ruled that once a homebuyer’s claim is admitted and incorporated into an approved Resolution Plan, the Successful Resolution Applicant must complete document verification before allocating or transferring possession of the unit. This prevents prejudicial third-party encumbrances and upholds the statutory priority of homebuyers under IBC, ensuring resolution outcomes align with the law’s consumer protection intent.
The NCLAT has ruled that once a Resolution Professional admits a homebuyer's claim within the statutory 60-day window under the approved Resolution Plan, the Successful Resolution Applicant cannot later demand re-verification or impose additional documentation requirements. This upholds the finality of the RP's assessment and protects homebuyers from post-approval procedural delays, reinforcing the IBC's goal of time-bound resolution.
NCLAT reinforces that resolution plans must provide full transparency in the Information Memorandum, including forensic audit details and asset valuation. Failure to disclose unexplained asset depletion or financial irregularities vitiates the plan's commercial wisdom, empowering adjudicating authorities to reject it outright.
NCLAT clarifies that Section 65 IBC cannot be invoked to re-agitate debt claims already adjudicated under Section 7 unless specific pleadings of collusion are made. The ruling shields corporate debtors from frivolous CIRP recalls based on mere assignment disputes without evidence of fraudulent intent.
NCLAT rules that labour proceedings disputing wage quantum, even if liability is partially admitted, qualify as a pre-existing dispute under IBC Section 9, preventing Corporate Insolvency Resolution Process initiation. This reinforces the bar on operational creditors using CIRP to bypass ongoing labour adjudication, impacting trade unions and government-owned corporate debtors.
NCLAT bars challenges to approved resolution plans through frivolous perjury claims, imposing Rs. 25,000 costs on suspended directors attempting to reopen settled insolvency proceedings. The ruling reinforces finality in IBC resolutions and deters abuse of judicial process.
The NCLAT has ruled that interest charged in invoices cannot be included in the operational debt threshold under Section 9 of the IBC unless there is a clear contractual provision or established past practice of accepting such interest. This sets a critical precedent for operational creditors relying on invoice terms alone, requiring explicit consent for interest to count toward the ₹1 lakh threshold.
NCLAT rules that directors can be held liable under Section 66 of the IBC for fraudulent trading if they fail to deposit salary deductions meant for employee welfare, even without personal benefit. The ruling underscores directors' fiduciary duty to creditors during insolvency, expanding liability beyond traditional fraudulent intent.
NCLAT rules that shareholders who actively consent to private placements or share sales cannot later challenge the same transactions as oppressive under Sections 397-398 of the Companies Act, 1956. The judgment reinforces estoppel as a bar to oppression claims where parties have knowingly participated in the impugned transactions.
NCLAT reinforces the primacy of the Committee of Creditors' commercial wisdom under the Insolvency and Bankruptcy Code, holding that the Adjudicating Authority cannot remand a resolution plan unless statutory grounds under Sections 30(2) or 31 are violated. The ruling clarifies the limited scope of judicial review over CoC-approved plans, impacting insolvency practitioners and creditors.
The NCLAT has clarified that the three-year limitation period under Section 95 of the IBC to initiate insolvency against a personal guarantor begins from the date the corporate debtor defaults, not from the date the creditor issues a demand notice under the guarantee. This resolves ambiguity affecting creditors and guarantors alike, ensuring consistency with the IBC’s statutory framework and preventing tactical delays.
NCLAT clarifies that the 30-day limitation period for filing appeals under Section 61 of the Insolvency and Bankruptcy Code starts from the date of oral pronouncement in open court, not from the upload of the order or receipt of a certified copy. This ruling impacts homebuyers and financial creditors challenging resolution plans, ensuring timely appeals are calculated from the correct date.
The NCLAT has ruled that profit-sharing payments under an Operation & Management agreement are not operational debt under the IBC, as they arise from commercial collaboration, not goods or services supplied. This clarifies the boundary between revenue-sharing arrangements and true creditor-debtor relationships, impacting how operators and owners structure agreements to avoid insolvency triggers.
The NCLAT has ruled that the Corporate Insolvency Resolution Process under the IBC cannot be invoked against a real estate developer’s entire portfolio - it must be confined strictly to the project where default occurred. This protects other solvent projects and their homebuyers from being dragged into insolvency, establishing a critical precedent for sector-specific relief and equitable treatment of consumer-creditors in real estate insolvencies.
NCLAT Chennai reaffirms that the 30+15 day limitation period under Section 61 of the Insolvency and Bankruptcy Code (IBC) is absolute. Filing writ petitions after expiry does not extend the deadline, and High Courts lack jurisdiction to condone delays in statutory appeals. This ruling reinforces strict adherence to statutory timelines, impacting personal guarantors and creditors in insolvency proceedings.
NCLAT rules that the clock for initiating insolvency proceedings under Section 95 IBC against a personal guarantor starts only upon formal invocation of the guarantee, not prior demand letters. This clarifies the limitation period for creditors and protects guarantors from premature insolvency actions.
NCLAT reinforces that dissenting financial creditors under Section 30(2)(b) of the IBC must receive at least the liquidation value approved by the Committee of Creditors (CoC). The ruling underscores the statutory minimum payout floor, ensuring dissenters are not shortchanged in resolution plans, even if the CoC's commercial wisdom prevails.
NCLAT rules that mere delay in filing a restoration application under Section 252 of the Companies Act, 2013, cannot be grounds for rejection if the company was operational at the time of striking off. The tribunal emphasizes merit-based evaluation of documents over procedural lapses, setting a precedent for shareholders seeking revival of struck-off companies.
NCLAT rules that a pending application under Section 45 of the Insolvency and Bankruptcy Code challenging the validity of a lease deed prevents eviction on encroachment grounds until adjudication. The ruling reinforces status quo during corporate insolvency resolution, protecting occupants from dispossession until the lease's legitimacy is determined.
NCLAT mandates that adjudicating authorities must evaluate a corporate debtor's solvency and other material factors before approving settlement offers made by suspended directors prior to CoC formation. This ruling reinforces the in rem character of CIRP proceedings and limits unilateral settlements that bypass creditor rights.
NCLAT rules that the Committee of Creditors (CoC) cannot proceed with voting on a resolution plan if a creditor's claim dispute remains unresolved. This ensures procedural fairness and protects creditor rights under the Insolvency and Bankruptcy Code, preventing prejudice to disputing creditors.
NCLAT rules that unverified WhatsApp screenshots and unfiled lab reports cannot establish a pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code. The ruling clarifies that operational creditors must provide credible, documented evidence to defeat insolvency petitions, impacting debt recovery strategies for businesses.