The Supreme Court has made an attempt to shed light on this matter recently in K. Paramasivan v. The Karur Vysya Bank Ltd. An appeal is preferred before the apex court under which the NCLAT decision is challenged.
Section 10A proceedings are not applicable against the Personal Guarantor under section 95 of the Insolvency and Bankruptcy Code, 2016.
Section 7 of the Code permits a financial creditor to initiate a CIRP procedure against the guarantor being a corporate debtor in accordance with the default committed by the principal borrower.
SBI initiated proceedings against Veesons under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), demanding an outstanding amount of approximately INR 61 crores as Veesons did not pay its debts on time.
There is no specific threshold limit for the NCLT Delhi under the IBC 2016. The IBC provides that a financial creditor, operational creditor, or the corporate debtor itself can initiate the insolvency resolution process with the NCLT.
The lease premium and rent given to the Corporate Debtor are not included in Section 14(1)(D) of the Insolvency and Bankruptcy Code, 2016.
An application filed to initiate CIRP against the petitioners under Section 7(2) of the IBC Vidarbha Industries Power Limited v. Axis Bank Limited.
A person to whom a debt has been properly assigned or transferred is also included in the definition of “Financial Creditor” under Section 5(7) of the IBC.
The interest component can include in the principal debt to acquire a minimum threshold limit i.e., 1 crore if delayed payment stipulated in the agreement or invoice.
Article 137 is having a wider scope than Article 1 of the Limitation Act and is not applicable to the proceedings under the Insolvency and Bankruptcy Code. Article 1 is also not applicable to the petition filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code.
The NCLAT ruling, on the other hand, may present some difficulties for banks that have extended bank guarantees. When the IBC imposes a moratorium period, recouping funds paid under bank guarantees from a corporate debtor may be difficult.
The NCLAT, in its Order dated 23.04.2019, ruled that GMSPL’s (Ghanshyam Mishra and Sons Pvt. Ltd.) Resolution Plan is better compared to the other Applicants. However, NCLAT noted that the parties’ claims that are not covered in the Resolution Plan may be raised before the relevant forums.
These two judgements would be of great importance because they have paved a way for the transfer of post-notice winding up petitions pending before the different High Courts.
In the case of Ashok Tripathi and Anr Vs. Ansal Properties and Infrastructure Ltd. that a decree-holder/homebuyer having refund order from RERA or other courts shall not be deemed as a homebuyer but a financial creditor.
Claims towards rent of leasehold property do not fall within the definition of the operational debt in terms of Section 5(21) of the Insolvency and Bankruptcy Code, 2016.
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