The COVID-19 crisis has caused distress and failure in the MSME sector. The insolvency law since its enactment in 2016 has been amended several times in order to protect the interest of MSMEs as well as the future and growth of the Country.

There is no such provision to implead creditors other than the ones which triggered the Corporate Insolvency Resolution Process.

VIPL sought for a stay on the proceedings before the NCLT on the pretext of pendency of proceeding before the Supreme Court and resultantly, VIPL was unable to realize a substantial sum of Rs. 1730 crores which would enable the Appellant to clear the debt towards Axis Bank.

The Corporate Debtor went into CIRP vide the Adjudicating Authority (AA) order dated 20.09.2019 and Mr. Hemant Mehta (Appellant) got appointed as Interim Resolution Professional (IRP).

The minimum threshold limit mentioned under section 4 of Insolvency and Bankruptcy Code, 2016 can include both principal and interest amount. The invoices/bills raised by the Operational Creditor clearly mentioned that the interest will be charged @18% after the due date of the bill.

In the present case, debt pertaining to unpaid license fee was fully covered within the meaning of ‘operation debt’ under Section 5(21), and the Adjudicating Authority committed an error in holding that the debt claimed by the Operational Creditor is not an ‘operational debt’

Hon’ble Supreme court declared that the provisions of IBC (Code) to be interpreted liberally to expand the objective of the Statute.

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.

The actions of the CoC by not accepting the Applicant’s Resolution Plan were void in nature and held that the Applicant must be given a fresh opportunity to participate in the process of submission of the Resolution Plan.

Claim of the rental lease will be treated as operational debt under Section 5(21) of the code as per the decision given by the Hon’ble NCLAT.

The Appellate Tribunal recorded its dissatisfaction to the effect that the appellant has not complied with provisions of Section 43(5) of the Act, 2016 and has not deposited the balance amount.

Covid-19 being a natural calamity and not having been caused due to actions of any party under a legal contract/agreement shall be treated as Force Majeure for a specific period of time or till the prevalence of lockdown, as and when the same shall be imposed by the Government.

The time specified for the completion of the corporate insolvency resolution process is 330 days as has been laid by the legislature. The intention behind keeping process in a time bound manner is to guarantee relief to the already aggrieved creditors of the company.

The process is not too tedious and is generally accepted by the court, thus, helping the parties to resolve disputes in a time bound manner.

Individuals and corporates have begun to opt for ‘Arbitration’ as the chosen mode for resolution of their disputes to avoid court delays and other legal hassles of court.