1. The Judgement of Hon’ble Supreme Court Insolvency and Bankruptcy code,
In the case of Swiss Ribbons and others
Insolvency and Bankruptcy code,
2016
By CA Raj Singhania
Insolvency Professional

2. Prolouge- The pre-existing STATE of the law
Discussion on BLRC
Madras Petrochem Ltd Vs. BIFR
- Utility of SICA was questioned.
Innoventive Industries
- Time frame of Resolution and Ease of doing business ranking.
ArcelorMittal Vs. Satish Kr Gupta
- failure of SICA & RDDBFI, even SRFAESI was inadequate.

3. JUDICIAL HANDS-OFF QUA ECONOMIC LEGISLATION
International Law Regulated to Insolvency and Bankruptcy Code discussed
In R.K. Garg Vs. Union of India this court held
“Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. “

4. THE RAISON D’ÊTRE FOR THE ibc
Innoventive Industries
Statement of objects and Reasons
Preamble of the Code
Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. [Arcelor Mittal at paragraph 83, footnote 3].
The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors.

5. APPOINTMENT OF MEMBERS OF NCLT AND THE NCLAT are CONTRARY to the judgement given in Madras Bar Association ?
Appointment of member of the NCLT and NCLAT not contrary to this Courts Judgments.
Section 412 of Companies Act 2013 amended on by Companies Act Amendment Act 2017, where the appointment of NCLT and NCLAT members will be by a selection committee and this committee was later on notified and framed. An affidavit by GOI also given that all appointments made are in compliance to Supreme Court Order in Madras Bar Association .

6. NCLT benches only in Delhi?
More benches of NCLAT should be set up in compliance with ruling in Madras Bar Association ?
NCLT benches only in Delhi?
The Attorney General assumed the MBA judgment will be followed and Circuit Benches will be set up within 6 months.

7. Administrative controls of the Tribunals should be under Ministry of Law and Justice and not MCA ?
TRIBUNALS ARE FUNCTIONING UNDER WRONG MINISTRY.
Since Madras Bar Association is 8 years old judgement and by Constitutional Bench, it is high time that Union of India should follow it both in letter and spirit – means , Tribunals to be administered under Ministry of Law.

8. Shayara Bano case law discussed in length Extract from BLRC
there is no intelligible differentia between the two types of creditors, viz. Financial Creditor and Operational creditor and therefore such classification is not only discriminatory, but also manifestly arbitrary.
CLASSIFICATION BETWEEN FINANCIAL CREDITOR AND OPERATIONAL CREDITOR NEITHER DISCRIMINATORY, NOR ARBITRARY, NOR VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA.
Shayara Bano case law discussed in length
Extract from BLRC
FC in the form of Home buyers discussed.
“There is obviously an intelligible differentia between the two which has a direct relation to the objects sought to be achieved by the Code. “

9. NOTICE, HEARING, AND SET-OFF OR COUNTERCLAIM QUA FINANCIAL DEBTS
NOTICE, HEARING, AND SET-OFF OR COUNTERCLAIM QUA FINANCIAL DEBTS verification by nclt
Notice and Hearing – Innoventive Industries
Noting of default by IU is only Prima Facie Evidence. It may be rebutted by NCLT
Section 60 read with NCLT rules given immense power to Tribunal.

10. Operational Creditor have no vote in coc
In this matter :-
The Joint Parliamentary Committee (JPC) Report agreed to some extent that OC should be part of meetings and accordingly modified Section 24 which states that OC aggregating to 10% or more of the total debt of Corporate Debtor (CD) can participate in the meeting without voting rights.
Even the Insolvency Law Committee of March, 18 thought it not to amend the code in this regard considering various aspects including approval of Resolution Plan.

11. Section 12A is against the principles laid down by the SC in Uttara Foods case and now even after settlement , the withdrawal of the case remains at the whims of the majority of the CoC ?
SECTION 12A IS NOT VIOLATIVE OF ARTICLE 14
Inserted by Second Amendment Act 2018 on the basis of ILC Report of March 2018.
Cases referred:- a) Lokhandwala Kataria Construction Pvt. Ltd. v. Ninus Finance & Investment Manager LLP – b) Uttara Foods and Feeds Private Limited v. Mona Pharmacem –SC
Brilliant Alloys Pvt. Ltd. v. Mr. S. Rajagopal & Ors. – SC
Regulation 30A(1) is not mandatory but is directory and in exceptional cases even after issue of invitation for Expression of Interest, the case may be withdrawn.

12. Before consitution of CoC – NCLT under its power of Rule 11 may allow withdraw of application.
Even U/s 60 of the Code, the NCLT/NCLAT has the last word on the subject. In case the CoC arbitrarily rejects a settlement- The NCLT/NCLAT can always set aside such a decision u/s 60

13. EVIDENCE PROVIDED BY PRIVATE INFORMATION UTILITIES:
Only Prima Facie Evidence of Default
Adjudication by Adjudicating Authority only

14. He can only form opinion.
RP has powers of adjudication – which is violative of the basic principles of dispensation of justice ?
The RP has no ADJUDICATORY Powers.
Section 18- Duties of IRP/RP
CIRP Regulation on Verification of Claims
It is pertinent that the RP is given administrative role only as opposed to Quasi Judicial Powers.
Even for preferential and other transactions he has to apply to AA for appropriate relief.
He can only form opinion.

15. However powers of liquidators are in contrast to RP.
Liquidator has to determine the value of claims in the manner specified.
However the same can be appealed before AA, which means- its a Quasi Judicial Function.
Thus the RP is really a facilitator of the Resolution Process.

16. CONSTITUTIONAL VALIDITY OF SECTION 29A
29A- Persons not eligible to be a Resolution Applicant :-
Introduced by IBC (Amendment) Ordinance, 2017
Main Issue in
Sub clause ( c ) – NPA more than 1 year
( h ) – Invoked Guarantee Remained Unpaid

17. Retrospective Application of 29A
Restriction also in case of Liquidation Section 35 (1) (7)
Cases referred: a) ArcelorMittal
b) Chitra Sharma
Retrospective Application of 29A
The Resolution Applicant have no vested right to be considered as such in Resolution Process.

18. The One Year period in section 29(a)(c) and npas
Default + 3 months = NPA
NPA + 12 months = Total 15 months of default
If not resolve default
15 months fine given to resolve and even in that period one can be RA. If doesn’t mean he is ailing himself.

19. Blanket ban on all defaulting promoters even if they are not wilful defaulters
Section 29(A)(C) not Restricted to MALFEASANCE
Criminal Intent is not important characteristics
It is so even in clause (a) or (e) wherein undischarged Insolvent or a disqualified
director due to non filing of filing of annual statements is barred from becoming a RA.

20. Related Party – 29(A)(i)
Related party in 29A means connected to the business of the CD “either at an anterior point of time or even during implementation of the Resolution Plan”
Exemption to MSME – 240A
ILC Report March- 2018
Only from Section 29A (c) & (h)
“the rationale for this relaxation is that a business of an MSME attracts interest primarily from promoter of an MSME and may not be of interest to other Resolution Applicants.”
Section 53 Not Violation of Article -14
OC may not get anything ??
Secured creditor’s money is further lent into economy as loan to other businesses
This rationale creates an Intelligible Differentia and fulfills the object of the code.

21. THE DEFAULTER’S PARADISE IS LOST
EPILOGUE:-
THE DEFAULTER’S PARADISE IS LOST

22. Thank you!
Raj Singhania