Issue 2

https://taxguru.in/corporate-law/insolvency-bankruptcy-code-2016-analysis-cases-settled-section-7-8-
9-10.html

https://www.casemine.com/judgement/in/5c6d10004a93262639683a40

ms sabari inn pvt. Ltd. vs. Rameesh Associates Pvt. Ltd

 Smart Timing Steel Ltd Vs. National Steel &Agro Industries. Ltd (CP No.
06/I&BP/MAH/2017 Dated 30/01/2017. (The creditor failed to enclose a certificate from
the bank indicating that the payments from the debtor were not received in terms of
instructions contained section 9(3) C. The case got dismissed.
 In the P. K. Ores Pvt (Corporate Debtor- CD) Ltd Vs. Tractors(I) Pvt Ltd (Corporate
Creditor (CoCr) at NCLT, Kolkata, company appeal (AT) (Ins No. 56 of 2017), CD had
stated that the application moved by Co Cr was approved by Adjudicating Authority
without serving a copy to the CD and thereby offering an opportunity to the CD to explain
their position and also that there were some disputes among the CD and Co C. The judge
in his judgement disapproved the action of AA Kolkata since it was in violation of rules of
natural justice. The action in nominating an IRP to take charge of the CD’s unit was illegal
and hence it was set aside by the judge of NCLAT, New Delhi.

The actions to be initiated by the operational creditors have been laid down in minutest
details both under section 8 and 9. By not admitting the existence of a dispute regarding
the poor quality of service as well as passing an order by AA without sending a copy to
CD, were felt untenable under the law and the whole gamut of actions under Section 14
like imposition of moratorium, appointment of an IRP and handing over the management
to him were reversed causing the Corporate Debtor free of the rigor of the law and the
management was handed back to the Board of Directors for further operations.
Similar judgements were also delivered in cases like Aruna Hotels Ltd Vs. Krishnan
(company appeal AT number 59,87, and 88/2017 under NCLAT, New Delhi, Sabari Inn
Pvt Ltd Vs. Rameesh Associates Pvt Ltd (company appeal AT/117/2017 of NCLAT, New
Delhi) and several other cases. The advocates dealing with similar cases are requested
to follow the rules laid down completely under the Code and not necessarily on the basis
of Company’s Act, 2013 only.
Malicious intention

Praveen kumar v. cil securities ltd. (2019 SCC OnLine NCLAT 334)

https://www.scconline.com/blog/post/2019/05/21/nclat-rejection-of-application-under-s-9-ibc-upheld-
where-cirp-initiated-with-fraudulent-and-malicious-intent/

On considering the facts and circumstances, the Appellate Tribunal was of the view that the Operational
Creditor initiated the Corporate Insolvency Resolution Process (“CIRP”) with fraudulent and malicious
intent for any purpose other than the resolution of insolvency or liquidation and therefore it was clearly
covered under Section 65 IBC (fraudulent or malicious initiation of proceedings).

Seema gupta v. supreme infrastructure India limited (Company Appeals (AT) (Insolvency) No.53 of 2017)

Before filing of an application under Section 9 it is mandatory to issue a notice under Section 8 of I&B
Code, 2016. we hold that giving a prior notice under Section 8 of I&B Code is mandatory before initiation
of interim resolution process, such notice having not been issued in this case, the adjudicating authority
rightly rejected the application. We find no merit in appeal. It is accordingly dismissed.

Ms sabari inn vs. rameesh associates ltd. (Company Appeal (AT) (Insolvency) No. 117 of 2017)

As per Section 9 of the 'I&B Code', before admission of application and its filing, a demand notice under
sub-section (1) of Section 8 is required to be issued on the 'Corporate Debtor'. Admittedly, no notice was
issued under sub-section (1) of Section 8 of the 'I&B Code. In effect, order (s) passed by Adjudicating
Authority appointing 'Interim Resolution Professional', declaring moratorium, freezing of account and all
other order (s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by
the 'Interim Resolution Professional', including the advertisement, if any, published in the newspaper
calling for applications and all such orders and actions are declared illegal and are set aside.

Balance of interest

https://ibbi.gov.in/uploads/resources/Article%20Balancing%20the%20Interests%20of%20Stakeholders
%20in%20IBBI%20Newsletter%20July-September%202017.pdf

The judicial pronouncements require consideration of the interests of all stakeholders in a resolution. In
the matter of Prowess International Pvt. Ltd. vs. Parker Hannifin India Pvt. Ltd., the NCLAT held: “In the
circumstances, instead of interfering with the impugned order, we remit the case to the Adjudicating
Authority for its satisfaction whether the interest of all stakeholders have been satisfied ...” In the
matter of Prabodh Kumar Gupta vs. Jaypee Infratech Limited and others, the NCLT observed: “..the
position of present petitioner is undisputedly of stakeholders. Therefore, the IRP appointed by this Court
in respect of the corporate debtor Balancing the Interests of Stakeholders 04 Insolvency and Bankruptcy
News company is equally expected to consider and take care of the interests of the petitioner….”