The Committee recommended a three-month deadline for the NCLAT to decide insolvency appeals and suggested expanding the scope of resolution plans under the corporate insolvency resolution process.
IBC
NCLT Can Adjudicate Fraud And Debt Disputes Under IBC: Delhi High Court
The Delhi High Court held that the National Company Law Tribunal (NCLT) has wide jurisdiction under the Insolvency and Bankruptcy Code, 2016, to adjudicate disputes involving fraud, forgery, the existence of debt, and the validity of an assignment.
The Court ruled that civil courts cannot be invoked to derail insolvency proceedings through parallel litigation.
It observed that Sections 60(5), 65, and 75 of the IBC empower the NCLT to examine complex factual and legal issues, while Sections 63 and 231 expressly bar civil court interference.
Dismissing the suit as an abuse of process, the Court imposed costs for indulging in avoidable litigation.
[Roseland Buildtech v. Vihaan 43 Realty].
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NCLAT Sets Aside NCLT Order, Remands Culver Max’s Insolvency Plea Against Fintech Firm
The National Company Law Appellate Tribunal (NCLAT) has overturned a National Company Law Tribunal (NCLT) order that dismissed Culver Max Entertainment’s Section 9 insolvency petition against Odisha-based Rechargekit Fintech.
The appellate tribunal held that the NCLT erred in rejecting the plea outright without granting Culver Max an opportunity to rectify procedural defects in its application under Section 9(5)(ii) of the Insolvency & Bankruptcy Code.
Setting aside the April 30, 2024 order, NCLAT remanded the matter to the NCLT for fresh consideration, directing that the petitioner be allowed to cure defects before the insolvency plea is examined on merits.
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Supreme Court Invokes Article 142 to Ensure Completion of Supertech Supernova Project
The Supreme Court invoked its extraordinary powers under Article 142 to ensure the completion of Supertech’s stalled Supernova project in Noida.
Citing prolonged delays and stakeholder hardship, the Court set aside the insolvency framework and constituted a three-member empowered committee to take over project management.
It constituted a three-member empowered committee to take charge of the project, directed the appointment of a new developer, mandated escrow-based control of funds, and ordered a forensic audit of accounts.
The Court emphasised that project completion and protection of homebuyers must take priority over rigid insolvency procedures.
[Ram Kishor Arora v. Bank of Maharashtra]
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Cheque Dishonour Not an Offence if Account Blocked Due to Insolvency: Delhi High Court
The Delhi High Court held that dishonour of a cheque does not constitute an offence under Section 138 of the Negotiable Instruments Act when the drawer’s bank account is blocked due to insolvency proceedings.
The Court observed that once insolvency proceedings commence, the account holder loses authority and control over the bank account.
In such a situation, the account cannot be said to be “maintained” by the drawer, which is a mandatory requirement under Section 138.
Accordingly, the Court ruled that criminal liability cannot arise where non-payment results from statutory restrictions imposed during insolvency proceedings.
[Farhad Suri v. Praveen Choudhary]
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IBC Amendment Bill 2025 Seeks Faster Insolvency Resolution, Codifies ‘Clean Slate’ Principle: Baijayant Panda
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, seeks to address persistent delays in insolvency proceedings by tightening statutory timelines and formally codifying the clean slate principle.
Lok Sabha MP Baijayant Panda said the Bill aims to reduce the average resolution period to six to seven months, which is expected to improve recovery rates for creditors.
The Bill was introduced in the Lok Sabha in August 2025 and was referred to a Select Committee, which has submitted its report to Parliament.
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Bombay High Court: SARFAESI Sale Invalid If Sale Certificate Not Issued Before IBC Moratorium
The Bombay High Court has held that a SARFAESI auction sale is incomplete if an interim moratorium under Section 96 IBC begins before the sale certificate is issued.
The Court ruled that ownership transfers only upon issuance of the sale certificate, and payments made after the moratorium cannot confer rights.
Since most instalments and the sale certificate in this case came after the moratorium, the auction purchaser acquired no ownership.
The writ petition was dismissed.
[Arrow Business Development Consultants Pvt Ltd v. Union Bank of India & Ors.]
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NCLT Mumbai: Damages for Contractual Breach Cannot Be a Ground to Initiate Insolvency
The NCLT Mumbai has held that claims based on liquidated or unliquidated damages arising from contractual breaches cannot be used to initiate insolvency proceedings.
Dismissing Goodrich Logistics’ Section 9 plea against Transrail Lighting, the Tribunal said such damages must first be adjudicated by a civil court or arbitral tribunal.
It found that detention charges and depreciated value of unreturned containers were not part of the original service order and constituted contractual damages outside the Code’s summary jurisdiction.
The Bench also noted pre-existing disputes and Goodrich’s failure to provide supporting records.
Holding that no crystallised operational debt existed, the application was rejected.
a month ago
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Calcutta High Court: Writ Plea Cannot Halt Personal Insolvency Proceedings Under IBC
The Calcutta High Court held that a writ petition cannot be used to stop personal insolvency proceedings under Section 95 of the IBC, since the Code provides a complete statutory mechanism with appellate remedies.
The Court said that issues relating to default, recall notices and RBI norms must be decided by the NCLT, where both the Section 7 case against the borrower and Section 95 proceedings against the guarantors are pending.
It noted that Piramal Finance and the security trustee are private entities not amenable to writ jurisdiction and that the petitioners have an alternative remedy before NCLT.
[Sanjay Jhunjhunwala v. Piramal Finance]
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NCLAT: Only CoC Can Appoint Liquidator; NCLT Can Replace RP
The NCLAT held that only the Committee of Creditors has the authority to appoint a liquidator when the Resolution Professional does not agree to continue, and that the NCLT cannot appoint a liquidator of its own choice.
The tribunal clarified that the Adjudicating Authority’s role is limited to replacing the RP. while the CoC must select the liquidator in accordance with the IBC. It added that judicial intervention cannot override the commercial wisdom of creditors.
The ruling came in appeals filed by Omkara Asset Reconstruction Company challenging the NCLT’s appointment of a liquidator.
[Omkara Asset Reconstruction Co Ltd v. RP & Ors.]
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Madhya Pradesh High Court: DRT Cannot Restrict or Condition Foreign Travel
The Madhya Pradesh High Court has held that the Debt Recovery Tribunal has no power to restrict a person’s right to travel abroad, nor can it impose conditions for such travel.
Justice Pranay Verma quashed the Tribunal’s direction requiring the petitioner, ex-Director of Metalman Industries, to deposit ₹50 crore as a precondition for foreign travel, observing that such conditions effectively deprive a person of their fundamental right.
The Court reiterated that the right to travel abroad is protected under Articles 19 and 21, and any restriction must be backed by enacted law, which is absent under the 1993 Act.
The imposed conditions were found arbitrary and unsustainable.
[Rajiv Soni v. ICICI Bank]
a month ago
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NCLT Mumbai Rules Pending Cheque-Bounce Case Does Not Bar Insolvency Plea
The National Company Law Tribunal (NCLT), Mumbai, held that the pendency of a cheque-bounce case under the Negotiable Instruments Act does not bar the initiation of insolvency proceedings.
The Tribunal admitted an application by Rexel India Private Limited to commence the corporate insolvency resolution process against Proto D Industries Private Limited.
The NCLT observed that the existence of a civil or criminal dispute relating to debt does not prevent the creditor from approaching the insolvency forum, provided default is established.
The ruling reaffirms that insolvency proceedings can proceed concurrently with other pending legal actions.
[Rexel India Pvt Ltd v. Proto D Industries Pvt Ltd]
a month ago
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NCLT Bengaluru Prioritizes IBC Over Third Party Claims On Attached Assets In Liquidation
The National Company Law Tribunal (NCLT), Bengaluru bench, has ruled that liquidators must recover corporate assets even if they have been attached or seized by third parties, emphasizing that such attachments cannot override the Insolvency and Bankruptcy Code (IBC).
The NCLT held that a liquidator must assume custody and control of all assets of a corporate debtor, including those under seizure or attachment by investigating agencies or other third parties.
The tribunal further clarified that IBC provisions take precedence over other recovery mechanisms, ensuring that the liquidation estate is properly managed and the value of assets is maximized for all creditors.
[Welworth Software Private Limited v. Akshaya Kumar Karunam]
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Supreme Court Flags Alleged Use of AI-Generated Fake Case Laws in Gstaad Hotels Insolvency Appeal
The Supreme Court has agreed to examine allegations that artificial intelligence tools generated fictitious legal precedents that were subsequently cited in court pleadings.
Concerns about such imaginary case laws being cited were raised during a hearing of a dispute tied to insolvency proceedings against Gstaad Hotel, after senior counsel flagged that the appellant’s rejoinder contained over 100 non-existent citations.
The case arises from an appeal against the NCLAT’s decision upholding the admission of insolvency applications against Gstaad Hotels and Neo Capricorn Plaza.
The Bench orally remarked that it would “put the appellant to task” if the citations were found to be fabricated or AI-generated. The matter will be heard next on December 8.
[Deepak Raheja v. Omkara Asset Reconstruction]
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NCLT Mumbai Validates SARFAESI Notice as Personal Guarantee Invocation
The National Company Law Tribunal (NCLT), Mumbai bench, has ruled that a notice issued under the SARFAESI Act can operate as a valid invocation of a personal guarantee when it makes a direct repayment demand on the guarantor.
They clarified that a separate demand notice isn't required beyond a SARFAESI communication, thereby streamlining the process for lenders to proceed against individual guarantors in debt recovery cases.
The tribunal relied on the arbitral award and cited the Supreme Court's ruling in Dena Bank v. C. Shivakumar Reddy, which held that an unsatisfied judgment, decree, or award creates a fresh financial debt enabling insolvency proceedings.
[Solapur Janata Sahakari Bank Limited v. Mukund Pandharinath Kulkarni]
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Provident Fund Dues Take Precedence Over Secured Creditor's Claim Under SARFAESI Act : Supreme Court
The Supreme Court considered whether a bank recovering dues under the SARFAESI Act must first clear provident fund arrears owed by the employer.
The Court observed that Section 11(2) of the EPF & MP Act, 1952, creates a statutory first charge over an establishment’s assets, giving provident fund dues priority over all other debts.
The Court held that even when a secured creditor proceeds under the SARFAESI Act, the sale proceeds must first satisfy provident fund dues, with the remaining amount applied to the bank’s claim.
[Jalgaon District Central Coop. Bank Ltd. v State of Maharashtra and Ors.]
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