If simultaneous insolvency proceedings against the corporate debtor have been initiated, the competent authority of another country shall also have the right to participate in the CoC & Joint CIRP meeting, in compliance with the provisions of the IBC.
By: Tanushree G L, 5th Year, B.COM, LL.B(Hons.), Sastra Deemed to be University.
CASE NOTE: Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016. The petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by the Financial Creditor against the Corporate Debtor for initiating corporate insolvency resolution process is admitted and the petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 is dismissed.
The Adjudicating Authority is not empowered to entertain the order passed by the Courts of foreign jurisdiction as the registered office of the Corporate Debtor lies within India.
And, there is no reciprocal arrangement with the foreign country in the instant case. Sec.234 and Sec.235 of the Insolvency and Bankruptcy Code,2016 which has not been given effect via notification by the Central Government is not enforceable.
1. The Petitioner granted a term loan of ₹1090 Cr. vide term loan agreement dated 08.09.2016. The Financial Creditor and other lenders of the Corporate Debtor executed Common Loan Agreement (CLA) dated 11.4.2018.
2. The financial exposure of the financial creditor to the corporate debtor under CLA stood at ₹1090 Cr. The Financial Creditor and the other lenders of the Corporate Debtor granted Additional term loan facilities were granted to the Corporate Debtor vide Additional Term Loan Agreement by the Financial Creditor and the other lenders. The Financial Creditor granted an additional term loan of ₹200 Cr.
3. The Working capital facilities both, fund-based and non-fund based facilities vide Working Capital Consortium Agreement wherein the financial creditor extended working capital facilities to ₹1445 Cr to the Corporate Debtor which was later to ₹1355 Cr vide First Supplemental Working Capital consortium agreement dated 23.09.2016. Further revision and reduction by the Financial Creditor to the existing fund-based working capital limit by ₹101 Cr vide Second Supplemental Working Capital consortium agreement dated 22.02.2018 was made. Under the agreement dated 12.02.2019, the Financial Creditor granted a term of ₹ 216.21 Cr to the Corporate Debtor.
4. The default amount is stated to be ₹462,39,38,604.55/-, being the overdrawn amount over sanctioned limits of the cash credit facilities by the Petitioner who is a Financial Creditor. Also, the Corporate debtor has failed to pay its Operational Creditors with nearly ₹550 Cr outstanding to its pilots.
5. On 20.06.2019 when these petitions were heard, the judgment of Noord-Holland District Court dated 21.05.2019 was submitted by the Administrator appointed by the Foreign Court. There is no provision providing legal effect to the judgment of Foreign Courts in India. Moreover, there would be parallel proceedings conducted with respect to the same issue of the Corporate Insolvency Resolution Process.
- Whether there is a bar under the Insolvency and Bankruptcy Code, 2016 for the Adjudicating Authority to recognize the insolvency proceedings in a foreign jurisdiction?
- Whether Sec. 234 and Sec.235 of the Insolvency and Bankruptcy Code, 2016 which has not been given effect to by the Central Government has any legal effect?
Sec.7, Sec.9, Sec.234, and Sec.235 of the Insolvency and Bankruptcy Code, 2016.
The order dated 20.06.2019 declared moratorium u/s 14 of I&B Code. The IRP/RP is directed to submit their fortnightly Progress report without delay of a single day. Though the Insolvency and Bankruptcy Code 2016 provides for the completion of CIRP within 180 days/270 days, it should not be extended till the last day of the statutory period. The judgment passed by the Noord-Holland District Court does not affect as the Corporate debtor has registered office in India.Sec.234 and Sec.235 do not affect as it has not been notified by the Central Government.
1. Innoventive Industries Ltd. vs ICICI Bank and Ors., AIR 2017 SC 4084.
The judgment ensures that there is no parallel proceeding with respect to the same issue and also ensures that the registered office being in India, the Foreign courts cannot take the matter into its hands without a reciprocal arrangement with India.
Additionally, since the provision insisting on the reciprocal arrangement has not been notified by the Central Government, it cannot be presumed to be encouraging the interference of Foreign Courts with respect to the Corporate Insolvency Resolution Process of the Corporate Debtor having its registered office in India.