By Rishi Raj, Student at MNLU Aurangabad
The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “Code”) serves two purposes: (i) saves the business that is viable; and (ii) facilitates the exit of those that are not viable. The rescue mechanism is achieved through a Corporate Insolvency Resolution Process (CIRP) under Part II of the Code, and the exit mechanism is dealt through a liquidation process under Part III of the Code.
Continue reading “Interplay Between the Companies Act and IBC: A Positive or Negative Impact on Liquidation Process?”
By Aryan Sharma and Sakshi Agarwal, Students at Institute of Law (Nirma University)
The Reflective loss rule bars or disables the claim brought by shareholders for any personal loss suffered by him due to diminution in the market value of his shares or diminution in dividend because of “loss” in the company, or diminution in value of net assets of the company, and such claim is barred because the “loss” is merely “reflective” of the loss suffered by the company. The origin of this rule can be traced to the case of Foss v. Harbottle, wherein the UK Court of Chancery held that whenever an actionable wrong is done to the company, then only the company can bring a claim as a “proper plaintiff”.
Continue reading “Tracking the Reflective Loss Rule and Its Implications in Various Jurisdictions”
By Anushka Rungta, Student at Maharashtra National Law University Mumbai, and Pratik Irpatgire, Alumnus of Maharashtra National Law University Mumbai and Advocate
Powers of NCLT to refer the dispute to Arbitration
The Indian legal position with respect to adjudication of Insolvency by arbitration tribunal has always been under paradox due to availability of alternative remedies as prescribed under IBC Laws. §8 and 45 of the Arbitration Act endows the judicial authority to refer the dispute to the arbitration tribunal as prescribed by the arbitration clause. However, the Supreme Court in its several earlier attempts has particularly ruled out the powers of the NCLT or Company Law Board with respect to the adjudication of application under Insolvency or Winding up of the company.
Continue reading “The Conundrum of Arbitrability of Insolvency Disputes: Need for a legal framework and proactive role of appropriate forum [Part II]”
By Ayushi Bhutra, Student at National Law University, Nagpur
The rights of homebuyers under insolvency proceedings have been under the scanner for a while. Earlier, the homebuyers were under the head ‘other creditors’ and they did not fall under the category of ‘financial’ or ‘operational creditor’. However, the legislature through the Insolvency and Bankruptcy Code (Second Amendment) Act of 2018 has brought the allottees as per RERA under the category of Financial Creditors. This was constitutionally challenged before the Supreme Court of India in the case of Pioneer Urban Land & Infrastructure v. Union of India. However, the Supreme Court has upheld the validity of the amendment and stated that there is nothing wrong in this classification. Through this article, I argue in disagreement with the Supreme Court judgment and will also lay down the reasons of such disagreement.
Continue reading “The Status of Homebuyers as Financial Creditors: Is the Law Clear?”
By Rukmini Mukherjee, lawyer based out of New Delhi and currently pursuing her LLM from Jindal Global Law School
The legal conundrum governing the position of at what stage winding up petitions pending before the High Courts (“ Company Court”) are to be transferred to the National Company Law Tribunals (“NCLTs”) have undergone various judicial pronouncements, debates and legislative amendments. The question of at what stage can a winding up petition be transferred has been recently dealt with by the Hon’ble Supreme Court in Action Ispat And Power Pvt. Ltd. Versus Shyam Metalics And Energy Ltd. This post will analyze this judgment in light of the provisions relating to winding up under the Companies Act 2013 to highlight how the same does not quite fit in within that framework.
Continue reading “To Transfer or Not to Transfer: An analysis of the Supreme Court’s decision in Action Ispat and Power Pvt Ltd v. Shyam Metallics and Energy Ltd”
Akshaya Kamalnath, Lecturer, Auckland University of Technology
The current focus on the monitoring role of the board has come under much criticism. Independent directors play a significant role in this model. However, their ability to truly function independently has been rightly questioned in the last decade. Independent directors are impeded by two main problems: lack of access to relevant information, for which they are reliant on management; and the high likelihood of being captured (to varying degrees) by management. There have been various suggestions to fix these problems, ranging from enhancing board diversity to drastically reforming the current model of corporate boards.
Continue reading “STRENGTHENING BOARDS THROUGH DIVERSITY – A TWO-SIDED MARKET THAT CAN BE EFFECTIVELY SERVICED BY INTERMEDIARIES”
Anurag Mohan Bhatnagar and Amiya Upadhyay, National Law University Odisha
Recently, the National Company Law Appellate Tribunal (NCLAT) passed a decision wherein it ruled that the locus standi to approach the Competition Commission of India (CCI) shall only be restricted to the person who has suffered harm because of anti-competitive practices in the market. This has created a major turmoil in the competition law regime since the decision is in disregard of the intent of the legislature and settled principles of interpretation. Axiomatically, the term “any person” as under Section 19(1)(a) of the Competition Act, 2002 (Act) acts as a gate through which multiple entities can reach the commission with complaints of anti-competitive practices. The provision also ensures healthy competition in the market of India. However, it does not have a mechanism to filter-out ill-motivated and frivolous complaints reaching CCI.
Continue reading “Samir Agarwal vs CCI – NCLAT’s Erroneous Approach Towards Locus Standi”
Chetan Saxena, 4th-year student, Institute of Law, Nirma University.
The National Company Law Tribunal [NCLAT] on February 28th, 2020 in Pacific World Shipping PTE Ltd. v. Dadi Impex Pvt. Ltd. and Ors. ruled that the tribunal cannot examine the commercial wisdom of the Committee of Creditors [CoC] and refuted the appellants’ argument of discriminatory treatment of the Operational Creditors as supposed to that of the Financial Creditors.
Continue reading “To Discriminate or Not to Discriminate: NCLAT’s ruling on differential treatment of the creditors”