1. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
Insolvency and
Bankruptcy Code,
2016.
FAQ’s
on
IBC, 2016

2. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
IBC, 2016 provides a unique opportunity for lenders to control a quick resolution process while
preserving value of the borrowers business
 Time bound framework avoids destruction of value due to delays
 Resolution a business decision by lenders - adjudicator only oversees process
 Distinction between business failure and malfeasance – commercial decision
 Creditor in Control – need to manage business while managing resolution
 Insolvency Professional to drive process – support of accounting, legal, marketing and
business professionals needed for value maximization
 Support ‘ecosystem’ to derive maximum value in minimum time.

3. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
FAQ’s Case Analysis/ Discussions
1. Whether Appeals can be filed by
Corporate Debtors or have to be
filed only by erstwhile directors?
Supreme Court in “Innoventive Industries Ltd” vide order dated 31st
August, 2017 held in para 11, “that once IP is appointed the erstwhile
directors are no longer in Management and obviously cannot maintain
an appeal on behalf of the Company”. But erstwhile directors can file
appeal as “Persons Aggrieved”.
2. Whether the dispute mentioned in
Sec 8 should be a “pre-existing”
dispute for it to be considered
sufficient for rejecting the
application of the Operational
creditors u/s 9 ?
Supreme Court in “Innoventive Industries Ltd” vide Order Dated 31st
August, 2017 held in Para 29 that in case of an application by Operational
Creditors u/s 9 there should be a dispute and it should be pre-existing:
“Under Sec 8(2) the CD can within a period of 10 days of receipt of the
Notice or the copy of the Invoice bring the notice of the OC the existence
of a dispute or the Record of the suit or arbitrator proceedings which is
“PRE-EXISTING” i.e. before such notice or invoice was received by the
CD. The Moment there is existence of such dispute the CD is out of the
clutches of the Code.”
3. Whether “dispute” of the Debt is
relevant in case of application by
Financial creditors or mere due
and default is sufficient?
In Innoventive Industries Limited, Supreme Court vide its Order
dated 31st
August, 2017 in para 30, held that, “in case of application by
the Financial Creditors under Section 7, it is no matter that the debt is
disputed so long as the debt is “DUE”.
“In case of sec 7, it is no matter that the debt is “due”. i.e. Payable
unless interdicted by some law or has not yet become due in the sense it
is payable at some future date.
4. Whether Success of “dispute” is
relevant or not in deciding in
application u/s 9 filed by the
operational creditor?
SC in Mobilox Innovations v/s Kirusa Software Pvt Limited vide
order dated 21st
September, 2017 held in para 40 that there must be a
dispute and it must be pre-existing. For deciding the existence of dispute
the success is not relevant and the fact that it may require further
investigation is also not relevant. But, the dispute must not be a feeble
argument.

4. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
5. Whether “dispute” in Sec 8(2)(a), IBC
2016 requires that the dispute must be in
form of a suit or arbitration since it uses
the word “and” along with the word
dispute.
In Mobilox Innoventive v/s Kirusa Software Private Limited decided
on 31.08.2017, the SC held in para 29 that there cannot be a case of
ousting disputes on the ground that it is not backed up by suits or
arbitration since the word ‘and’ is used. It held that the word “and
“should be read as “OR”. This will facilitate all disputed cases (whether
suit filed or not) to be outside IBC provided they are pre-existing.
6. What is to be seen while
Examining an application under section
9 filed by the operational creditor?
Supreme Court in Mobilox Innovations v/s Kirusa Software Pvt
Limited vide its order dated 21st
September, 2017 held in para 25 that :
While examining application under section 9:
 Whether there is an ‘operational debt ‘as defined exceeding Rs.
1,00,000 (Sec 4)?
 Whether the documentary evidence furnished with the
application shows that the aforesaid debt is “due & Payable &
has not yet been paid”?
 Whether there is existence of a dispute between the parties OR
the record of the pendency of the suit or arbitration proceedings
filed before the receipt of the demand notice of the Unpaid
Operational Debt?
If any one condition of the above is lacking, then the application is liable
to be rejected.
7. Whether the various Time Lines
prescribed (14 days for disposal of
application etc) are recommendatory
and not Mandatory?
In Surendra Trading Company v/s. Juggilal Kamlapat Jute Mills
Company Limited and Others the Supreme Court held in its order
dated 19th
September 2017 that “the timelines provided in Sections 7, 9
and 10 for deciding a matter within 14 days as well as the time to remove
a defect within 7 days are directory and not mandatory.”

5. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
8. Whether Arbitration Proceedings
After The Imposition Of Moratorium
Under Sec 14 Of Insolvency And
Bankruptcy Code can be initiated?
In Alchemist Assets Reconstruction Co. Ltd v/s Hotel Gaudavan Pvt
Ltd Supreme Court held vide Order dated October 23, 2017 that
arbitration proceedings instituted after the imposition of moratorium
under Section 14 of the Insolvency and Bankruptcy Code, 2016 are non-
est in law.
Allowing the appeal, the Hon’ble Supreme Court held the following:
“The effect of Section 14(1)(a) is that the arbitration that has been
instituted after the aforesaid moratorium is non est in law”. Thus, the
Hon’ble Supreme Court set aside the order of the District Judge
entertaining the appeal under Section 37 of the Arbitration Act with
respect to the arbitration proceeding started after the imposition of
moratorium under the Code.”
9. Whether Insolvency Resolution
Professional can continue administration of
the Corporate Debtor beyond 30 days until
replacement by NCLT?
In Anil Kumar v/s Rolex Cycles Private Limited (NCLT Chandigarh)
held on 8th
September, 2017 that as per Sec 16(5) of IBC, 2016 the
tenure of Insolvency Resolution Professional (IRP) cannot exceed 30
days. The COC is required to file change of IRP u/s 22(3). Till then, he
will continue to perform his duties.
The NCLAT in Rolex Cycles Private Limited decided 22nd
September
2017 relied upon Section 27 “Replacement of RP by CoC” and held
that the IRP will continue doing “ day to day routine work” as per the
IBC, beyond the period of 30 days.
10. Whether Corporate Debtor’s must
disclose all relevant information as per IBC
2016 in the application u/s 10?
In Unigreen Global Private Limited, NCLT Principal Bench, in its
Order dated 8th
May 2017 held that “the CD needs to disclose all the
relevant information as per IBC, 2016.” NCLT stated that “the
petitioners had not come with “clean hands” before the tribunal in
bringing out the necessary facts and dismissed the application filed by
the CD. Reversing this the NCLAT in its Order dated 1st
December
2017 held that there is no requirement of IBC, 2016 to disclose
anything beyond what is prescribed in the code and in the Forms. Suits
are not required to be disclosed and not a ground for rejection of
application.
11. Whether tenants of immovable
properties whose rents remain unpaid are
operational creditors?
In Jindal Steel & Power Limited v/s. DCM International
Limited (Insolvency), NCLAT, in its Order dated 28th
November
2017, held that, “despite the applicant been the tenant of the CD, the
applicant cannot be treated as Operational creditor as it is not against
the goods and the services.”

6. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
9. Can IBC override all the State Laws In Innoventive Industries Ltd v/s ICICI Bank Ltd Civil Appeal no.
vide MRU [Maharashtra Relief 8337-8338/2017, Supreme Court in its order dated 31st
August, 2017 held
Undertakings (Special Provisions Act), that the Central Act “IBC” shall prevail over State Act “MRU”.
1958]?
10. Can a Credit Balance in an account of In R.P of Amtek Auto v/s 1ndian Overseas Bank (IOB), NCLT
the Corporate Debtor with Financial (Chandigarh) held in its order dated October 2017 [confirmed by
Creditor be set off or adjusted against the NCLAT on 15.11.2017] that “the bank cannot appropriate the amount
debit balance of the Corporate Debtor with lying in any of the CD’s account set-off of debt, as it will be in
the same Financial Creditor? contravention of the moratorium. The Institution should transfer the
monies within 15 days of the receipt of the Order.”
11. Whether Personal Guarantees of
Guarantors for loans given to Corporate In SBI vs. Veesons Energy Systems & V. Ramakrishnan, NCLT
Debtor can be enforced during CIRP Chennai, in its Order dated 18th
September 2017, held that “the FC is not
process? permitted to sell of the assets and properties of the personalguarantors.”
The NCLT held that where the promoters repay the loan they will get a
charge on the property under section 140 of the Contract Act, and the same
amounts to creating an Encumberance which is prohibited u/s 14 of the
IBC, 2016. [Confirmed by NCLAT on 25.02.2018]
On 6th
September, 2017, a similar stand was taken by the Allahabad High
court in, Sanjeev Shriya vs. State Bank of India it was decided that“ When
the CIRP Process is on, the liability has not been crystallized either
against the CD or the guarantor then the proceedings against the
principal CD cannot go on & the same is stayed till the finalisation of
CIRP or till the NCLT approves the Resolution Plan as the case maybe.
(Para 31)”
In Pheonix ARC Private Limited vs. Schweitzer Systemtek India
Private Limited the NCLT order dated 9th
August, 2017 ruled that the
word “its” in Section 14(1) only refers to the properties and security
interest of the Corporate Debtor, not the promoters or guarantors.
12. Whether Acquisition of Piecemeal In Roofit Industries the NCLT Mumbai order dated ……. January 2018,
assets without resolving the entire Debt of held since no plan was received except the factory, it cannot be considered
the company is Resolution under the Code? as the resolution under the code and therefore a Piecemeal Resolution is
no resolution under the code and liable to be not considered.
14. Can a Power of Attorney holding (not In Palogix Infra Pvt Ltd v/s ICICI vide order dated 20.09.2017:
being Authorised Representative) file an
application under the Code?  Held in Para 36 that” Power of Attorney can be Authorized
Representative”. And such persons can file an application on behalf
of the FC.
If the Power of Attorney is not an Authorised Representative then the court
ruled that the person is not competent to apply, under section 7.
16. Whether Appointment of Resolution In Edelweiss ARC v/s Raj Oil Mill NCLT Mumbai order dated 15th
Professional can be confirmed even where September 2017 held that “The IRP moved an application in the NCLT to
the voting was less than 75% for his remove the deadlock which requires 75% of the voting share of FCs to either
appointment and resulted in deadlock? appoint or replace the IRP as RP.”
As per IBC it states that the largest stakeholder should be taken into account
while choosing an RP and that FCs with the largest percentages of voting
rights in CoC should be given preference over stakeholders with a nominal
percentage of voting rights.
IBC, 2016
15. Where Resolution Professional does
not gets Co-operation from Corporate
Debtor to take over the Corporate Debtor,
whether assistance of police and local
administration can be granted?
In Rolex Cycles Private Limited, NCLT, Chandigarh vide order dated
8th
September, 2017 directed police assistance and protection. Also in
Muskaan power Infrastructure Limited NCLT Chandigarh decided on 13th
October 2017, bailable warrants were issued.
16. Whether the code of conduct of IP in
First schedule of IBBI (Insolvency
Professional) Regulation 2017 requires
that IPs should not take too many
assignments?
In IDBI Bank Ltd v/s Lanco Infratech Ltd, NCLT Hyderabad y order
dated 7th
August 2017 that an IP should not take too many assignments.
However, no limit on number was prescribed.
14. Whether where winding up has been
ordered by the High Court, can IBC be
invoked?
13. Whether the Corporate Debtor was a
guarantor of Loan taken by an associate
fromthe Financial creditor. Whether IBC
can be invoked against the guarantor?
12. Where IRP is nominated by Two
Financial Creditors, Standard Chartered
Bank (SCB) application was earlier than
that of State Bank of India SBI but the
loan outstanding (And consequently
voting power) of SBI was larger than
SCB, which IRP was to be selected?
In Essar Steel India Ltd v/s Standard Chartered Bank (SCB) & SBI
the NCLT Ahmedabad Order dated 2nd
August’ 2017 held that “ the IRP
nominated by SBI and Joint Lenders Forum (JLF) lenders is to be
appointed as they would have had a larger share in the CoC.”
In Anil Nutrients Limited v/s. Reliance Commercial Finance Limited
the NCLT Ahmedabad, in its order dated 10th
August 2017, held that where
a Corporate Debtor issues a guarantee to the Financial Creditor for the Loan
taken by its associates, the Financial creditor can invoke IBC against the
Corporate Debtor as it was a Financial Creditor by virtue of being a
guarantor of the loan taken by the associates and a default on payment of
Corporate Guarantee so invoked amounts to default of Financial Debt. It is
not necessary to invoke IBC against the borrower.
In Innoventive Industries Ltd v/s Kumar motors Pvt Ltd NCLAT (New
Delhi) Order dated 09.02.2018 held that the winding up has been ordered,
IBC cannot be invoked. NCLAT relied upon its own orders in Unigreen
Global Pvt Ltd v/s Punjab National Bank (NCLAT New Delhi) order dated
1st
December, 2017 and Forech India Pvt Ltd v/s Edelweiss Asset
Reconstruction Co. Ltd dated 23rd
November 2017

7. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
17. Where Personal Guarantors of a
Company who paid the Financial
Creditors its dues, whether such
guarantors become Financial Creditor’s
themselves?
In Davindra Ahluwalia & Mamta Ahluwalia v/s Summit Aviation
Private Limited. NCLAT vide its order dated 9th
February, 2018 held
that the Personal Guarantors do not become financial creditors of the
Corporate Debtor. The Tribunal held in para 18 and 19 that such payment
is not amount “ disbursed” in favour of Corporate Debtor against
consideration for the true value of money and are not Financial Creditor
as defined under sub section 7 read with sub-section 8 of Section 5 of
IBC, 2016.
18. Whether money suits ( even before
High Court under original jurisdiction)
or suits for recovery can be proceeded
with once moratorium under section 14 of
the code is in effect ? Whether such
moratorium will affect any suit before
Supreme Court under article 32 or order
passed under article 136 or the power of
the High Court under article 226 of the
Constitution?
In Canara Bank v/s Deccan Chronicle Holdings Ltd , NCLAT, in Order
Company Appeal (AT) (Insolvency) No. 147 of 2017 14th
September,
2017, held that that once moratorium under section 14 of the code is in
effect money suits (even before High Court under original jurisdiction) or
suits for recovery cannot be proceeded with.
However, the moratorium will not affect the Supreme Courts power or
the High Court power under article 226 of the Constitution.
19. Whether share application money
pending due to non-allotment is to be
treated as a financial debt ?
In Engenious Engineering Private Limited v/s. Onaex Natura Private
Limited CA (AT) (Insolvency) No. 249 of 2017, NCLT in its Order dated
1st
November 2017 held that that even though such amount has been shown
to be a debt, does not mean that the appellant is a financial creditor and
such a debt is a financial debt
20. Whether Supreme Court has powers
under Article 142 of the Indian
Constitution to settle the dispute after the
initiation of CIRP?
In Lokhandwala Kataria Construction Private Limited v/s. Nisus
Finance and Investment Manager LLP Supreme Court, 24th
July, 2017
and in Mother Pride Dairy India Pvt ltd v/s. Portrait Advertising &
Marketing Private Limited, 28th
July, 2017 held that Supreme Court has
power to restrict the dispute using Article 142 of the Constitution and call
of the CIRP.
21.Whether the code empowers the
adjudicating authority to review the
earlier scheme sanctioned under BIFR?
In Hada Textile Industries Limited, NCLT (Kolkatta) in its Order dated
13th
November 2017 held that there is no provision under the IBC for the
adjudicating authority to review the earlier scheme sanctioned under BIFR.
Further, the adjudicating authority is not authorised to extend the terms of
the scheme so sanctioned.

8. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
22. Whether any prior permission of
adjudicating authority is required at
every stage of liquidation in view of the
words “Subject to direction of
Adjudicating authority the liquidator
shall have the following powers and
duties” in section 35 of the code?
In Nicco Corporation Limited the NCLT Kolkata in its order dated 24th
November 2017 held that the liquidator has to exercise his power under IBC
and does not require prior permission of NCLT for every action to be
performed. The adjudicating authority further recommended to the
liquidator to form a committee of financial creditors in order to monitor the
work of the liquidator.
23 . Whether Corporate guarantee can be
invoked on the Corporate Debtor during
CIRP and a claim can be made as a
Financial Creditor?
In Axis Bank v/s Edu Smart Services Private Limited NCLT- Delhi
Order dated 27th
October 2017 it was held that the Financial Creditor had
invoked corporate guarantee on the Corporate Debtor for loans granted to
its associates. This was invoked after the CIRP commencement date and a
claim u/s 14 filed as a Financial creditor. The RP rejected the claim of the
Financial Creditors stating that such claim could not be admitted as
guarantee could not be invoked because the CD has a moratorium in place.
The hon’ble NCLT upheld the stand taken by the RP and dismissed the
application filed by Financial creditors
24. Whether the adjudicating authority
has jurisdiction to examine the reasons
for rejection of a resolution plan by the
CoC ?
In Gupta Coal India Pvt Limited, NCLT in its order dated 1st
December
2017, held that NCLT does not have any jurisdiction to examine the reasons
for rejection of a resolution plan and it is the prerogative of the CoC whether
to approve or disapprove a resolution plan and further, it was bound to pass
liquidation order.
It is only when a resolution plan is approved by the CoC that NCLT can go
into the merits of the plan and the CoC decision.
25. Whether transfer of debt by a related
party to a non-related party could wash
away the status of related party nearly on
the ground that an assignment was made
with the non- related party for a
consideration ?
In Fortune Pharma Private Limited, NCLT Mumbai, in its Order dated
13th
November 2017, held that by an assignment, the assignee does not get
the right to change the status from related to unrelated vis-a vis the
impugned debt where the sole objective of the assignment was to reduce the
voting power of existing financial creditors.
26. Whether if the final outcome is
liquidation, can an application for
extension beyond 180 days be granted?
In REI Agro Limited, NCLT Kolkata, in its Order dated 24th
August
2017, held that “as the ultimate result of the applicant would be liquidation,
there is no justifiable reason for allowing extension. In such cases, NCLT
held that it would be appropriate to order liquidation of the corporate
debtors.”

9. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
27.Where winding up petition is admitted
or/and a provisional liquidator has been
appointed, can IBC 2016 be invoked ?
In Jotun India Private Limited vs. PSL, the Bombay High Court in
its order dated 5th
January, 2018 held that where winding up petition is
admitted or/and a provisional liquidator is appointed, it is not a bar for
initiating IBC in view of section 238 of the IBC which over rides.
Also, NCLT in its order dated 18th
July, 2017 in Industrial and C.B. of
China v/s. Alok Industries held similar view
28. Whether the Corporate Debtor must be
heard before passing an order of admission
following principle of Natural Justice?
In the case of Innoventive Industries Limited dated 05.05.2017 and
Starlog enterprises Limited dated 24.05.2017, NCLAT held that the
Corporate Debtor must be given an opportunity of being heard before
admitting the application. However the NCLAT in the case of
Innoventive Industries Limited observed in para 41,41 and 42 after
referring to Supreme Court in S. L. Kapoor v/s Jagmohan & Ors
(1980) 4 SCC 379 that “where such notice would be a “useless
formality” there is no denial of natural justice if notice is not given. This
was applied by NCLAT in K.S. Rangasamy v/s SBI (in the matter of
Summer India Textiles Mills Private Limited) where vide order dated
06.03.2018 it held that the notice although not given would be a useless
formality and therefore there was no denial of natural justice.
29.Whether the certificate of bankers is to be
attached to the application by the
operational creditor under section 9 where
the operational creditor is a foreign
operational creditor?
In Shilpi Cables Tech Ltd v/s Macquarie Bank Ltd, the Supreme
Court held in order dated 15th
December 2017 that the certificate is not
to be furnished by foreign operational creditors.
30. Whether application by lawyers or
advocates can act as authorised persons and
sign the application under section 9 on behalf
of operational creditors?
In Shilpi Cables Tech Ltd v/s Macquarie Bank Ltd, the Supreme
Court held in its order dated 15th
December 2017 that lawyers or
advocates can act as authorised persons and sign the application under
section 9 on behalf of operational creditors.
31. Whether Form 2 filed by RP giving
consent while filing application to the
adjudicating authority requires RP to give
the optional certificate?
In Essar Power (Jharkhand) Private Limited, NCLT in its order
dated 16th
January 2018 held that it is not appropriate for the RP to
give such an optional certificate as it shows bias and further IBBI
should consider amending Form 2 so as to delete the optional part.

10. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016.
32. Can a Power of Attorney holding (not
being Authorised Representative) file an
application under the Code?
In Palogix Infra Pvt Ltd v/s ICICI vide order dated 20.09.2017:
 Held in Para 36 that” Power of Attorney can be Authorized
Representative”. And such persons can file an application on
behalf of the FC.
 If the Power of Attorney is not an Authorised Representative
then the court ruled that the person is not competent to apply,
under section 7.
33. Whether statutory dues have to be paid
in full in a resolution plan?
In Trinity Auto Company Ltd, NCLT in its order dated 22nd January
2018 that in a resolution plan, no statutory dues are to be paid in full
and no deduction is to be allowed even though they are operational
creditors. This view was confirmed by the NCLAT in its order dated
9th March 2018.
34. Whether Claims are mandatorily
required to be filed within 14 days as
required by Section 15(1) of the IBC, 2016
read with regulation 6 (2) of IBBI (
Insolvency Resolution Process for Corporate
Persons) Regulations, 2016?
In Moser Baer v/s Alchemist NCLT vide order dated 31St
January 2018
held that claims are to Be mandatorily filed with 14 days and claims are
not to be accepted beyond 14 days inspite of regulation 12 (1) and 12(2)
which allows claims to be filed upto the date of resolution plan.
35. Whether Appointment of Resolution
Professional can be confirmed even where
the voting was less than 75% for his
appointment and resulted in deadlock?
In Edelweiss ARC v/s Raj Oil Mill NCLT Mumbai order dated 15th
September 2017 held that “The IRP moved an application in the NCLT
to remove the deadlock which requires 75% of the voting share of FCs
to either appoint or replace the IRP as RP.”
As per IBC it states that the largest stakeholder should be taken into
account while choosing an RP and that FCs with the largest percentages
of voting rights in CoC should be given preference over stakeholders
with a nominal percentage of voting rights.
36.Whether the period of limitation should
be counted in all cases from 1st December
2016 when IBC came into force even if it is
held that the limitation act is applicable?
In Speculum Plast Private Limited v/s PTC Techno Pvt Ltd vide
order dated 21st
April, 2017 (Para 24) the NCLAT held that even if it is
held that the limitation act is applicable the same should be counted
from 1st
December 2016 when the right to apply under the Act arouse.

11. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
37. Whether the Limitation Act applies
to proceedings under IBC ?
In Black Pearl Hotels Pvt Ltd v/s Planet M Retail Limited NCLAT
(New Delhi) Order dated 17th
October 2017 held that the Limitation Act
does not apply to proceedings under IBC. Also see Ellora Paper Mills
NCLAT 15th
December, 2017 and Speculum Plast Pvt Ltd dated 7th
November, 2017.
38. Whether Acquisition of Piecemeal
assets without resolving the entireDebt
of the company is Resolution under the
Code?
In Roofit Industries the NCLT Mumbai order dated 22nd
January 2018,
held since no plan was received except the factory, it cannot be considered
as the resolution under the code and therefore a Piecemeal Resolution is no
resolution under the code and liable to be not considered.
39. Whether Personal Guarantees of
Guarantors for loans given to
Corporate Debtor can be enforced
during CIRP process?
In SBI vs. Veesons Energy Systems & V. Ramakrishnan, NCLT
Chennai, in its Order dated 18th
September 2017, held that “the FC is not
permitted to sell of the assets and properties of the personal guarantors.”
The NCLT held that where the promoters repay the loan they will get a
charge on the property under section 140 of the Contract Act, and the same
amounts to creating an Encumberance which is prohibited u/s 14 of the
IBC, 2016. [Confirmed by NCLAT on 25.02.2018]
On 6th
September, 2017, a similar stand was taken by the Allahabad High
court in, Sanjeev Shriya vs. State Bank of India it was decided that“ When
the CIRP Process is on, the liability has not been crystallized either against
the CD or the guarantor then the proceedings against the principal CD
cannot go on & the same is stayed till the finalisation of CIRP or till the
NCLT approves the Resolution Plan as the case maybe. (Para 31)”
In Pheonix ARC Private Limited vs. Schweitzer Systemtek India
Private Limited the NCLT order dated 9th
August, 2017 ruled that the
word “its” in Section 14(1) only refers to the properties and security
interest of the Corporate Debtor, not the promoters or guarantors.
40. Can IBC override all the State
Laws vide MRU [Maharashtra Relief
Undertakings (Special Provisions Act),
1958]?
In Innoventive Industries Ltd v/s ICICI Bank Ltd Civil Appeal no.
8337-8338/2017, Supreme Court in its order dated 31st
August, 2017 held
that the Central Act “IBC” shall prevail over State Act “MRU”.

12. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC, 2016
41. Can a Credit Balance in an account
of the Corporate Debtor with Financial
Creditor be set off or adjusted against
the debit balance of the Corporate
Debtor with the same Financial
Creditor?
In R.P of Amtek Auto v/s 1ndian Overseas Bank (IOB), NCLT
(Chandigarh) held in its order dated October 2017 [confirmed by
NCLAT on 15.11.2017] that “the bank cannot appropriate the amount
lying in any of the CD’s account set-off of debt, as it will be in
contravention of the moratorium. The Institution should transfer the
monies within 15 days of the receipt of the Order.”
42. Whether NCLAT can entertain an
appeal beyond 45 days u/s 61 of the
IBC, 2016? [30 days for filing the
appeal and 15 days more for sufficient
reasons]
The NCLAT in Custodial Services (I) Pvt Ltd vide order dated 20th
November,2017 held that no appeal can be entertained by NCLAT
against the orders of NCLT beyond 45 days under section 61 of the
IBC, 2016 as NCLAT has no power to condone the delay beyond 45
days.
43. Whether suits can be initiated/
defended by the corporate debtor
undergoing Corporate Insolvency
Resolution Process or are these suits
affected by Sec 14 of the IBC,2016?
The Delhi High Court in Power Grid Corporation of India Pvt Ltd
v/s Jyoti Structures Ltd vide order dated 11th December, 2017 held
that there is no bar in Section 14 for the Resolution Professional of
the Corporate Debtor undergoing CIRP to file suit for recovery or
defended suits by the Corporate Debtor. The moratorium provisions
of Section 14 only restricts suits from being filed against the
Corporate Debtor recovery.

13. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
IBC,2016
44. Whether the application for extension
can be filed beyond 180 days?
In Quantum Limited, the NCLAT vide order dated 20th
February, 2018 held that there is no restriction on filing the
application for extension beyond 180 days. The only
requirement is that the CoC must pass the resolution with
minimum 75% of the voting share before the 180th
day.
45. Whether the period of 180 days or 270
days can be extended by the number of
days?
In Quinn Logistics Pvt Ltd, the NCLAT vide order dated 8th
May, 2018 held following Quantum Ltd (NCLAT order dated
20th
February, 2018) and Amar Remedies (NCLAT order dated
5th
March, 2018), Shilpi Cables Technologies Ltd ( NCLAT
order dated 22nd
January, 2018 ) held that the period where the
process is legally stayed / stalled [due to stay, due to non-
functioning by Resolution Professional, due to delay in taking
charge by Resolution Professional etc]is required to be excluded.
46. Whether the NCLT can entertain the
application filed for stay of orderin case of
delisting of shares of the Corporate
Debtor?
In Jitender Kumar Jain v/s BSE Limited and Ors, the
Adjudicating Authority vide order dated ……. , held that no
such application by the Resolution Professional can be
entertained as the action by the company is neither connected to
the prohibitions u/s 14 of the IBC, 2016 nor inconsistent u/s 238
of the Act and hence the application was dismissed.
47. Whether Corporate Debtor under
SARFAESI Act or under the proceedings
of DRT can enjoy the benefits of
moratorium period and not commence the
CIRP under the Code?
In Bharatbhai Vrajlalbhai Selani v/s State Bank of India the
NCLT vide order dated 21st
August, 2017 held that the initiation
of CIRP cannot be delayed merely on the ground that the
Corporate Debtor is under the proceedings of the SARFAESI
Act and in the DRT, in view of the overriding effect given to
Sec238 of the IBC, 2016.
48. Whether CIRP can be initiated against
personal guarantors of the Corporate
Debtors which is under CIRP inspite of the
provisions relating to individuals not being
notified?
In ICICI Bank Limited v/s Vista Steel Pvt Ltd the
NCLATvide order dated 2nd
May, 2018 held that there is no
prohibition for initiating CIRP against the personal guarantors of
the Corporate Debtor who is under CIRP inspite of the
provisions relating to individuals not being notified u/s 60 of the
Code. This involves that an application u/s 7 would have been
brought in by the Financial creditors against such guarantors.
IBC, 2016

14. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
49. Whether the NCLT can reject an
application for the lack of documenting
evidence?
In Smt. Srikanta Sarda v/s Tansway marketing Private Ltd
the NCLT vide order dated4th
December, 2017, the application
filed by the Financial creditor can be rejected by the NCLT for
the lack of proper document evidence.
50. Whether the IBC Process leads to
terminate or interrupt the Corporate
Debtor from the essential goods or
services?
In Super Multi Colour Printers Pvt Ltd vide order dated 7th
April, 2017, it was held that no essential goods or services of
any of the Corporate Debtors should be terminated, suspended or
interrupted during the moratorium period.
However, in Innoventive Industries Limited, the NCLAT vide
order dated 6th
October, 2017 held that electricity is not covered
under moratorium period and therefore is not an essential
service.
51. Can a IRP be considered as the
Resolution Professional inspite of having
other pendency of disciplinary
proceedings?
In Sharvan Kumar Vishnoi v/s Crown Alba Writing
Instrument P. Ltd, the NCLAT vide order dated 28th
May,
2018, declined to interfere with the impugned order of the
Adjudicating Authority i.e NCLT vide order dated 10th
May,
2018 in which “the IRP unilaterally changed by the Adjudicating
Authority on the ground that he has one case pending of
disciplinary actions”
The NCLAT declined to interfere inspite of no resolution for
change has been passed by the Committee of Creditors.
IBC, 2016

15. Alok K Saksena
Resolution Professional
Desai Saksena & Associates
52. Whether the NCLT can order change
the RP on the ground that the RP is not
independent / Transparent under the code?
In Alchemist Asset Reconstruction Co. Pvt Ltd v/s NIIL
Infrastructure Pvt Ltd, the NCLT Delhi vide order dated 29th
May, 2018 held not to appoint the Resolution Professional who
is representing the panel of the Bank of Baroda, a member of the
CoC on the grounds of eligibility of an RP to be an independent
and biased person to a CoC member and therefore recommended
for change of the RP. NCLT Delhi held similarly in Mussadi Lal
Kishan Lal vide order dated 15th
May, 2018.
53. Whether the claims can be accepted
untill the approval of the Resolution Plan?
In Innovsource Pvt Ltd v/s Getit Grocery Private Limited the
NCLT Delhi vide order dated 29th
May, 2018 held that claims
can be accepted upto the approval of the resolution plan. The
NCLT Delhi has reversed its own decision in Moser Baer India
Limited v/s Alchemist Asset Reconstruction Co. Ltd.
IBC, 2016

16. Alok K Saksena
Resolution Professional
Desai Saksena & Associates