MANY NCLAT’S VERDICTS WERE OVERTURNED BY SUPREME COURT IN 2019- LANDMARK VERDICTS BY SC
Channel: R V Seckar
Date: 2020-07-27

Though the National Company Law Appellate Tribunal (NCLAT) passed several orders/judgments in the insolvency and corporate matters in 2019 which include Tata-Mistry feud, Essar Steel ,Jet Airways ,IL&FS, Jaypee Infratech, and Reliance Communications Cases, several of them failed to pass the scrutiny of the Supreme Court and were either set aside or modified.
Many Important Cases have to be decided by NCALT during 2020 such as Registrar of Companies (RoC) plea to modify the order passed by it in the Tata-Mistry case, in which it had directed to change the status of Tata Sons from a private company to a public company, the holding firm of USD 110 billion empire

Recently , NCLAT has uphold the supremacy of Section 32A of IBC IN Bhushan Power & Steel Ltd in which JSW has challenged attachment of assets by the ED and NCLAT ordered re-attachment of Bhushan Power assets in 2020. 
NCLAT has to decide in resolution of IL&FS group which has an outstanding debt of over Rs 90,000 crore in 2020 and in McDonald's-Bakshi matter, where state-run HUDCO is opposing settlement offer by US-based QSR major

Cases in which NCLAT orders have been reviewed by Supreme Court in 2019.

Essar Steel insolvency matter NCALT put all the operational creditors of the company almost at par with the secured financial creditors over the disbursement of funds.
NCLAT altered  resolution plan voted by Essar Steel's lenders and approved by NCLT Ahmedabad and was challenged before the Supreme Court. The apex court on November 15 2019, not only upheld the primacy of financial creditors in the distribution of funds received under the corporate insolvency scheme but also ruled that the CoC would have a final say in the resolution plans under the Insolvency and Bankruptcy Code (IBC)
Amtek Auto 


Dhanuka Laboratories for Orchid Pharma
 NCLAT in November 2019 rejected the bid of Dhanuka Laboratories for Orchid Pharma and set aside the approval granted by the Chennai-bench of the NCLT.

The NCLAT observed that the approved resolution value, which stood at Rs 1,146.04 crore, proposed by Dhanuka Laboratories was lower than the liquidation value of Rs 1,309 crore of the company.  This was challenged by the CoC before the Supreme Court which granted a stay on the order December 2019.
Jaypee Infratech In July 2020, the NCLAT permitted fresh bidding for the debt-laden Jaypee Infratech and extended the resolution period for another 90 days. However, in November 2019 ,the apex court annulled the order and allowed only two revised resolution plans from NBCC (India) Ltd and Suraksha Realty for voting.The apex court had directed to complete the resolution process of Jaypee Infratech in 90 days.
La-Fin Financial Services
 The NCLAT order of January l2019 directing initiation of insolvency proceedings against investment firm La-Fin Financial Services over the plea of IL&FS Financial Services had similar outcome at the apex court. 
 The order was set aside by the Supreme Court which held that IL&FS Financial Services plea was beyond the period of three-years mentioned in Article 137 of the Limitation Act, and thus is time-barred and cannot be proceeded further.

Sterling Biotech
In 2019, some of the NCLAT orders also raised eyebrows. The order in case of Sterling Biotech was such a case. The appellate tribunal not only stayed the liquidation of the company but also directed to hand over the management to its promoters, including absconding Nitin Jayantilal Sandesara and Chetankumar Jayantilal Sandesara.
The NCLAT also said that the Enforcement Directorate will probe and ascertain whether the money paid by the absconding promoters is not from the proceeds of crime.
NCLAT sets aside CAIT plea against CCI nod to Flipkart's acquisition by Walmart
A two-member bench of the appellate tribunal said CAIT failed to establish its allegations against CCI granting approval for Walmart-Flipkart deal. NCLAT also said Flipkart was not even made party by CAIT in its plea. "We find no merit in it, accordingly the appeal is dismissed," said NCLAT, upholding the CCI nod to the deal.

CONCLUSIONS
• SC upheld the primacy of financial creditors in the distribution of funds .SC held that CoC would have a final say in the resolution plans under the Insolvency and Bankruptcy Code (IBC) where NCLAT treated both Financial and operational creditors alike.
• SC granted extension of the insolvency resolution process deadline which was refused by NCLAT. 
• SC held that IL&FS Financial Services plea was beyond the period of three-years mentioned in Article 137 of the Limitation Act, and thus is time-barred and cannot be proceeded further.
• NCLAT permitted fresh bidding for the debt-laden Jaypee Infratech and extended the resolution period for another 90 days and the apex court annulled the order and allowed only two revised resolution plans.