Newsletter ARBITRATION AND CONCILIATION ACT, 1996 JANUARY, 2022 WHETHER ARBITRAL AWARD CAN BE CHALLENGED ON THE GROUNDS OF NON-APPRECIATION OF FACTS ON PART OF ARBITRATOR  OR NOT ? Recently the Hon’ble Supreme Court held that an arbitral award cannot be challenged on the ground that the arbitrator had drawn his own conclusion or had failed to appreciate facts. The Hon’ble Supreme Court pronounced that the scope of the provisions for challenge of an arbitral award are limited and courts should not reassess or appreciate evidence or examine sufficiency of evidence in the exercise of the same. Only a patent error or misconduct of the Arbitrator or the proceedings could justify court's interference. The Hon’ble Supreme Court relied on Kwality Manufacturing Corporation v. Central Warehousing Corporation, Arosan Enterprises Ltd. v. Union of India And Anr., Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr. And Rajasthan v. Puri Construction Co. Ltd. And Anr. Read More... WHETHER AN ARBITRATOR CAN BE APPOINTED BY A PARTY PERSUANT TO AN APPLICATION FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 OR NOT? Recently, a division bench of Hon’ble Supreme Court comprising of Justice Ajay Rastogi and Justice Abhay S. Oka noted that once an arbitration petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 notice should be served to the Respondent. If the Petitioner sleeps over the matter and fails to pursue its application and does not participate in the proceedings after filing its statement of claim, an ex-parte award shall be passed. In the instant case, Arbitrator was appointed by the Respondents after arbitration petition was filed by the Petitioner. The notices in the Arbitration Petition were issued to Respondents almost three years after passing of the ex-parte award. Thus, the petition under Section 11(6) of the Act was dismissed by the High Court. The said decision was upheld by the Hon’ble Supreme Court. However, the Hon’ble court also observed that the present case is different from the settled law entailed in Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. and followed in Punj Lloyd v. Petronet MHB Ltd. i.e. that once an application under Section 11(6) of the Act is filed to appoint an Arbitrator before the High Court, the Respondents forfeit its right to appoint an Arbitrator and the High Court alone holds jurisdiction to appoint an Arbitrator in terms of Section 11(6) of the Act. Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 WHETHER APPLICATION UNDER SECTION 95 OF THE IB CODE, 2016 IS MAINTAINABLE IN TH ABSENCE OF ANY APPLICATION SEEKING CIRP PROCESS OF THE CORPORATE DEBTOR? Recently, Hon’ble NCLAT in the matter of State Bank of India versus Mahendra Kumar Jajodia, held  that Sub-Section 1 of Section 60 provides that Adjudicating Authority for the corporate persons including corporate debtors and personal guarantors shall be the NCLT. The Sub-Section 2 of Section 60 requires that where a CIRP or Liquidation Process of the Corporate Debtor is pending before ‘a’ National Company Law Tribunal the application relating to CIRP of the Corporate Guarantor or Personal Guarantor as the case may be of such Corporate Debtor shall be filed before ‘such’ National Company Law Tribunal. The purpose and object of the sub-section 2 of Section 60 of the Code is that when proceedings are pending in ‘a’ National Company Law Tribunal, any proceeding against Corporate Guarantor should also be filed before ‘such’ National Company Law Tribunal. The idea is that both proceedings be entertained by one and the same NCLT. The sub-section 2 of Section 60 does not in any way prohibit filing of proceedings under Section 95 of the Code even if no proceeding are pending before NCLT. Read More... WHETHER PRINCIPAL  AND INTEREST AMOUNT CAN BE CLUBBED TOGETHER TO REACH THE THRESHOLD OF INR 1 CRORE UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 ("IBC CODE") IF THE DEBT IS AN OPERATIONAL DEBT ? Recently, the National Company Law Tribunal ("NCLT"), Delhi bench in CBRE South Asia Pvt. Ltd. v. M/s United Concepts and Solutions Pvt. Ltd. dismissed a petition to initiate a corporate insolvency resolution process ("CIRP") against a corporate debtor after it observed that the claimed amount in the said petition is INR 1,39,84,400 out of which INR 88,50,886 is the principal amount and the remaining INR 51,33,514 is the interest component. NCLT, Delhi bench comprising of Judicial Member Shri Abhi Ranjan Kumar Sinha and Technical Member Shri L.N Gupta analysed the definitions of operational debt and financial debt and pronounced that there is a difference between as a financial debt would include a debt along with interest whereas in operational debt it will not be included. NCLT, Delhi Bench reached this conclusion based on the express inclusion of the phrase “debt with interest” in the definition of financial debt under the IBC Code.  The same observation was made by the NCLT, Chandigarh bench in M/s. Wanbury Ltd. Vs. M/s. Panacea Biotech Ltd. Read More... INITIATION OF PROCEEDINGS AGAINST A PERSONAL GUARANTOR WHILE THE CIRP IS UNDERWAY AND RESOLUTION PLAN HAS BEEN APPROVED ALLOWED Recently, NCLT, Kolkata bench gave the green flag to initiate proceedings against a personal guarantor while the CIRP is underway and even if a resolution plan has been approved. NCLT, Kolkata bench noted that the legislature endeavours to ensure that no personal guarantor escapes liability. NCLT, Kolkata bench further noted that liability of a corporate debtor and its guarantors is co-extensive, joint and also several and reiterated that to deal with the personal guarantors of the corporate debtor, proceedings under section 95(1) of the IBC Code to initiate insolvency resolution process or bankruptcy, can be initiated and continued against the guarantors. Read More... MANDATORY APPROVVAL OF COMMITTEE OF CREDITORS ("COC") NOT REQUIRED WHILE SEEKING EXCLUSION OF TIME UNDER SECTION 12 OF THE IB CODE, 2016. Recently, in Indiabulls Housing Finance Limited v. Sandeep Chandna, the Hon’ble National Company Law Appellate Tribunal pronounced that the approval of Committee of Creditors is not mandatory while seeking exclusion of time differentiating between 'exclusion' and 'extension' of time under the IBC Code. The issue that arose for consideration in the initial petition was whether the approval of the COC under section 12(2) of the IBC Code is mandatory for seeking exclusion of time even if it is sought on grounds of lockdown/time lost during the period of any 'Stay'/Status Quo /or for any other reason. The NCLAT relied on Quinn Logistics Private Limited Vs. Mack Soft Tech Private Limited  and Bhim Sain Goyal Vs. The American Swan Lifestyle Co. Pvt. Ltd. Read More... WHETHER AN APPROVED RESOLUTION PLAN CAN BE ACCORDED THE STATUS OF A CONFIDENTIAL DOCUMENT Recently, division bench of the Hon’ble National Company Law Appellate Tribunal comprising of Justice Ashok Bhushan and Justice Ashok Kumar Mishra held that once a resolution plan has been approved by the Ld. Adjudicating Authority it shall not be considered confidential.  Thus, a claimant with a genuine claim can rightfully access the plan, who is aggrieved by the plan and has come up on appeal. However, the Hon’ble Court also noted that this does not mean that the plan is made available to everyone who has interest in the process.  The access to resolution plan can be denied too, even if it is not considered a confidential document. Read More... The Code of Criminal Procedure, 1973 SECOND FIR REGISTERED ON AN INCIDENT FOR WHICH AN FIR IS ALREADY REGISTERED CAN BE QUASHED IN VIEW OF SECTION 482 CrPC Recently, the Punjab and Haryana High Court held that a second FIR registered on an incident for which an FIR is already registered can be quashed on the ground of abuse process of law. The High Court noted that exercise of power under Section 482 CrPC to quash the FIR is not excluded even though a report under Section `173 CrPC has not been filed. Additionally, the High Court provided a few key circumstances wherein the said power can be used by the Court, inter-alia, if no commission of offence is made out from perusing the contents of FIR, if the FIR has been registered for a non-cognizable offence, if FIR reeks of violation of a judicial order or a settled principle of law. However, the bench noted that the said list is not absolute and the test will be applicable from case to case. Read More... OTHER RELEVANT JUDGMENTS PASSED BY VARIOUS COURTS UNDER VARIOUS LAWS THE PERIOD FROM 15.03.2020 TILL 28.02.2022 STANDS EXCLUDED FOR COMPUTING LIMITATION IN RESPECT OF ALL JUDICIAL AND QUASI-JUDICIAL PROCEEDINGS Recently, the Hon’ble Supreme Court restored the order dated 23.03.2020 and directed that the period from 15.03.2020 till 28.02.2022 stood excluded to compute limitation in respect of all judicial and quasi-judicial proceedings. Read More... WHETHER TRANSFER OF TENANCY AMOUNTS TO CREATION OF NEW TENANCY Recently, the Bombay High Court held that when a developer purchases tenancies from old tenants and inducts new tenants therein, that amounts to transfer or exchange of tenancy. The Bench clarified that transfer or exchange of old tenancy does not amount of new tenancy. The Bench also noted that while transfer of tenancies was illegal under the Maharashtra Rent Control Act, 1947, is now permitted in view of the Maharashtra Rent Control Act, 1999 with a pre-requisite that the same must be registered. Read More... APPLICABILITY OF SECTION 5 OF LIMITATION ACT IN A CIVIL SUIT FILED BEFORE CIVIL COURT Recently, the division bench of Hon’ble Supreme Court comprising of Justice Sanjeev Khanna and Justice Bela M. Trivedi observed that the remedy to file an application under Section 5 of the Limitation Act, 1963 is not available if a person wishes to bring an action in a Civil Court.Recently, the Hon’ble Supreme Court held in a landmark ruling that the High Court does not have jurisdiction to issue mandamus under Article 226 of the Constitution of India to direct a bank to consider or grant the benefit of OTS to the borrower. The Hon’ble Bench further noted that the grant of OTS is subject to an eligibility criteria mentioned under the scheme itself and the guidelines governing such scheme are issued from time to time. The Hon’ble Bench also noted that such a decision should be left at the commercial wisdom of the bank who is directly affected by the loan and thus, it is always presumed that the bank shall take the right decision so as to grant the benefit of OTS scheme or not, having due regard to the public interest. The Hon’ble Court noted that the National Consumer Disputes Redressal Commission erred in passing the order stating that the complainant is free to file an application under Section 5 of the Limitation Act, 1963 to bring an action in a civil court. Read More... NEW DELHI X -3, Green Park Main, New Delhi, 110016, Telephones: +91 11 2652 0041-42 For further / specific information, please contact us at: info@tandonandco.com Disclaimer: The contents of this newsletter are intended for information purposes only, and parts of this newsletter are based on news reports and have not been independently verified. The newsletter is not in the nature of a legal opinion or advice. They may not encompass all possible regulations and circumstances applicable to the subject matter and readers are encouraged to seek legal counsel prior to acting upon any of the information provided therein. Tandon & Co. neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter.  This newsletter is the exclusive copyright of Tandon & Co. and may not be circulated, reproduced or otherwise used by the intended recipient without the prior permission of its originator.