Between The Lines – Page 10 – Vaish Associates Advocates

Supreme Court upholds the constitutional validity of Section 140(5) of the Companies Act, 2013, which inter alia imposes statutory bar on the auditor(s) for a period of five years

The Hon’ble Supreme Court of India (“Supreme Court”), in the case of Union of India v. Deloitte Haskins and Sells LLP and Another [Criminal Appeal Nos. 2305-2307/2022] (“Judgement”), has upheld the constitutionality of Section 140(5) (Removal, resignation of auditor and giving of special notice) of the Companies Act, 2013 (“Companies Act”), which inter alia renders […]

Supreme Court: Secured creditor not categorized as either financial creditor or operational creditor is entitled to retain security interest in pledged shares

The Supreme Court, by a judgment pronounced on May 4, 2023, in the matter of Vistra ITCL (India) Limited and Others v. Mr. Dinkar Venkatasubramanian and Another [Civil Appeal No. 3606 of 2020], has held that by virtue of a security created by a corporate debtor in favor of a lender to secure the loan […]

NCLAT: IBC does not contemplate multiplicity of applications against the same personal guarantor

The National Company Law Appellate Tribunal, Chennai (“NCLAT”), by a judgment pronounced on March 29, 2023, in the matter of Union Bank of India v. Mr. P. K. Balasubramanian [Company Appeal (AT) (CH) (Ins) No. 293 of 2022] has held that the Insolvency and Bankruptcy Code, 2016 (“IBC”) does not contemplate multiplicity of applications against […]

NCLAT: Fraud for the purpose of Section 66 of the IBC includes a debt where the debtor has no intention to repay

The National Company Law Appellate Tribunal, New Delhi (“NCLAT”) has, in its judgement dated March 29, 2023 (“Judgement”), in the matter of Shri Baiju Trading and Investment Private Limited v. Mr. Arihant Nenawati and Others [Company Appeal (AT)(Ins.) No. 699 of 2021], held that ‘fraud’ for the purpose of Section 66 (Fraudulent trading or wrongful […]

Bombay High Court: A share purchase agreement containing option to sell the shares does not amount to derivative contract, thereby does not violate provisions of SCRA

The Hon’ble Bombay High Court (“High Court”) has, by the judgment pronounced on February 2, 2023, in the matter of Percept Finserve Private Limited v. Edelweiss Financial Services Limited [Commercial Appeal (L) No.284 0f 2019 in Commercial Arbitration Petition No. 220 of 2014] (“Impugned Order”), held that a contract containing put option for securities does […]

Supreme Court: Directors cannot escape penal liability in cheque dishonoring cases by citing company’s dissolution

The Supreme Court of India (“SC”), in the case of Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Limited [Criminal Appeal No. 172 of 2023], while deciding the ongoing proceedings under Negotiable Instruments Act, 1881 (“NI Act”) as well as the ongoing Corporate Insolvency Resolution Proceedings (“CIRP”) held that the scope of the […]