Hello! Welcome back to our updates from the insolvency law landscape in India.
In the news
According to some news reports, Insolvency and Bankruptcy Board of India (“IBBI”) is in the process to request Ministry of Corporate Affairs (“MCA”) for dedicated benches of National Company Law Tribunal (“NCLT”) to take up the matters related to insolvency proceedings for real estate sector considering the number of such matters pending with NCLTs.
In a record-breaking performance, NCLT has approved 78 resolution plans in first quarter of FY 2026-27. This is the highest number of approval of plans in a quarter since the introduction of Insolvency and Bankruptcy Code, 2016 (“IBC”).
MCA has invited comments from various institutions and stakeholders involved in the insolvency proceedings on a proposed Integrated Platform for Insolvency Ecosystem (iPIE), a unified digital platform that will integrate various business processes and digital services used for insolvency proceedings.
From the docket
Moratorium applicable only to corporate debtor – In Tejas J. Shah & Amisha T. Shah & Ors. v. Mantri Technology Constellations Pvt. Ltd. & Ors., Supreme Court held that the scope of a moratorium imposed under Section 14 of IBC is confined strictly to corporate debtor and cannot be enlarged beyond what the statute contemplates. No other entity or person, whether a subsidiary company, managers, directors, or personal guarantors, can be brought within its scope.
Fairer repayment mechanism required – In the case of M/s Tata Steel Ltd. v. Varsha & Anr., applying the “clean slate doctrine”, the Supreme court opined that once the resolution plan has been approved under Section 31 of the IBC, all claims not forming part of the approved plan stand abated, extinguished, waived or withdrawn. The court further observed that the code does not adequately take into consideration small operational creditors like MSMEs and recommended the law commission and the legislature to examine the matter to ensure a fairer repayment mechanism and an efficient insolvency regime.
Uncrystallized claims not included in plan – The Supreme Court in Employees Provident Fund Organisation v. Rachna Jhunjhunwala & Anr. has held that claims for interest and damages under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which had not been adjudicated/determined before the commencement of the CIRP are not required to be provided for in resolution.
Homebuyer claim cannot be rejected merely for delay – NCLAT in Rajkumar Jhawar & Ors v. Arun Kapoor & Ors. has held that the claim of a genuine homebuyer cannot be rejected merely on the ground of delay in filing the claim when the information regarding the allotment of flat was available in the records and RP had failed in his duty to identify and notify stakeholders.
Disclaimer
The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at knowledge@sarthaklaw.com.