Indian Exporters and Legal Compliances : New Changes

Indian Exporters and Legal Compliances : New Changes

Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Seventh Amendment) Regulations, 2025 amends Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015.

Regulation 5 (CA) has been substituted. 

Regulation 5 (CA) deals with Foreign Currency Account of an exporter. It deals with how funds in the account can be utilised by exporter for paying for its imports into India

Compliance with Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 is also mentioned. 

Bank Loans and Litigation : High Court Answers the Legal Issues Affecting such Litigation

Bank Loans and Litigation : High Court Answers the Legal Issues Affecting such Litigation

In this case, the order passed by the Additional District Magistrate Jabalpur, under section 14 of the SARFAESI Act, 2002 and the Order through which he was called upon to handover the possession of the property was challenged. High Court has directed the borrower to approach DRT for urgent relief, instead of quashing the Order under A.226.

Neeraj Shrivastava v. State of MP [2025] GCtR 1898 (Jabalpur, MP)

S.138 of Negotiable Instruments Act, 1881 : Role of Authorized Signatory of Company Explained by Supreme Court

S.138 of Negotiable Instruments Act, 1881 : Role of Authorized Signatory of Company Explained by Supreme Court

In an interesting judgment issue answered was whether authorized signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused. It was held that in the absence of the company being arraigned as an accused, a complaint against the Director of Company was therefore not maintainable. The Director of Company had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused.

Himanshu v. B. Shivamurthy [2019] GCtR 6177 (SC)

Pre Packaged Insolvency under IBC, 2016

 Pre Packaged Insolvency under IBC, 2016

Chapter III-A is in Part 2 of IBC, 2016. Part 2 of IBC is titled as Insolvency Resolution and Liquidation for Corporate Persons. 

Chapter III-A of IBC, 2016 deals with pre packaged insolvency resolution process under IBC, 2016. This chapter was introduced through an Amendment Act, 2021. This chapter was introduced in IBC after COVID. 

S.54A (3) of IBC requires approval of financial creditors representing not less than 66% in value of financial debt. 

IBC, 2016 : Important Decisions of May 2024 (Part 1)

IBC : Important Decisions of May 2024 (Part 1) 

Insolvency and Bankruptcy Code, 2016 was enacted with a purpose. There are few interesting decisions pronounced some years ago which explained the contours of IBC, 2016. Innoventive Industries Ltd v. ICICI Bank [2017] GCtR 1171 (SC), Pioneer Urban Land and Infrastructure Limited & Anr v Union of India [2019] GCtR 628 (SC) and Swiss Ribbons Pvt Ltd v. Union of India[2019] GCtR 1313 (SC) are some of those older but interesting decisions dealing with aspects of IBC, 2016.

IBC, 2016 claims to be "an Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto."

S.238 of IBC, 2016 states that "the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law".

In the month of May 2024, few interesting decisions dealing with IBC, 2016 have been pronounced.

In this Part 1, a list of some important decisions dealing with issues of IBC pronounced in the month of May 2024 are given below : -

1. Sanjay Sharma v. Super Iron Foundry Pvt. Ltd. [2024] GCtR 1246 (NCLAT)

2. Optinova AB v. Bio-Med Health Care Products Private Ltd [2024] GCtR 1247 (NCLAT)

3. Rajesh Lallubhai Chitalia v. Brijendra Kumar Mishra & Anr [2024] GCtR 1248 (NCLAT)

4. Sumer Radius Realty Pvt. Ltd. v. Avenue 54 Welfare Association & Ors. [2024] GCtR 1249 (NCLAT)

5. Jagdish Prasad Chokhani v. IDBI Bank Ltd. [2024] GCtR 1250 (NCLAT)

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters/blogs without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made by the violator. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957. This is not to be considered as any professional legal advice and does not constitute client-attorney relationship.

Can an Employee file a case under IBC, 2016 against its employer - Company ?

 Can an Employee file a case under IBC, 2016 against its employer - Company ?

IBC, 2016 is meant "to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto."

Sec. 4 (1) of IBC, 2016 says that Part 1 of IBC, 2016 shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one crore rupees.

Sec. 3 (36) of IBC, 2016 says that “workman” shall have the same meaning as assigned to it in clause (s) of section 2 of the Industrial Disputes Act, 1947.

In one of the case an employee has filed a case under IBC to initiate insolvency against the employer - Company.

However, employee has not disclosed anywhere as to how much he is entitled to claim arrears for the years 2016, 2017, 2018 and 2019 and about leave encashment, variable pay, leave travel allowance and other reimbursements.  Therefore, the application was found incomplete. [Refer K.G. Rajasekaran v Alectrona Energy Pvt Ltd [2019] GCtR 3139 (NCLAT)]

This is clear that there is no prohibition being pointed out in this case that employee cannot initiate insolvency proceedings against employer-Company for its dues.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters/blogs without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made by the violator. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957. This is not to be considered as any professional legal advice and does not constitute client-attorney relationship.

What Falls Beyond IBC, 2016 : Answered in a Recent Judgment

 What Falls Beyond IBC, 2016 : Answered in a Recent Judgment

Sec. 17 of IBC, 2016 refers to situation where the management of the affairs of the corporate debtor shall vest in the interim resolution professional.

More than 6 years have passed since IBC, 2016 was enacted with a specific goal. Several decisions on IBC, 2016 have been passed. It is to be noted that notice under S.24 (3) of IBC, 2016 is to be given to members of suspended Board of Directors as well. But, S.24(4) of IBC, 2016 affects the right of suspended Board of Directors to vote in meetings of CoC.

In a recent case [citation : Tamilnadu Mercantile Bank Ltd v Recovery Officer [2023] GCtR 2131 (Madras)], the scope of Sec. 53 of IBC, 2016 was explained. 

It was held that "as far as the dues of the workmen/employees on account of Provident Fund, gratuity or pension are concerned, they shall be governed by Section 36(4) of IBC 2016. Section 36(4) (iii) specifically excludes “all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund” from the ambit of "liquidation estate assets". Therefore, it is clear that Section 53(1) of the IBC, 2016 shall not be applicable to such dues, which are to be treated outside the liquidation process and liquidation estate assets under the IB Code."

One can download entire judgment free of cost from the following link : - 

https://www.mhc.tn.gov.in/judis/index.php/casestatus/caseno

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters/blogs without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957. This is not to be considered as any professional legal advice and does not constitute client-attorney relationship.

IBC, 2016 : NCLT's Order passed in Contravention of Rules Set Aside

 IBC, 2016 : NCLT's Order passed in Contravention of Rules Set Aside

Section 3 (11) of Insolvency and Bankruptcy Code, 2016 ("IBC, 2016") defines debt and says that “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt." Sec. 6 of IBC, 2016 permits even a corporate debtor initiate CIRP. 

In a recent case related to IBC, 2016 in Jasti Samba Siva Rao v SREI Equipment Finance Ltd [2023] GCtR 2125 (NCLAT, Chennai), the Order of National Company Law Tribunal ("NCLT") was challenged. 

Explaining the effect of applicable Rules, the Order passed by NCLT was set aside.

One can download full copy of decision free of cost from the following link : - 

https://nclat.nic.in/display-board/judge 

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters/blogs without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957. This is not to be considered as any professional legal advice and does not constitute client-attorney relationship.

IBC, 2016 : Replacement of Resolution Professional Is Permissible

 IBC, 2016 : Replacement of Resolution Professional Is Permissible 

An important Decision was given by Chennai Bench of NCLAT on 15 December 2022 in Company Appeal (AT) (CH) (INS.) No. 319 / 2022. [Available free of cost at https://nclat.nic.in/display-board/judge] 

One can gather from Dr. K.V. Srinivas [2022] GCtR 1802 (NCLAT, Chennai) that replacement of Resolution Professional under IBC, 2016 is permissible. 

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957.  

Sec. 20 of IBC, 2016 : An Important View of Supreme Court

 Sec. 20 of IBC, 2016 : An Important View of Supreme Court

There have been many decisions of Hon'ble Supreme Court on 31 August 2017. 

In context of IBC, 2016, it has been noted at page 30 of Innoventive Industries Ltd v ICICI Bank [2017] GCtR 1171 (SC) thus : - 

"Under Section 20 of the Act, the interim resolution professional shall manage the operations of the corporate debtor as a going concern."

 

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost from the official website at the link https://main.sci.gov.in/judgments - Then entering the date of Judgment.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.