The Banking Litigation Law Review: India

Overview

Prior to the covid-19 pandemic, the banking sector in India was grappling with a slowing economy, the resolution of non-performing assets (NPAs) and liquidity crisis among non-banking financial companies (NBFCs). The monetary policies of the Reserve Bank of India (RBI) were focused towards these issues, while the Government was working towards a plan for recapitalisation of public sector banks and attempting to address the liquidity crisis among the NBFCs.

There has also been some consolidation in terms of regulation. For instance, the Government has brought in housing finance companies and urban co-operative banks under the aegis of the RBI, thereby bringing the banking system in the country under a single regulator. Alongside, the Government has taken over the policy making powers in relation to foreign equity investment from the RBI completely leaving foreign debt investment within the regulatory power of the RBI.

The Insolvency and Bankruptcy Code, 2016 (IBC) and the stressed asset framework of the RBI have aided the improvement in the gross NPA ratio and overall recoveries from stressed assets. In light of the failure of certain systemically important NBFCs, the Government has extended the applicability of the IBC to these NBFCs with certain modifications to the process (detailed out in the following sections).

The RBI has also been handling the resolution of the crisis hit Yes Bank and Punjab and Maharashtra Co-operative Bank, with the restructuring scheme in relation to Yes Bank being implemented through a unique public-private partnership among leading financial institutions in India.

With the onset of the covid-19 pandemic, the Government and the RBI have been co-ordinating recovery packages for the industry ranging from the suspension of insolvency application to granting moratoriums to borrowers. The judicial system itself has been grappling with management of case load during the lockdown hitting hard at its efficacy. The existing macro-economic factors and the pandemic will continue to be key drivers in the coming year as well.

Significant recent cases

i Resolution Plans and treatment of creditors

The Supreme Court set out some important principles in relation to (1) the scope of the adjudicating authority's review of a resolution plan and (2) the treatment of various classes of creditors while dealing with an appeal in the CIRP process of Essar Steel Limited.2

In relation to the scope of review by the adjudicating authority (National Company Law Tribunal (NCLT)), the court held that the NCLT cannot reverse the business decision taken by the committee of creditors (CoC) and that it can review the resolution plan only on limited grounds under the IBC.3 In exercise of this power, the NCLT can determine whether the CoC has taken into account the ability of the corporate debtor to be a going concern, the maximisation of value of its assets and interest of all stake holders including operational creditors.

The Court also set to rest the controversy around differential treatment of various classes of creditors and held that a resolution plan should ensure that all creditors in each class (i.e., secured, unsecured, financial or operations) are treated in an equitable manner and it does not have to provide for payment of same amounts in terms of percentage across all classes of creditors. The Court further held that the NCLT cannot reject a resolution plan on the ground that it is unjust of unfair to a class of creditors, as long as the CoC has considered the same and taken care of their interests.

The court also clarified that timelines for completion under the IBC can be extended but only in limited cases such as an impending completion of the process in the near future or the resolution being in the interest of the stakeholders (as against liquidation), or if the delay caused is on account of the time taken by legal proceedings owing to the process followed by the NCLT.

ii Third Party Security and Preferential Transactions

The Supreme Court laid out certain important principles in relation to the treatment of third party security under the IBC in the case of Anuj Jain v. Axis Bank Limited.4 In that case, Jaypee Infratech Limited (JIL) created security over its assets to secure loans availed by its holding company, Jaiprakash Associates Limited (JAL), in favour of various banks. JAL itself made loans available to JIL and issued guarantee in favour of loans availed by JIL, thereby making it a creditor or surety of JIL.

The questions before the court were (1) if the security created by JIL could be avoided as a preferential transaction, and (2) if the lenders benefiting from the security will be financial creditors of JIL. The Court held that the transactions to be preferential in nature and denying the lenders of JAL the benefit of being financial creditors of JIL. The following are the key points:

In re preferential transactions:

  1. intention of the parties to give preference to a creditor or surety or to act fraudulently is irrelevant for avoidance of a transaction under the IBC if the criteria set out therein are fulfilled;
  2. if the relationship between the security provider and the principal borrower can be established as that of a debtor-creditor or beneficiary-surety, the third party security being beneficial to the principal borrower can (if the other elements are satisfied) be seen as a preference in favour of such creditor or surety;
  3. lenders should carry out due diligence on the security provider to ensure that such security provider is itself not under any stress and that such security is a prudent and viable one; and
  4. disclosure of the security in the books of account does not create any estoppel against the creditors from challenging the transaction at the time of insolvency.

In re status of beneficiaries of third party security:

  1. creation of security by itself does not make the beneficiary of such security interest a financial creditor of the security provider; and
  2. to qualify as a financial debt, the claim of a creditor must satisfy the basic elements of there being a disbursal of debt against time value of money.

In light of the judgment, while taking third party security (and especially so when such security is an important credit consideration), lenders will have to be mindful of the status of the relevant security provider. If they intend to be onboard as financial creditors during the CIRP of such security provider, they must ensure that the obligation undertaken by such security provider constitutes a financial debt under the IBC in clear terms.

iii Interim Finance by Existing Lenders

During the CIRP, the financial creditors of the corporate debtor take their decisions as the CoC (by way of resolutions passed by specified majorities). One such consideration under the IBC, which requires the approval of the CoC is raising interim finance for the corporate debtor. However, the IBC is silent on whether a decision to infuse such interim finance by existing creditors can bind the other financial creditors of the corporate debtor.

In the case of Edelweiss Asset Reconstruction Company Limited v. Sai Regency Power Corporate Pvt. Ltd,5 the NCLAT held that if a CoC by requisite majority had taken a decision on infusing interim finance into the corporate debtor, then all members of the CoC (including the dissenting financial creditors) are bound by that decision. It observed that if the dissenting financial creditor wanted to be a part of the CoC, it could not be expected to only avail benefits out of the CIRP. Further, the NCLAT held that Section 30(4) of the Code does not mandate that only a secured financial creditor has to contribute towards raising interim finance.

Similarly, in the case of Reliance Commercial Finance Ltd v. Noble Resourcing Business And Solutions Pvt Ltd,6 where a financial creditor refused to contribute to the expenses incurred by the IRP during CIRP, the NCLT held that the financial creditor has to contribute towards the costs of the CIRP.7 While binding all financial creditors to contribute towards such interim finance ensures that their stakes remain the same, it will be an important strategic consideration for lenders on account of the possible increase in their exposure to a stressed borrower.

iv Interim orders during the covid-19 pandemic

With the onset of the covid-19 pandemic and the national lockdowns that followed, courts in India have given interim relief to pledgees from enforcement in margin finance transactions and in cases of encashment of bank guarantees and letters of credit.

In a case from March 2020,8 the Bombay High Court granted an injunction on enforcement of pledge of shares by the debenture trustee where the price of the pledged shares fell below the prescribed redemption trigger. The pledgor argued before the court that the share price fell due to market volatility arising from covid-19, and the court granted a temporary injunction in light of the general market situation arising from covid-19.9 In another case,10 the Bombay High Court, with a view to protecting the interests of parties involved, ordered the defaulting borrower (defaulting due to circumstances arising out of the pandemic), to pay the overdue sum along with the accrued interest in tranches, pending which the lender was restrained from selling the pledged shares.

The granting of interim reliefs, however, has not been a consistent practice by the courts. In a more recent case in July 2020,11 where the pledgors sought an injunction from the Delhi High Court against enforcement upon the defaulting on the payment of the underlying instrument, a single judge bench of the court refused to grant such an injunction. The court denied interim relief and held that under the Indian Contract Act 1872, the discretion is with the pledgee to either sell the pledged goods or choose a suit for recovery by retaining the goods as collateral; the pledgor cannot decide when and how and the pledgee should exercise its right.12 The court also refused to introduce force majeure into the contracts where none was agreed by the parties.13

In certain cases14 relating to invocation of letters of credit and encashment of bank guarantees, owing to the lockdown situation and the covid-19 pandemic, courts have issued ad interim injunctions restraining the invocation of bank guarantees or letters of credits. However, similar to the case of pledge enforcements, this has not been a uniform trend and courts have also been reluctant in some cases to deviate from established principles for granting injunctions.15 In these cases, courts have insisted on the party seeking an injunction on encashment to come within the established exceptions of fraud or irretrievable injury and have held that mere financial distress would not be a sufficient ground to grant a stay of invocation.16

Recent legislative developments

i Applicability of the IBC to systemically important NBFCs

When the IBC was introduced, financial service providers (FSPs) (such as banks, NBFCs and other financial institutions) were kept out of the framework with an option for the Government (in consultation with the appropriate financial sector regulators), to notify FSPs or categories of FSPs for the purpose of their insolvency and liquidation proceedings, which may be conducted under the IBC. The Government in 2019 notified the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Providers and Application to Adjudicating Authority) Rules, 2019 (the FSP Rules), which provide for initiation of corporate insolvency resolution process in relation to FSPs that are NBFCs with an asset size of 5 billion rupees or more as per their last balance sheet.17

The FSP Rules provide for the following additional features of an insolvency resolution and liquidation of an FSP:

  1. a corporate insolvency resolution process (CIRP) against an FSP can be initiated only upon an application by the appropriate sectoral regulator (being the RBI, in case of NBFCs) before the NCLT;
  2. in addition to a moratorium under the IBC, an interim moratorium is declared in respect of the FSP on and from the date of filing of the application till its admission or rejection;
  3. the licence or registration that authorises the FSP to engage in the business of providing financial services will also not be suspended or cancelled during the interim-moratorium or the CIRP;
  4. the NCLT will appoint the individual proposed by the appropriate regulator as the 'Administrator' who will discharge the functions of the IRP and the RP;
  5. the FSP Rules also allow the regulator to constitute an advisory committee to assist the administrator in discharge of these functions;
  6. the resolution plan is required to contain a statement explaining how the resolution applicant satisfies the requirements of engaging in the business of an FSP; and
  7. upon approval of the resolution plan by the committee of creditors, the administrator will seek 'no objection' of the appropriate regulator to the effect that it has no objection to the persons who would be in control or management of the FSP.

ii Notification of provisions relating to insolvency of personal guarantors of corporate debtors

The Government in November 2019 notified the provisions of the IBC that relate to (1) insolvency resolution process, (2) bankruptcy, and (3) administration and distribution of the estate of the bankrupt and other allied provisions for individual who are personal guarantors to corporate debtors within the ambit of the IBC. Individuals and partnerships generally (other than limited liability partnerships), continue to remain outside the ambit of the IBC until the relevant provisions are notified. The National Company Law Tribunal (NCLT) is the adjudicating authority in respect of such insolvency resolution and bankruptcy of personal guarantors in terms of Section 60 of the IBC. Insolvency resolution process can be initiated against personal guarantors of corporate debtors under the IBC where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before an NCLT.

iii Amendments to the IBC

In December 2019, the Government amended the provisions of the IBC to bring in some key changes to the code.18 The following is an overview:

  1. Ring-fencing assets of corporate debtor from criminal liability: In relation to offences committed prior to commencement of CIRP, the assets of a corporate debtor whose CIRP has resulted in an approved resolution plan, are ring fenced from liability. The cessation of liability19 applies in cases where the resolution plan has resulted in a complete change of the management and control of such corporate debtor, and its composition does not include (1) any promoter, management, or a related party of the aforementioned prior to the commencement of, or during the CIRP, or (2) any person being investigated for abetting, or conspiracy for commission of an offence.20 Subject to the aforementioned change in control, such property of the corporate debtor included in the approved resolution plan or liquidation will also be protected from any action;21
  2. Last mile funding: the definition of 'interim finance' under IBC has been widened to include debt that may be notified. This was done with the intention of giving the highest priority in the insolvency or liquidation process to last mile financing provided for preventing insolvency;22
  3. Restructured debt of financial creditors: the existing definition of related parties under the IBC excluded financial creditors being a financial entity regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares. The scope of this carve out has now been widened to include 'completion of such transactions as may be prescribed'. The intention seems to be to exclude financial institutions that have restructured their debt (other than by way of conversion of debt into equity) from being categorised as a 'related party' of the corporate debtor, and therefore losing their right to vote on the committee of creditors or being disqualified from presenting a resolution plan in relation to the corporate debtor;
  4. Initiation of CIRP by certain financial creditors: initiation of CIRP by (1) creditors represented by a trustee, and whose financial debt is in the form of securities and deposits; and (2) allottees of real estate projects that have now been increased, requires a minimum of 10 per cent of such class of creditors, or 100 applicants to file the CIRP application jointly. This change will cover investments by way of non-convertible debentures and other debt securities of the corporate debtor. It may be noted that by way of the amendment in 2019, the authorised representative of financial creditors (being a class of creditors or holding debt securities) were required to cast its vote in respect of any matter on behalf of all such financial creditors in accordance with the decision taken by a vote of more than 50 per cent of the vote share of such financial creditors, who have cast their vote. The amendment did not save any previous arrangements among such creditors;
  5. Scope of moratorium: it has been clarified that, for example, governmental licenses, permits, concessions and clearances, and the supply of essential goods and services will not be suspended on the grounds of insolvency during the moratorium period other than in the case of a default by the corporate debtor in paying the dues. This is aimed at maintaining the corporate debtor as a 'going concern' through the CIRP; and
  6. Separately, the amendment clarifies that a corporate debtor undergoing an insolvency resolution or liquidation process is not barred from initiating a CIRP against another corporate debtor.

iv Exclusion of covid-19 defaults from the IBC

The Government by way of the Insolvency and Bankruptcy (Amendment) Ordinance, 2020 amended the provisions of the Insolvency and Bankruptcy Code 2016 in June 2020 to restrict filing of an application to initiate a CIRP on account of any default arising on or after 25 March 2020 until six months thereafter (which may be extended up to one year). The ordinance has been replaced by the Insolvency and Bankruptcy (Second Amendment) Act, 2020 and by way of a notification23 the Government has extended such suspension for an additional period of three months from 25 September 2020.

v Amendments to the Banking Regulation Act

The Government of India amended the Banking Regulation Act, 1949 by way of the Banking Regulation (Amendment) Bill, 2020 (replacing the Banking Regulation (Amendment) Ordinance 2020) in September this year. The amendment provides for the regulation of co-operative banks by the RBI, allowing such banks to raise capital and debt by way of issuance of securities to persons residing in the area of their operation, and allowing the RBI to declare a moratorium in respect of these banks and to prepare a scheme of reconstruction or amalgamation during the order of moratorium in relation to such banks.

vi Resolution framework for covid-19 related stress

In light of the covid-19 pandemic, the RBI by way of its circular dated 6 August 2020 (Restructuring Circular)24 notified a window under the existing New Prudential Framework to enable lenders to implement resolution plans, in respect of borrowers in certain identified sectors without change in ownership, and personal loans, while classifying such exposures as standard. Any such resolution plan is required to be limited to borrowers having stress solely on account of covid-19. Borrower accounts classified as standard, but not in default for more than 30 days with the lending institution as on 1 March 2020, will be eligible for restructuring under the window. Restructuring under this framework may be invoked up to 31 December 2020. The key features of the Restructuring Circular are set out below:

In relation to resolution of personal loans

  1. the restructured account should be classified as standard until invocation, being the date on which the borrower and the lender agree for the restructuring;
  2. the restructuring must be implemented within 90 days from the date of invocation;
  3. the resolution plans may include rescheduling of payments, conversion of any interest accrued into another credit facility, or, granting of moratorium, based on an assessment of income streams of the borrower, subject to a maximum of two years; and
  4. provision for the renegotiated debt will be the higher the provisions as per the extant IRAC norms immediately before implementation, or 10 per cent of the renegotiated debt exposure. Half of the above provisions may be written back upon the borrower paying at least 20 per cent of the renegotiated debt and the remaining at 30 per cent without slipping into NPA post implementation.

In relation to other exposures

  1. the restructured account should be classified as standard until invocation being the date on which the borrower and the lender agree for the restructuring (in case of a borrower with several lenders, the date on which lenders representing 75 per cent of the value and not less than 60 per cent of lenders are to be in agreement);
  2. where there are several lenders, lenders will be required to sign an inter creditor agreement (ICA) within 30 days from invocation. In case of lenders not regulated by the RBI, signing of the ICA is optional;
  3. the restructuring must be implemented within 180 days from the date of invocation;
  4. a committee constituted by the RBI will recommend a list of financial parameters required to be factored into the assumptions of any resolution plan;
  5. the resolution plan may involve any action as provided in the 'Prudential Framework', except compromise settlements, which will be governed by the Prudential Framework;
  6. the resolution plan may provide for conversion of debt into equity or debt securities subject to the conditions set out in the Restructuring Circular;
  7. resolution plans in respect of exposures above 1 billion rupees require an independent credit evaluation by any one credit rating agency approved by the RBI;
  8. lenders are required to enter into formal escrow arrangements with the borrowers to ensure that lending institutions service their disbursement obligations on a timely basis; and
  9. provision for the renegotiated debt will be the higher the provisions as per the extant IRAC norms immediately before implementation, or 10 per cent of the renegotiated debt exposure. Half of the above provisions may be written back upon the borrower paying at least 20 per cent of the renegotiated debt and the remaining at 30 per cent without slipping into NPA post implementation.

Failure to meet the above timelines will lead to the exposures being classified as per the extant prudential framework applicable as if the restructuring was never invoked.

Changes to court procedure

i Commercial courts

In 2015, the government passed the Commercial Courts Act 2015 (the Commercial Courts Act). The Commercial Courts Act provides for setting up commercial courts at a district level and setting up commercial divisions and commercial appellate divisions in the High Courts. These courts deal with commercial disputes, which include 'disputes arising out of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents'. The idea behind the Commercial Courts Act is to speed up the resolution of commercial disputes in India and, to that effect, the Commercial Courts Act has various provisions (on process and timelines) that, if enforced, would have the effect of streamlining processes and reducing timelines for resolution of disputes. However, given that banks already have recourse to debt recovery tribunals and to NCLTs (under the IBC) to address their disputes, the impact of the Commercial Courts Act on banks may be limited.

The Commercial Courts Act has been recently amended to reduce the minimum value of disputes (to determine pecuniary jurisdiction) to 300,000 rupees, thereby bringing more matters into the purview of the commercial courts. The amendment also introduced a mandatory pre-institution mediation for suits not requiring urgent interim relief.

Privilege and professional secrecy

The Indian Evidence Act 1872 (the Evidence Act) attaches privilege to communication made during the course of professional employment to legal practitioners, against disclosure of any advice given to the client or against disclosure of communication made during the course of his or her employment. That privilege continues even after the employment has ceased. The protection is given to what might constitute legal advice and not to any other communications from the adviser. In addition, such protection is not granted to the disclosure of any communication made in furtherance of any illegal purpose or the disclosure of any fact observed by the legal practitioners in the course of employment, in case a crime or fraud has been committed since the commencement of his or her employment (as opposed to before the employment commenced).

The law further provides that a person cannot be compelled to disclose to a court any confidential communication that has passed between that person and his or her legal professional adviser. However, where such person voluntarily offers himself or herself as a witness, he or she may be compelled to disclose such communications to the court that appear necessary in order to explain any evidence that he or she has given.

The privilege under the Evidence Act also extends to the contents or condition of documents with which the legal adviser becomes acquainted in the course and for the purpose of his or her professional employment. Communications containing facts of a matter for the benefit of the legal adviser that are shared for the purpose of seeking legal advice may enjoy privilege.

The principle of litigation privilege – that privilege is attached to any document prepared for the purposes of, or in anticipation of, litigation – recognised under English law, is not reflected in the Evidence Act. This common law principle has, however, been recognised by the Bombay High Court.25 In that case, the management of the company had directed for studies to be conducted by its advertising and public relations departments. It was held that the company was entitled to claim legal privilege on the internal communications with the legal and other departments because the documents were brought into existence with the sole purpose of obtaining legal advice. This decision seems to suggest that if any work has been commissioned for the purpose of seeking legal advice, such work product in the form of a document will enjoy privilege.

Sources of litigation

In terms of litigation against banks, common causes have included: (1) failure or delay in repaying deposits; (2) wrongful dishonour of cheques; (3) refusal to grant loans; (4) failure or delay in paying bank guarantees; (5) charging interest at rates higher than those stipulated in the loan agreement; and (6) deficiency in service on various other matters.

In addition to the above, for the next couple of years, banking litigation in India is likely to, in large part, revolve around IBC proceedings and matters ancillary thereto (such as resolution of assets and creditor rights inter se). We have already seen jurisprudence around the IBC evolve substantially since it was enacted and as banks and other creditors continue to make the IBC their first port of call to resolve NPAs and stressed assets, we expect to see the jurisprudence around the IBC to increasingly evolve.

Footnotes

1 Sonali Mahapatra is a partner and Tanay Agarwal is a senior associate at Talwar Thakore and Associates.

2 Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. Civil Appeal No. 8766-67/2019.

3 Section 30(2) of the IBC provides the details that a resolution plan must include (and which are verified by the resolution applicant). These include (1) payment of insolvency resolution process costs in priority to the payment of other debts of the corporate debtor; (2) payment of debts of operational creditors, and payment of debts of financial creditors who do not vote in favour of the resolution plan, in such manner as specified in the section; (3) management of the affairs of the corporate debtor after approval of the resolution plan; (4) implementation and supervision of the resolution plan; and (5) no contravention of any of the provisions of the law for the time being in force.

4 Civil Appeal Nos. 8512-8527 of 2019.

5 Company Appeal (AT) (Insolvency) No. 887 of 2019.

6 Item No. 114 (IB)-494(PB)/2017.

7 CO No. 1081/2016 (CA-96(PB)/2018, CA-690(PB)/2018, CA-707(PB)/2018 and CA-708(PB)/2018).

8 Rural Fairprice Wholesale Limited and Anr. v. IDBI Trusteeship Services Limited and Ors. Interim Application No.1 of 2020 in Commercial Suit (L) 307 of 2020.

9 The court also noted that the pledgor had contended that the debentures were 'fully secured' with collateral other than the shares (this appears to be a reference to security over immovable property that had been provided, though the order does not reflect if the property had any significant value).

10 Ideal Toll & Infrastructure and Ors. v. ICICI Home Finance Limited and Ors. Commercial Suit No. LD-VC-7 of 2020 and I.A. No. LD-VC-7 (IA) of 2020.

11 Khoobsurat Infra Pvt Ltd., Direct Media Distribution Ventures Pvt Ltd, Cyquator Media Services Pvt Ltd v. IDBI Trusteeship Services Ltd and Anr. I.A. 4847/2020 in OMP(I)(COMM) 135/2020, I.A. 4848/2020 in OMP(I)(COMM) 136/2020, I.A. 4849/2020 in OMP(I)(COMM) 137/2020.

12 The court also distinguished this case from the Bombay High Court case discussed above, on the grounds that a downward trend in the share values was seen prior to covid-19 and that the debentures in that case were fully secured on collateral other than the shares.

13 On appeal, a division bench of the Delhi High Court upheld the order of on similar grounds and refused to grant an injunction.

14 For instance, see, Ashwani Mehra (as resolution professional of M/s. Punj Lloyd Limited) v. Indian Oil Corporation Limited and Ors. W.P.(C) No. 2971/2020 & CM Appl. No. 10310-12/2020 and M/s Halliburton Offshore Services Inc. v. Vedanta Limited &Anr. [O.M.P. (I) (COMM) & I.A. 3697/2020] (Halliburton Case).

15 The Delhi High Court lifted the interim order in the Halliburton Case in May 2020. In the case of Indrajit Power Pvt. Ltd. v. Union of India and Ors. [W.P.(C) No. 2957/2020, L.P.A. 145/2020, C.M. Appl. 10525/2020 & CM Nos. 10268-70/2020] (Indrajit Power Case), the Delhi High Court rejected prayers for grant of interim order holding that the petitioners were unable to establish any irretrievable injury to the guarantor which eliminated the possibility of recovery of the amount from the beneficiary.

16 See Indrajit Power Case and also Standard Retail Pvt. Ltd. and Ors. v. M/s. G. S. Global Corp and Ors. Commercial Arbitration Petition (L) No. 404 of 2020, Bombay High Court.

17 In a press release issued by the Government in relation to the FSP Rules, it is stated that (1) the FSP Rules will not apply to banks, and (2) the Government will separately notify categories of financial service providers that are not systemically important and that would be subject to the provisions of the Code applicable to corporate debtors.

18 The Insolvency and Bankruptcy (Amendment) ordinance 2019 was then replaced by the Insolvency and Bankruptcy (Amendment) Act, 2020.

19 It is to be noted that the liability of concerned individual's liabilities does not cease under the newly introduced Section 32A.

20 In such cases, a report on such a person is submitted to the relevant authority or court in relation to commission of such offence.

21 In JSW Steel Limited v. Mehndar Kumar Khandelwal and Others (Company Appeal (AT) (Insolvency) No. 957 of 2019), the NCLAT held that Section 32A does not suggest that its benefit is to be extended only to resolution plans that are yet to be approved. Section 32A is clarificatory, and is applicable retrospectively.

22 Debt raised from the Special Window for Affordable and Middle-Income Housing Investment Fund I has been included as 'interim finance' under the IBC by way of a notification dated 18 March 2020.

23 S.O. 3265(E), dated 24 September 2020.

24 RBI/2020-21/16- DOR.No.BP.BC/3/21.04.048/2020-21, dated 6 August 2020.

25 Larsen and Turbo v. Prime Displays Ltd and others, 2002 (5) Bom CR 158.

26 Modi Entertainment Network and Anr v. WSG Cricket Pte Limited, AIR 2003 SC 1177; Piramal Healthcare Limited v. DiaSorin SpA 172 (2010) DLT 131; M/s Gupta Coal India Private Limited v. M/s Swiss Marine Services SA 2014(4)ABR353; Sunrise Industries India Limited v. PT OKI Pulp and Paper Mills and Ors 2017 GLH (2) (226).

27 National Thermal Power Corporation v. Singer Company, AIR 1993 SC 998, the only limitation to this rule is that the intention of the parties must be expressed bona fide and should not be opposed to public policy.

28 Some of the reciprocating territories are: Bangladesh, Hong Kong, Papua New Guinea, Singapore, Trinidad and Tobago and the United Kingdom.

29 Marine Geotechnics LLC v. Coastal Marine Construction & Engineering Ltd 2014 (2) Bom CR 769.

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