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Recognition of Indian CIRP in Singapore: A Step Forward for Cross-Border Insolvency

INTRODUCTION

    In Re Compuage Infocom Ltd[1] (“Judgment”), the Singapore High Court (“Court”) has recognized the Corporate Insolvency Resolution Process (“CIRP”) of an Indian company under the Insolvency and Bankruptcy Code, 2016 (“IBC”) and granted assistance to the Resolution Professional (“RP”) appointed by the National Company Law Tribunal (“NCLT”). Applying the UNCITRAL Model Law on Cross-Border Insolvency (1997)[2] (‘Model Law’), as adopted by Singapore by way of Section 252 and the Third Schedule of the Insolvency, Restructuring and Dissolution Act, 2018 (“IRDA”), the Judgment deals with several key issues, including whether the NCLT is a ‘foreign court’, whether RPs are ‘foreign representatives’, and whether repatriation of assets located in a foreign jurisdiction can be permitted for the benefit of creditors in other jurisdictions. This is the first such ruling in Singapore and is a welcome development. This piece discusses the key findings in the Judgment and their implications for all stakeholders involved in the CIRP of Indian companies.

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    FCPA, FCA and the Trump Effect: What Indian companies need to know

    The Foreign Corrupt Practices Act (“FCPA”) and the False Claims Act (“FCA”) are two pivotal legislations of the United States (“U.S.”) that significantly influence the operations of multinational corporations, including Indian entities. The most notable recent cases against Indian companies are: (i) the allegations on the Adani Group for orchestrating a bribery scheme thereby violating the FCA; and (ii) investigation of Azure Power Global on the allegations of improper payments and misrepresentation of the company’s anti-bribery practices to gain U.S. financing in violation of the FCPA.

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    Navigating Legal Crossroads: Interplay between IBC and NI Act

    INTRODUCTION

    The intersection between the Insolvency and Bankruptcy Code, 2016 (“IBC”), and the Negotiable Instruments Act, 1881 (“NI Act”), has caused significant judicial deliberation, particularly concerning creditor rights, financial discipline, and the resolution of financial distress. Section 138 of the NI Act holds the drawer of the cheque liable in case of dishonour of cheque due to insufficient funds. The provision imposes penal consequences on the drawer, serving as a deterrent against indiscriminate issuances of cheques and safeguarding creditors’ interests.[1]

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    INTRODUCTION

    The evolution of arbitration in India has been marked by a steadfast judicial commitment to enhancing its merits, particularly its efficiency, speed, and limited judicial intervention. This development offers a credible alternative to the overburdened judicial system. However, courts have remained the cornerstone of supervisory jurisdiction, ensuring that arbitral awards adhere to the principles enshrined in Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”).[2] Among the grounds for challenging awards, “patent illegality” under Section 34(2A) of the Act, initially conceived as a subset of “public policy”, was introduced as a distinct ground to address blatant legal errors visible on the face of an award by way of Arbitration and Conciliation (Amendment) Act, 2015.[3] Today, patent illegality stands as one of the widely employed grounds for challenge, yet its contours remain vague.

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    CCI Nod Mandatory Before Committee Of Creditors’ Approval Under The Code, Says Supreme Court

    The Hon’ble Supreme Court of India (“Court”) recent judgment in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja, 2025 SCC Online Sc 181 is a landmark decision. It highlights the interplay between the Insolvency and Bankruptcy Code, 2016 (“Code”), and the Competition Act, 2002 (“Competition Act”), in the context of resolution plans involving combinations that may have an appreciable adverse effect on competition (“AAEC”) in the relevant market.

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    Real Estate Insolvency: Waivers contemplated under approved resolution plan override transfer / change in shareholding charges demanded by Industrial Development Authorities

    In a recent judgment[1], the Hon’ble Supreme Court has upheld the approval of a resolution plan which provided that there should be an exemption from payment of (i) any type of fees/ penalties for renewal of sub-lease; and (ii) transfer charges due to change in directorship/ shareholding in favour of the resolution applicant, in view of the overriding effect of Section 238 of the Insolvency and Bankruptcy Code, 2016 (“the Code”/ “IBC”).

    Background

    The NOIDA Special Economic Zone Authority (“NSEZA”) had sub-leased a plot of land to the Corporate Debtor in the NOIDA Special Economic Zone, which in turn had been leased to the NSEZA by the NOIDA Authority. Upon the Corporate Debtor defaulting on lease payments and on account of the fact that no activity took place on the leased premises for a prolonged period, causing loss to the public exchequer, the NSEZA initiated proceedings under the Code for corporate insolvency resolution process against the Corporate Debtor, which stood admitted. The committee of creditors (“CoC”) was formed comprising a sole financial creditor being the Stressed Asset Stabilization Fund – IDBI Bank Limited. NSEZA filed its claim as an operational creditor for Rs 6,29,18,121.

    The resolution plan submitted by M/s Commodities Trading (“Resolution Applicant”) for a value of Rs 4,50,00,000 was approved by the CoC, under which the NSEZA would receive Rs 50,00,000 as against its claim of Rs 6,29,18,121. The resolution plan was further approved by the Hon’ble National Company Law Tribunal (“Ld. Adjudicating Authority”) by an order dated October 5, 2020, under Section 31(1) of the Code, whereunder, the Ld. Adjudicating Authority found that the concessions and waivers sought for by the Resolution Applicant fell within the parameters of the Code.

    The NSEZA challenged this approval, citing several issues, including improper valuation of the Corporate Debtor, i.e., the liquidation value and the fair value and a highly discounted payout to NSEZA. However, the main issue flagged by the NSEZA was that Clause 10.9 of the approved resolution plan, which provided for exemption from payment of (i) any type of fees/ penalties for renewal of sub lease; and (ii) transfer charges due to change in directorship/ shareholding in favour of the resolution applicant, was in contravention of Section 34(2)(d) of the Special Economic Zone Act, 2005 (“SEZ Act”).

    Pertinently, Section 34 of the SEZ Act states that it shall be the duty of the Special Economic Zone Authority (i.e. NSEZA in the present case) to undertake such measures as it thinks fit for the development, operation and management of the Special Economic Zone for which it is constituted, including inter alia “levy user or service charges or fees or rent for the use of properties belonging to the Authority”.

    Observations of the Hon’ble NCLAT

    The Hon’ble National Company Law Appellate Tribunal (“NCLAT”) addressed the said issue by holding that (a) the Code overrides other laws, and resolution plans that meet the requirements under Section 30(2) of the Code ought to be approved by the Ld. Adjudicating Authority under Section 31; and (b) that the commercial wisdom of the CoC with respect to viability of a resolution plan and the financial decisions taken while evaluating a resolution plan ought to prevail.

    Hon’ble Supreme Court upholds the verdict of the Hon’ble NCLAT

    NSEZA challenged the order of the Hon’ble NCLAT in an appeal before the Hon’ble Supreme Court, which vide its judgment dated November 5, 2024, upheld the reasoning of the Hon’ble NCLAT and found no reason to interfere with it. The Hon’ble Supreme Court has clearly found that exemptions from payments including any type of fees or penalty for renewal of sub-lease and/ or for transfer charges associated with the change in directorship/ shareholding in favour of the Resolution Applicant has to be waived as per Clause 10.9 of the Resolution Plan. Thus, the Code and a resolution plan approved thereunder, by virtue of Section 238 of the Code, would have an overriding effect over the provisions of the SEZ Act.   

    Conclusion

    The judgment of the Hon’ble Supreme Court is a welcome deviation from the general directions issued at the time of resolution plan approval, i.e., for reliefs and concessions from statutory authorities, whereunder the resolution applicant is required to approach the said authorities, which are usually hesitant to grant any waivers. Pertinently, waivers/ exemptions from payment of charges for inter alia change in shareholding are essential in order to: (a) ensure that the resolution applicant is not saddled with the liability of making exorbitant payments in order to effect the takeover of the Corporate Debtor; and (b) to ensure that the resolution plan remains viable.

    Where a resolution plan envisages such exemptions and the same stands approved in the commercial wisdom of the CoC, it ought to be considered that the financials of the resolution plan for the revival of the corporate debtor, are based on such exemptions being granted, and accordingly cannot be varied. Further, change in shareholding/ directorship of the Corporate Debtor, in favour of the resolution applicant, is an essential feature of the Code, wherein the corporate debtor is given a fresh start/ clean slate after replacing the erstwhile promoters/ management[2]. As such, there is no rationale for an industrial development authority (like the NSEZA) to burden a resolution application with exorbitant charges, merely for taking over the affairs of the corporate debtor.

    In addition to the above, the ruling of the Hon’ble Supreme Court serves as a testament to the overriding effect of the Code standing the test of time and adds to the rich jurisprudence on the doctrine of commercial wisdom of the CoC, and further fortifies the powers of the National Company Law Tribunal to grant reliefs and concessions necessary for the effective implementation of a resolution plan.

    [1] Noida Special Economic Zone Authority v Manish Agarwal, 2024 INSC 839

    [2] Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 (Para 28)

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    Interim Moratorium Not An Escape From Consumer Penalties: Supreme Court Clarifies

    INTRODUCTION

    While expanding the jurisprudence of the Insolvency and Bankruptcy Code, 2016, (“IBC”), the Division Bench of the Supreme Court (“SC”), in Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth and Ors.,[1] held that an interim moratorium under the IBC does not apply to execution proceedings for penalties imposed under the Consumer Protection Act, 1986 (“Consumer Protection Act”). Once an insolvency application is admitted by the National Company Law Tribunal, moratorium under the IBC comes into effect, which is a temporary suspension of legal actions against the debtor.

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    Comprehending the World Bank’s Sanctions Regime: Guidance for Indian Companies, Banks and Financial Institutions

    As one of the foremost international financial institutions, the World Bank (“Bank”) aims to strengthen economic progress in middle- and lower-income nations by providing financial aid for various development projects.[1] However, in 2018, the Bank sanctioned an Indian enterprise which was engaged in executing a Bank-funded project[2], highlighting the accountability of these funds. Recipients of these funds are held accountable by the Bank for using the proceeds responsibly, which is where the Bank’s sanctions regime becomes relevant.

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    Can housing societies withhold permission to install electric vehicle chargers?

    Maharashtra was among the inaugural states in the country to come up with an Electric Vehicle (“EV”) policy in February 2018, to promote sustainable and clean mobility solutions and to make it a top state in EVadoption. The EV Policy was updated on July 27, 2021, to push EV sales and encourage manufacturing within the State.

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    “Related Party” Creditor Under IBC: Making A Case For Purposive Interpretation

    The Insolvency and Bankruptcy Code, 2016 (“Code”), has marked a significant shift in India’s corporate insolvency landscape, transitioning from a debtor-centric approach to a creditor-centric approach. With the committee of creditors (“CoC”) now driving the resolution process, it has become imperative for “related parties”, likely to sabotage the resolution process of a corporate debtor, to be excluded from the same. For this purpose, the Code stipulates that “related parties” should not (i) regain control of the company either by means of submitting a resolution plan (Section 29A); or (ii) be allowed to influence the resolution process by participating and voting in CoC meetings (first proviso to Section 21(2)).

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