The observations of the Hon’ble Supreme Court in this case may be viewed as a broad affirmation of the NCLAT ruling in Kirusa Software Case where it was held that a ‘dispute’ pursuant to Section 8(2) must not be pending in a suit or arbitration proceeding; however, the same must be ‘pending’ and cannot be raised by the corporate debtor for the first time while it is pending.
This decision brought a new tool to the homebuyers’ arsenal by giving them an extra recourse against the developers, it did not leave the developer in a lurch because it also offered an assortment of protections that the developer might use to hold wily allottees at bay.
The timeline given under Sec. 9 of the code lays down the time period for the National Company Law Tribunal to give the order after the application is filed with them. This time period is of fourteen days. Within these fourteen days the tribunal after satisfying that the application is filed as per the conditions laid down under the Code, can appoint the interim resolution professional to carry out the insolvency proceedings as per the rules laid down under the code.
If for fraudulent and dishonest purposes the privilege of corporate veil is used, such persons can be made personally liable for the debts of the company. Even when a person uses this for concealing his own criminal activities, the court will break through the corporate shell and apply the principle of what is known as “lifting or piercing through the corporate veil.”
There should be a necessary balance between the interest of the public and the corporate personality. There cannot be a single rule for the doctrine of corporate veil. Since no right is absolute, lifting of corporate veil to disregard limited liability of members should be emphasised and for this, the courts must stick to a set of statutory standards.
The corporator even if he holds all the shares is not the corporation, neither he nor any creditor of the company has any property legal or equitable in the assets of the corporation.
Specialists who draft these shareholders’ agreement (SHAs) should consider the enforceability of these speculator rights when relocating from other undeniably more all around created PE markets which, subsequently, might be an outright rebel under Indian law.
The Hon’ble Supreme Court held that one of the main objectives of enactment of the Insolvency and Bankruptcy Code 2016 was to finish the legal proceedings in a time bound manner. Hence holding this objective, the court held that if there is any delay in the filing of the appeal or filing of the application under the provisions of the code, then in that case the adjudicating authority shall not accept the application and reject the same.
As in the present case, the court protected the rights of the operational debtor by using literal approach towards the provision of section 9 of the Code. Also, to not to deprive the Advocates from practice of their profession, the Court held that depriving them for such practice will attract the violation of Article 19 of the Constitution of India.
When the moratorium period is imposed then in such case certain activities as prescribed under the Act has been kept on stay i.e., during this time the corporate debtor shall not initiate the arbitration proceeding. In other words, that when the imposition of moratorium takes place then during that time the corporate debtor will not be allowed to invoke the provisions of remedy available under various different provisions.
