Supreme Court’s Observations Regarding Auctioned Properties and Insolvency Professionals
Supreme Court on Auctioned Properties and IBC:
The Supreme Court of India made a significant observation regarding the treatment of auctioned properties in the context of the Insolvency and Bankruptcy Code (IBC), 2016. This ruling has implications for how assets are handled in insolvency proceedings.
Key Points:
- The court stated that properties of a defaulting borrower, which are sold in an auction sale, cannot be considered as part of the liquidation assets if the sale was concluded before the declaration of a moratorium under the IBC.
- The Supreme Court set aside an order passed by the National Company Law Appellate Tribunal (NCLAT) in this regard.
- This decision clarifies the status of assets disposed of before the commencement of insolvency proceedings, providing a more definite framework for dealing with such scenarios.
Delhi High Court on Insolvency Professionals:
In another significant development, the Delhi High Court ruled on the status of Insolvency Professionals (IPs) under the Prevention of Corruption Act, 1988.
Key Points:
- The High Court determined that Insolvency Professionals or Resolution Professionals should not be classified as “public servants” under the Prevention of Corruption Act.
- This judgment was in response to an argument made by the Central Bureau of Investigation (CBI) that the duties of IPs under the IBC should be treated as “public duties.”
- The Delhi High Court rejected these arguments and thus clarified the legal position of IPs in the context of the Act.
Implications:
These rulings are significant in the field of insolvency law and for the treatment of assets in insolvency and bankruptcy cases. The Supreme Court’s decision provides clarity on how assets sold before the imposition of a moratorium should be treated, which is crucial for creditors and insolvency practitioners. Similarly, the Delhi High Court’s ruling on the status of Insolvency Professionals underlines the distinction between private professionals and public servants, impacting how these professionals are perceived and treated under law.
Social Media Reactions:
These decisions have sparked discussions on social media, particularly among legal professionals and experts in insolvency law. However, as of my last training data in April 2023, I can’t generate or access real-time social media content, including tweets. To find relevant tweets or social media posts, you can search on platforms like Twitter using keywords related to these rulings, such as “Supreme Court India IBC ruling” or “Delhi High Court Insolvency Professionals.” This will give you access to the latest discussions and opinions on these legal developments.
