Lenders Law

The Supreme Court of India has, in a recent decision in Gloster Limited vs. Gloster Cables Limited & Ors. , delivered an important clarification on the limits of insolvency jurisdiction , particularly where intellectual property ownership disputes intersect with the Corporate Insolvency Resolution Process (CIRP). The ruling is significant for lenders, resolution applicants and insolvency professionals, as it reinforces that insolvency forums are not substitutes for civil courts in adjudicating complex title disputes. Background:  The dispute arose in the CIRP of Fort Gloster Industries Limited , where competing claims were raised over the ownership of the trademark “Gloster” . The successful resolution applicant asserted that the trademark was a corporate debtor asset , capable of being transferred under an approved resolution plan. Another party (who was assigned the rights over the trademark vide an assignment agreement, and was also an associate company of t...

With banks implementing the Positive Pay mechanism pursuant to RBI directions , cheque return memos increasingly record reasons such as  “Positive Pay not registered”  or “Positive Pay mismatch” . This has given rise to a new question:  If a cheque is returned due to Positive Pay non-compliance, does Section 138 of the Negotiable Instruments Act, 1881 still apply? Inthe author's view, the answer is yes — since the dishonour is still attributable to the drawer . This post examines the issue through statutory interpretation and settled Supreme Court jurisprudence. Understanding the Positive Pay Mechanism: The Positive Pay system requires the drawer of a cheque to pre-register key cheque particulars —such as cheque number, date, amount, and payee name—with the bank before presentation. If the details are: Not registered, or Incorrectly registered, the cheque may be returned unpaid even if sufficient funds are available . The critical point is:  Positive Pay co...

Section 128 of the Indian Contract Act, 1872 stipulates: “ The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract . Laxmi Pat Surana v. Union Bank of India (2021, SC) – A guarantor’s liability arises the moment the principal borrower commits default. SBI v. Athena Energy Ventures (2020, NCLAT) – A creditor can proceed simultaneously against the corporate debtor and guarantor. Thus, it was understood that once the principal borrower has defaulted, and an IBC petition is being filed for the principal borrower, relevant steps may also be taken against the guarantor for initiation of the guarantor's insolvency proceedings simultaneously.  The Turning Point — SBI v. Deepak Kumar Singhania (2025, NCLAT) In February 2025, the NCLAT in State Bank of India v. Deepak Kumar Singhania changed the ground reality. What Happened SBI had lent to LML Ltd. , which defaulted and went into liquidation. ...

When an operational creditor issues a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 , the corporate debtor has 10 days to: Repay the amount due, or Bring to notice the existence of a dispute . Sometimes, the real issue arises when a reply is sent — but instead of being a genuine dispute, it is a tactic to stall or avoid insolvency proceedings, or instead of a full reply, the corporate debtor sends an “interim reply” within those 10 days — saying something like “ We are in the process of preparing a detailed response to the Demand Notice. Meanwhile, we request you to kindly treat this communication as our interim/ holding response” .  Now, the question which arises here is: does this obligate the creditor to wait further before filing an application under Section 9? The Legal Framework Statutory Timeline : The Code strictly prescribes 10 days from receipt of the Section 8 notice. There is no provision for extending this timeline merely bec...

India’s digital transformation has streamlined the entire banking and financial services through Aadhaar, e-KYC, and video-based verification[1]. However, these systems have posed severe barriers for persons with disabilities, particularly acid attack survivors with facial/ eye disfigurements and individuals with blindness. Recognising this, the Hon’ble Supreme Court in Pragya Prasun & Ors. vs. Union of India  issued a landmark judgment on 30th April 2025, mandating inclusive reforms in KYC processes. In this regard, the Securities Exchange Board of India had earlier issued a circular no. SEBI/HO/MIRSD/SECFATF/P/CIR/2025/74 dated 23rd May, 2025, directing all its intermediaries to comply with the said Supreme Court Order. Now, on 14th August, 2025, the Reserve Bank of India has issued a notification no. RBI/2025-26/74 , wherein it has directed that all regulated entities shall mandatorily undertake appropriate measures in this regard.  Background:  Two writ petitions...

  In Jaypee Kensingon Boulevard Apartments Welfare Association vs. NBCC (India) Limited [1] , the Hon’ble Supreme Court had held that in case a resolution plan requires modification, the Adjudicating Authority must send back the resolution plan to committee of creditors (CoC) to consider the modifications, so as to afford an opportunity to resolution applicant to modify the plan, and CoC may then re-consider the plan and vote upon same. Similar understanding reflects even from the Hon’ble Supreme Court decision in Committee of Creditors of Essar Steel India Ltd vs. Satish Kumar Gupta [2] , wherein it had affirmed this power to remand back. Now, recently, in Bank of Maharashtra vs. Videocon Industries Ltd. [3] , the primary issue that arose for consideration before the National Company Law Appellate Tribunal, New Delhi (NCLAT) was whether CoC can review its decision of approving the resolution plan. Facts of the case: a) The dissenting financial creditor filed an appeal before N...

  The creditors might have given loan to a company based on the credentials of the group, and the management might have siphoned the funds into related entities, causing insolvency of the borrower company. In such a situation, the creditors of the borrower insolvent company will suffer huge financial loss. Further, in some cases, there may be practical difficulties in carrying out the insolvency proceedings of one or more entity within a group due to intermingling of assets of the group entities. There is, therefore, a need to carve an exception to the concept of separate legal entity, and pierce the corporate veil by bringing the assets of the solvent entities within the purview of the insolvency proceedings of its associate or subsidiary.   In India, the concept of group insolvency gained prominence in the case of Videocon Industries Limited [1] , wherein the Hon’ble National Company Law Tribunal, Mumbai Bench held that in the corporate insolvency resolution process of Video...