Company Appeal - The Legal Chamber

The Supreme Court held that Cumulative Redeemable Preference Shares (CRPS) represent an equity investment, not a financial debt under the IBC. Preference shareholders are not creditors, and redemption is contingent upon company profits under the Companies Act. Therefore, they cannot initiate insolvency proceedings under Section 7 of the IBC for non-redemption. Facts Of The Case: EPC Constructions India Limited (EPCC) held outstanding receivables from Matix Fertilizers and Chemicals Limited for construction work. In 2015, to help Matix meet lender-mandated debt-equity ratios, the parties agreed to convert ₹400 crores of dues into 8% Cumulative Redeemable Preference Shares (CRPS). Matix subsequently allotted CRPS worth ₹250 crores to EPCC. When the shares matured after three years, M...

The Supreme Court held that an appeal against an NCLT order under the IBC must be filed within 30 days from the date of its pronouncement. It reiterated that mandatory filing of a certified copy of the impugned order is integral to a valid appeal, and non-compliance renders the appeal barred by limitation. Facts Of The Case: The case originated from an order dated June 23, 2023, passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which approved a resolution plan submitted by Ashdan Properties Pvt. Ltd. in the corporate insolvency resolution process of the corporate debtor. The respondent, DSK Global Education and Research Pvt. Ltd., being aggrieved by this order, filed an appeal before the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT's decision. The ...

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Supreme Court Ruling: No Certified Copy, No Appeal – NCLAT’s Order Set Aside on Technical Ground