# In the matter of Asian Hotels (West) Limited I.A.-3041-2022 in Company Petition No. (IB)-571(PB)-2021

> NCLT judgment dated 2022-09-16. Citation: TCN-2022-NCLT-01047. The case involves an application filed by JM Financial Asset Reconstruction Company Ltd.…

- **Court:** NCLT
- **Order date:** 16 Sept 2022
- **Citation:** TCN-2022-NCLT-01047
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/asian-hotels-west-limited-ia-3041-2022-in-company-petition-no-ib-571pb-2021-4b984504

## Summary

### Background

The case involves an application filed by JM Financial Asset Reconstruction Company Ltd. seeking to be substituted as the petitioner in place of Yes Bank Limited in a corporate insolvency resolution process (CIRP) petition against Asian Hotels (West) Limited. The original petition, IB/571(PB)/2021, was filed by Yes Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016. JM Financial acquired the debt from Yes Bank through an assignment agreement dated 21.06.2022. The corporate debtor objected to the substitution, arguing that the assignment agreement was not properly stamped or registered, and that substitution is not allowed after the initiation of CIRP. The applicant argued that stamp duty has been paid and that the SARFAESI Act exempts such documents from

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## Facts

Yes Bank Limited initiated corporate insolvency resolution process (CIRP) against Asian Hotels (West) Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. During the pendency of the CIRP petition, Yes Bank Limited assigned its debt to JM Financial Asset Reconstruction Company Ltd. via an assignment agreement dated 2022-06-21 for a purchase consideration of INR 284,06,02,102. JM Financial then filed an application to be substituted as the petitioner in place of Yes Bank in the CIRP petition. Asian Hotels (West) Limited opposed the substitution, arguing the assignment agreement lacked proper stamp duty and registration, and that substitution is impermissible after CIRP initiation. JM Financial countered that stamp duty was paid, SARFAESI Act provides

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## Issues and analysis

### Issue 1: Whether the applicant, JM Financial Asset Reconstruction Company Ltd., can be substituted as the …

**Ratio:** The assignment of debt is a valid transaction recognized by the Insolvency and Bankruptcy

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**Reasoning:** The court reasoned that the assignment of debt is essentially a transaction between the

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**Interpretation:** Section 5(7) of the IBC is interpreted to include assignees of financial debt

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**Application:** Since Yes Bank legally assigned the debt to JM Financial, JM Financial steps

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## Parties

- **Judges:** Sh. Dharminder…; BINOD KUMAR…
- **Appellants:** JM Financial…
- **Respondents:** Asian Hotels…

## Timeline

- **2021-01-01 — Company Petiti…**: Company Petition No.…
- **2022-06-01 — Advertisement for Sale…**: Yes Bank issued an advertisement inviting counter bids for sale of Financial Assets/ Loan…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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