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2019 (8) TMI 1849 - AT - Insolvency and BankruptcyInitiation of CIRP - Objection / Appeal by another lender (Financial Creditor) against the initiation of CIRP - Locus Standi - NCLT admitted the application in the second round - earlier NCLT had rejected the application - Corporate Debtor as 'Gwalior Bypass Project Limited' - Appellant allege that the applicant, ICICI Bank has loan to corpoate debtor in the absence of approval of NHAI, as mandated in terms of the Concession Agreement dated 9th October, 2006. - according to the Counsel for the Appellant sanction of loan by ICICI Bank having not been approved by NHAI, the Bank by filing application under Section 7 cannot deprive the Appellant from occupying position of sole/ senior lender HELD THAT - A limited notice is required to be given to the 'Corporate Debtor' before admitting an application under Section 7. In such case, the 'Corporate Debtor' may raise objection and may point out that there is no debt payable in law or in fact or that the default has not been committed. It is also open to the 'Corporate Debtor' to take plea that the Applicant is not a 'Financial Creditor' or 'Operational Creditor'. The 'Corporate Debtor' may also settle the claim with the 'Financial Creditor' or 'Operational Creditor' before admission of an application under Section 7 or 9. The Appellant being not a Member/ Shareholder of the 'Corporate Debtor', and has claimed to be a 'Financial Creditor' of the 'Corporate Debtor' has no right to intervene to oppose admission of the application under Section 7 preferred by the ICICI Bank against the 'Corporate Debtor'. After admission of the application under Section 7, if the Appellant claims that it is one of the 'Financial Creditor', it can file claim before the 'Resolution Professional', but it cannot challenge the order of admission in absence of any challenge by the 'Corporate Debtor', on the ground that it has first charge on the asset of the 'Corporate Debtor' or has superior claim over the claim of the other 'Financial Creditors'. Appeal dismissed.
Issues:
- Rejection of petition for intervention by L&T Infrastructure Finance Company Ltd. - Admission of application under Section 7 by ICICI Bank Limited against the Corporate Debtor. - Challenge to the rejection and admission orders in the Appeals. Analysis: 1. Rejection of Intervention Petition: L&T Infrastructure Finance Company Ltd. filed a petition for intervention in the insolvency proceedings initiated by ICICI Bank Limited against the Corporate Debtor. The National Company Law Tribunal rejected the intervention petition, stating that L&T was not a necessary party in the proceedings. 2. Admission of Application under Section 7: ICICI Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor, which was admitted by the Adjudicating Authority. This initiated the Corporate Insolvency Resolution Process against the Corporate Debtor. 3. Challenges in the Appeals: The Appeals challenged the rejection of the intervention petition and the admission of the application under Section 7. The Appellant, L&T Infrastructure Finance Company Ltd., claimed to be a financial creditor of the Corporate Debtor and contested the order of admission by ICICI Bank Limited. 4. Legal Analysis: The judgment referred to the case of "Innoventive Industries Ltd. v. ICICI Bank," emphasizing the provisions of the Insolvency and Bankruptcy Code related to financial creditors and operational creditors. It highlighted that a financial creditor can trigger the insolvency process if the debt is due and not paid, regardless of any dispute over the debt amount. 5. Position of Law: The Appellate Tribunal held that the Appellant, L&T Infrastructure Finance Company Ltd., being a financial creditor of the Corporate Debtor, did not have the right to intervene in opposing the admission of ICICI Bank's application under Section 7. The Appellant could file a claim before the Resolution Professional after admission but could not challenge the admission order based on superior claim over other financial creditors. 6. Conclusion: The Appeals were dismissed, and no relief was granted to the Appellant. The judgment clarified the rights of financial creditors under the Insolvency and Bankruptcy Code, emphasizing the process of admission of applications under Section 7 and the limited scope for intervention by creditors not directly involved in the proceedings.
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