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2019 (8) TMI 1867 - AT - Insolvency and BankruptcyCIRP - Six Directors-Applicants of the Financial Creditor sought impleadment as party Respondent - how the Application under Section 7 of IBC is to be dealt with? HELD THAT - How the Adjudicating Authority should consider the matter at the stage of admission fell for consideration of Hon ble Supreme Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. 2017 (9) TMI 58 - SUPREME COURT , when the Hon ble Supreme Court observed that It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. From the plain reading of Section 7 of IBC it is clear that the Adjudicating Authority, on being satisfied and if the application is complete, after notice and hearing the Corporate Debtor, may either admit the application or reject it. The Hon ble Supreme Court also noticed the aforesaid mandate of law. In that view of the matter, there is no requirement for intervention of any Directors or shareholders of the Financial Creditor or any other party before admission of Application under Section 7 of IBC. If the application is admitted, it would be open to any aggrieved party to move before this Appellate Tribunal. The impugned order dated 29.04.2019 is set aside - the Financial Creditor Corporate Debtor are directed to appear before the Adjudicating Authority and the Adjudicating Authority on hearing the parties will pass appropriate order on merit of the case on the next date or within a reasonable time - appeal allowed.
Issues:
Application under Section 7 of Insolvency and Bankruptcy Code, 2016; Intervention of Directors of Financial Creditor before admission of application; Interpretation of Section 7 of IBC; Requirement of intervention of Directors or shareholders of Financial Creditor before admission of application. Analysis: The case involved an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by the Appellant, a Financial Creditor, against the Corporate Debtor. The Adjudicating Authority allowed the intervention of Directors of the Financial Creditor without impleading them as parties. The main issue was whether intervention of Directors or shareholders of the Financial Creditor was necessary before the admission of the application under Section 7 of IBC. The National Company Law Appellate Tribunal referred to the judgment in "Innoventive Industries Ltd. Vs. ICICI Bank and Anr." where the Supreme Court explained the scheme of the Code concerning defaults, debts, financial creditors, and operational creditors. The Tribunal highlighted the provisions of Section 7 of IBC, emphasizing that the Adjudicating Authority, after notice and hearing the Corporate Debtor, may admit or reject the application. The Tribunal concluded that there was no requirement for the intervention of Directors or shareholders of the Financial Creditor before the admission of the application under Section 7 of IBC. Based on the interpretation of the law and the Supreme Court's observations, the Appellate Tribunal set aside the impugned order and directed the Financial Creditor and Corporate Debtor to appear before the Adjudicating Authority for further proceedings. The Tribunal clarified that if the application is admitted, any aggrieved party could approach the Appellate Tribunal. The appeal was allowed with these observations, emphasizing the importance of following the procedures outlined in the law without the need for additional intervention before the admission of the application under Section 7 of IBC.
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