2018 (4) TMI 532 - AT - Insolvency and Bankruptcy

Corporate insolvency procedure - appellant submits that there is no debt in the eyes of the law as the amount was not paid to the Corporate Debtor - Held that - As from the record we find that Mr. Atul Sharma and Mr. Nipun Sharma, two Directors of the Corporate Debtor were introduced through common friend in the year 2013. At that time, Corporate Debtor needed financial assistance for a short period, therefore, Corporate Debtor approached and requested the Financial Creditor to help them out. Thereafter, on different dates as per the table mentioned at Part IV of the application (Form I), sum of ₹ 51,750,000/- was disbursed by the Financial Creditors which include sum of ₹ 25,00,000 given by one Mr. Vinay Lakra. Therefore, the arguments advanced by the appellant that no amount be given to the Corporate Debtor cannot be accepted. Apart from the aforesaid fact we are of the view that the appeal preferred by Corporate Debtor is not maintainable in view of the decision of the Hon ble Supreme Court in M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. - 2017 (9) TMI 58 - SUPREME COURT OF INDIA . Appeal dismissed.

Summary

Issues:
- Appeal against order admitting application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
- Maintainability of appeal by Corporate Debtor.
- Disbursement of funds to Corporate Debtor by Financial Creditors.
- Applicability of the decision in "M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. 2017 SCC OnLine SC 1025".

Analysis:

1. Appeal against order admitting application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The appeal was filed by the Corporate Debtor against the order passed by the Adjudicating Authority admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Financial Creditors had approached the Corporate Debtor with financial assistance, and funds were disbursed to the Corporate Debtor. The argument made by the appellant that no amount was given to the Corporate Debtor was dismissed by the Tribunal, citing the disbursement of funds as per the application.

2. Maintainability of appeal by Corporate Debtor:
The Tribunal observed that the appeal filed by the Corporate Debtor was not maintainable based on the decision of the Hon’ble Supreme Court in "M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. 2017 SCC OnLine SC 1025". The Supreme Court's decision highlighted that once an insolvency professional is appointed to manage the Company, the erstwhile Directors who are no longer in management cannot maintain an appeal on behalf of the Company. Therefore, the Tribunal found the appeal by the Corporate Debtor to be not maintainable.

3. Disbursement of funds to Corporate Debtor by Financial Creditors:
The Tribunal noted that funds were disbursed to the Corporate Debtor by the Financial Creditors, including a specific amount given by an individual. The Tribunal rejected the argument that no amount was given to the Corporate Debtor, emphasizing the disbursement of funds as per the records presented during the proceedings.

4. Applicability of the decision in "M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. 2017 SCC OnLine SC 1025":
The Tribunal cited the decision of the Hon’ble Supreme Court in "M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. 2017 SCC OnLine SC 1025" to support its finding that the appeal filed by the Corporate Debtor was not maintainable. The Supreme Court's decision emphasized the appointment of an insolvency professional to manage the Company, which rendered the appeal by the erstwhile Directors of the Company as not maintainable. As a result, the Tribunal dismissed the appeal by the Corporate Debtor, with no order as to costs in the circumstances of the case.