2019 (2) TMI 1609 - AT - Insolvency and Bankruptcy

Pre-admission proceedings - application of Appellant Financial Creditor under Section 7 of the I&B Code is pending consideration - Held that - The limited enquiry has been converted into a full dressed trial. Pre-admission proceedings cannot be permitted to protract. This Appellate Tribunal has observed in a recent judgment that Corporate Insolvency Resolution Process is not a recovery proceeding and the Adjudicating Authority has to strictly adhere to the rules of procedure and the timelines set out in the I&B Code. The Adjudicating Authority should be alive to the object sought to be achieved by the I&B Code and ensure that all efforts to derail the process are frustrated. This appeal can be disposed of at the very threshold stage by directing the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench Ahmedabad to expedite the disposal of application under Section 7 of the I&B Code and pass an appropriate order preferably within two weeks failing which this Appellate Tribunal may send for the record of Adjudicating Authority and pass appropriate order - appeal disposed off.

Summary

Issues: Delay in disposal of application under Section 7 of the I&B Code before the Adjudicating Authority.

Analysis:
1. The Appellant's counsel highlighted that the application under Section 7 of the I&B Code was pending before the Adjudicating Authority since 1st March, 2018, and the matter had been adjourned multiple times.
2. The impugned order revealed that both parties were represented before the Adjudicating Authority, and the matter was adjourned at the request of the Respondent-Corporate Debtor's counsel.
3. The judgment expressed concern over the limited enquiry being prolonged into a full-fledged trial during the pre-admission stage. It emphasized that the Corporate Insolvency Resolution Process is not a recovery proceeding, and strict adherence to procedural rules and timelines under the I&B Code is essential to achieve the code's objectives.
4. The Appellate Tribunal, after hearing the Appellant's counsel, decided to dispose of the appeal promptly by directing the Adjudicating Authority to expedite the disposal of the Section 7 application and pass an appropriate order within two weeks. Failure to comply would result in the Appellate Tribunal intervening.
5. The order instructed the Appellant's counsel to provide a copy of the directive to the Adjudicating Authority for necessary action.
6. The appeal was ultimately disposed of with the aforementioned observations and directions to ensure timely resolution of the matter before the Adjudicating Authority.