2017 (11) TMI 1858 - AT - Insolvency and Bankruptcy

Recall of order - Power of Adjudicating authority to recall of order - Admissibility of application - initiation of CIRP - Initiation by the Operational Creditor in collusion with the Directors - Section 9 of the I B Code - HELD THAT - Admittedly the Appellant is an Investor therefore the Appellant cannot claim to be an aggrieved person for preferring appeal against the order dated 2nd May 2017 passed by Adjudicating Authority whereby the application under Section 9 of the I B Code was admitted. In fact the Appellant being an investor is entitled to file its claim before the Insolvency Resolution Professional. In absence of any power of review or recall vested with the Adjudicating Authority we hold that the Adjudicating Authority rightly refused to recall the order of admission dated 2nd May 2017. Appeal dismissed.

Summary

Issues:
1. Jurisdiction of Adjudicating Authority to recall order under Section 9 of I&B Code.
2. Allegation of fraudulent initiation of Corporate Insolvency Resolution Process.
3. Appellant's standing as an investor to challenge the order.

Analysis:
1. The Appellant, claiming to be an investor of a company, filed an intervention petition before the Adjudicating Authority alleging the fraudulent initiation of Corporate Insolvency Resolution Process against the company. The Adjudicating Authority rejected the prayer to recall the order admitting the application under Section 9 of the I&B Code, stating it lacked the power to do so.

2. The Appellant contended that the Operational Creditor filed the Company Petition fraudulently in collusion with the Directors, leading to the initiation of Corporate Insolvency Resolution Process. The Appellant argued that the Operational Creditor should be punished under Section 65 of the I&B Code for not disclosing relevant facts to the Adjudicating Authority, rendering the petition non-maintainable.

3. The Appellant, being an investor, was deemed ineligible to challenge the order admitting the application under Section 9 of the I&B Code. The Appellant's status as an investor entitled them to file a claim before the Insolvency Resolution Professional, rather than appealing the Adjudicating Authority's decision.

4. The Appellate Tribunal clarified that since the order dated 2nd May, 2017, admitting the application, was not challenged in the appeal, they could not comment on its validity. Any challenge to this order would be time-barred under Section 61 of the I&B Code. The Tribunal upheld the Adjudicating Authority's decision not to recall the admission order due to the absence of a review or recall power.

5. Consequently, the appeal was dismissed due to the lack of merit. However, the Appellant was permitted to file a claim before the Insolvency Resolution Professional, notwithstanding the dismissal of the appeal. The orders of the Adjudicating Authority were affirmed, and the Appellant's challenge was deemed unsustainable.