2018 (5) TMI 1997 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application has been rejected on the ground that the tabular chart reveals that the dates of default are not specifically mentioned - HELD THAT - Admittedly, we find that on the technical ground i.e. the application is defective, the Adjudicating Authority has rejected the application under Section 7 of the I B Code. Therefore, we cannot appreciate the impugned order, as before rejecting the application the Adjudicating Authority was required to give an opportunity to the Appellant to rectify the defect. Further, in a petition under Section 7 of the I B Code, the Adjudicating Authority is required to decide whether the Form 1 along with documents is complete or not. The Adjudicating Authority is not required to decide as to what is the actual amount of claim and other details, which is required to be determined by the Resolution Professional after initiation of Corporate Insolvency Resolution Process - case is remitted to the Adjudicating Authority to Company to find out whether the application in Form 1 is complete or not after notice to the parties and hearing the parties. Appeal disposed off.

Summary

Issues involved:
- Appeal against rejection of joint application under Section 7 of the Insolvency and Bankruptcy Code, 2016 on the ground of technical defect in the application.

Detailed Analysis:

1. Rejection of Application on Technical Ground:
The appeal was filed against the rejection of a joint application by the Appellants (Financial Creditors) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority rejected the application citing a technical defect, specifically the absence of specific mention of dates of default in the tabular chart. The judgment highlighted that the debt due on specific dates was mentioned, but a typographical error was present, which could have been rectified if allowed time. The Tribunal observed that the rejection solely on the ground of a defect was not appropriate as the Appellant should have been given an opportunity to rectify the error before rejection.

2. Role of Adjudicating Authority in Section 7 Petition:
The judgment emphasized the role of the Adjudicating Authority in a petition under Section 7 of the Insolvency and Bankruptcy Code. It clarified that the Adjudicating Authority's task is to determine the completeness of Form 1 along with documents, rather than deciding the actual amount of the claim or other details. Such determinations are to be made by the Resolution Professional during the Corporate Insolvency Resolution Process, post the initiation of proceedings.

3. Remittal of Case and Directions:
In light of the above observations, the Tribunal set aside the impugned order and remitted the case back to the Adjudicating Authority. The Authority was directed to evaluate the completeness of the application in Form 1 after providing notice to the parties and hearing them. If any defects were found, the Appellant should be granted time to rectify them. Additionally, the Corporate Debtor was given the opportunity to settle the claim with the Financial Creditor during this period. The appeal was disposed of with the stated directions and observations, without any costs imposed.

This detailed analysis of the judgment outlines the key issues involved, the reasoning behind the decision, and the directives provided for further proceedings in the matter.