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2019 (9) TMI 1431 - Tri - Insolvency and BankruptcyReopening of petition which was reserved for orders on 20.08.2019 posted for their hearing on the Company Application filed by the Applicants herein - HELD THAT - As held by the Hon'ble Supreme Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. 1991 (9) TMI 72 - SUPREME COURT , the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the sub-ordinate authorities and that utmost regard should be paid by the Adjudicating Authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of higher appellate authorities which are binding on them. The Applicants cannot be impleaded at this stage of the proceedings as they are neither the Financial Creditor nor the Corporate Debtor in the matter being adjudicated upon - application rejected.
Issues Involved:
1. Application for reopening a company petition for further hearing and orders. 2. Impleadment of applicants in the proceedings. 3. Dismissal of petition under Section 7 of IBC and penalty imposition. 4. De-merging successful project from CIRP to protect lenders. 5. Legal implications of impleading third parties in insolvency proceedings. Analysis: Issue 1: Application for Reopening Company Petition The case involved the consideration of multiple applications filed by two individuals seeking to reopen a company petition for further hearing. The applicants requested the Adjudicating Authority to pass orders in the interest of justice. The Authority allowed the application, emphasizing the principles of natural justice and granting the applicants the opportunity to make submissions. Issue 2: Impleadment of Applicants The applicants, who were guarantors for a portion of the loan extended to a project of the Corporate Debtor, sought impleadment in the proceedings. They argued that they would be prejudiced by the outcome of the petition under the IBC, exposing them to recovery proceedings despite continued loan servicing. However, the Financial Creditor objected to the impleadment, citing the provisions of the IB Code and specific judgments of the NCLAT regarding the rights of third parties at the admission stage. Issue 3: Dismissal of Petition and Penalty Imposition One of the applications sought the dismissal of the petition under Section 7 of the IBC and the imposition of a penalty on the Financial Creditor. The applicants argued that the petition did not comply with mandatory requirements and should be returned for refining. However, given the rejection of the impleadment application, this issue was closed and disposed of accordingly. Issue 4: De-merging Successful Project Another application requested the de-merging of a successful project from the CIRP to protect lenders and ensure that the guarantors were not prejudiced. The applicants sought necessary directions to safeguard their interests. However, this issue was also disposed of due to the rejection of the impleadment application. Issue 5: Legal Implications of Impleading Third Parties The Authority considered the legal implications of impleading third parties in insolvency proceedings, particularly in light of judgments by the NCLAT. The applicants' counsel raised objections to the judgments cited by the Financial Creditor, but the Authority emphasized the importance of judicial discipline and the binding nature of higher appellate authorities' orders. Consequently, the impleadment application was rejected based on established legal principles and precedents. This comprehensive analysis highlights the key issues addressed in the judgment, including impleadment, dismissal of petitions, and the legal framework governing insolvency proceedings involving third parties.
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