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2019 (3) TMI 1901 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - winding up petition against the corporate debtor, pending for disposal before High Court - consideration of application filed by SBI - State Bank of India did not disclose pendency of winding up petition against the corporate debtor - suppression of material fact and playing fraud on this authority or not. Whether in view of the fact that the Hon ble High Court having admitting the winding up petition against the corporate debtor and it is pending for disposal, this authority can consider this application filed by State Bank of India under section 7 of IBC? - HELD THAT - Though the winding up petition against the corporate debtor is admitted by the Hon ble High Court, this authority can proceed with heaing of this application filed by State Bank of India (in short, SBI) against the corporate debtor under section 7 of 1 B Code. I also noted that SBI s stand before the Hon ble High Court against the corporate debtor and before this authority is not inconsistent at all. In the High Court, SBI opposed winding up proposal and here in this case, SBI requested this authority to have a resolution of insolvency of the corporate debtor as a first instance and if not the consequences of liquidation may follow - Hon ble High Court admitted winding up petition against the corporate debtor, this authority can proceed with hearing of this application and admit the corporate debtor in CIRP. Whether this authority having held in daily proceeding order dated 02.08.2017 in CP No.95/KB/2017 that it is not proper on the part of this authority to pass any order against the corporate debtor in CIRP under IBC as it may amount to interference of jurisdiction of Hon ble High Court. Whether this authority can still consider this application filed by SBI under section 7 of IBC? - HELD THAT - It is to be made clear that the order dated 02.08.2017 was passed in daily proceeding under rule 92 of NCLT rules, 2016. By that order, this authority simply adjourned that matter to next date. It is not a final order passed in the proceeding. Moreover, that order was passed way back on 22.08.2017 when law relating to status of the proceeding under I B Code vis-a-vis proceeding under winding up petition pending against same company was not clearly set out and explained - proceeding under B Code being distinct and independent proceeding than the proceeding of winding up company, this Adjudicating Authority can proceed with the hearing of the application under section 7, 9 or 10 of 1 B Code filed by the creditor or Corporate Person as the case may be. This authority has to take judicial notice of above judgment of the Hon ble Apex Court as they are having binding precedent on this authority as per Article 141 of the Constitution of India. When this authority passed order dated 02.08.2017, this position of law was not clear. This authority can proceed with the hearing of this application. It cannot be said that this authority is sitting in appeal against its own order because order cited by the corporate debtor cannot be said to be final order passed by this authority. State Bank of India did not disclose pendency of winding up petition against the corporate debtor and the order of this authority dated 02.08.2017 in CP No.95/KB/2017. Whether it is amounting to suppression of material fact and playing fraud on this authority? - HELD THAT - This authority did not pass any order in favour of the SBI. It is not a case wherein the SBI got some advantageous order being passed by this Adjudicating Authority because it did not disclose pendency of winding up petition against the corporate debtor. No doubt, SBI ought to have disclosed the same in all its fairness but only because SBI did not disclose those facts, is not enought to reject this application. SBI did not seek any order prejudicial to the interest of the corporate debtor. In fact, it is the say of SBI in this proceeding that as the corporate debtor is unable to pay huge debt, its insolvency resolution process may be started - non-disclosure of pendency of winding up petition against the corporate debtor is not a relevant and material fact to decide this application - answered in negative. Application admitted - moratorium declared.
Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) can be considered and admitted when a winding-up petition is already admitted and pending before the High Court. 2. Whether the previous order dated 02.08.2017, which deferred the proceedings under IBC due to the pending winding-up petition, affects the current application. 3. Whether the State Bank of India (SBI) suppressed material facts by not disclosing the pending winding-up petition against the corporate debtor and if this amounts to playing fraud on the tribunal. Detailed Analysis: Issue 1: Admissibility of Application under Section 7 of IBC The core issue was whether the National Company Law Tribunal (NCLT) could proceed with the application under Section 7 of IBC despite the High Court admitting a winding-up petition against the corporate debtor. The Corporate Debtor argued that the NCLT should not proceed as the High Court was already dealing with the winding-up petition. However, the tribunal noted that various rulings, including those from the NCLT Principal Bench, NCLAT, and the Supreme Court, clarified that the proceedings under IBC are independent and separate from winding-up proceedings. It was established that unless a winding-up order is passed and an official liquidator is appointed, the NCLT can proceed with the application under IBC. Therefore, the tribunal held that it could proceed with the application filed by SBI under Section 7 of IBC, despite the pending winding-up petition. Issue 2: Impact of Previous Order Dated 02.08.2017 The Corporate Debtor contended that the tribunal's previous order dated 02.08.2017, which deferred the IBC proceedings due to the pending winding-up petition, should prevent the current application from being admitted. The tribunal clarified that the order dated 02.08.2017 was an interim order passed during daily proceedings and not a final order. It was also noted that the legal position regarding the relationship between IBC proceedings and winding-up petitions was not clearly established at that time. Subsequent rulings by higher courts clarified that IBC proceedings are distinct and can proceed independently of winding-up petitions. Therefore, the tribunal held that it could proceed with the current application without it being considered an appeal against its own previous order. Issue 3: Alleged Suppression of Material Facts by SBI The Corporate Debtor and intervenors argued that SBI suppressed material facts by not disclosing the pending winding-up petition, amounting to fraud. The tribunal examined whether SBI sought any favorable orders by suppressing these facts. It was concluded that SBI did not gain any advantageous order from the tribunal by not disclosing the pending winding-up petition. The tribunal noted that while SBI should have disclosed the pending petition in fairness, the non-disclosure did not materially affect the proceedings or amount to playing fraud. Therefore, the tribunal held that the non-disclosure was not sufficient grounds to reject the application. Conclusion: The tribunal admitted the application filed by SBI under Section 7 of IBC to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The tribunal declared a moratorium as per Section 14 of IBC, appointed an Interim Resolution Professional (IRP), and directed the IRP to complete the CIRP process in a time-bound manner. The tribunal also disposed of the intervenors' applications challenging the maintainability of the proceedings.
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