2019 (12) TMI 1525 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - applicant/respondent, seeking another opportunity to the to put forth its stand on admission of the application moved under Section 7 of the Code effectively - Financial Creditors - it was averred that the application was incomplete and as the OTS process was on, thus, default could not have been alleged and there is need to espouse the plea so raised and bring it home by putting forth the oral submissions - HELD THAT - The right to hearing was given and availed by the learned counsel for the applicant/respondent in CP(IB) No. 250/Chd/Pb/2018. Therefore, reopening of the proceedings is not necessary. The terms of the sanction letter dated 27.12.2018 were not complied with by the applicant/respondent in CP(IB) No. 250/Chd/Pb/2018 and therefore, the sanction letter dated 27.12.2018 granting OTS was automatically cancelled. The novation of contract, if any, does not therefore arise in the present case where the OTS proposal is not complied with and automatically cancelled. The prayer for granting another opportunity to the applicant/respondent to put forth its stand on admission of the application moved under Section 7 of the Code effectively is denied - application dismissed.

Summary

Issues:
1. Application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Request for an opportunity to present arguments effectively due to counsel unavailability.
3. Allegation of incomplete application and ongoing OTS process leading to no default.
4. Discretionary power to reopen evidence and novation of contract in the case.

Issue 1: The Central Bank of India filed CP(IB) No. 250/Chd/Pb/2018 seeking initiation of CIRP in the case of M/s. KSM Spinning Mills Ltd. The respondent raised objections regarding the completeness of the application and the ongoing OTS process, arguing that no default existed. The respondent requested an opportunity to present its stand effectively and extend the time for order until 30.03.2020. The Tribunal considered arguments from both sides and examined the record.

Issue 2: CA No. 1169/2019 was filed by KSM Spinning Mills Ltd. under Rule 11 read with NCLT Rules, 2016, due to the unavailability of their arguing counsel during the hearing. The applicant sought a chance to present additional points effectively. However, the Tribunal noted the presence of the respondent's counsel during the hearing and considered the contentions raised in the reply to the main application.

Issue 3: The respondent argued that the application was incomplete and highlighted the ongoing OTS process, claiming no default existed. The respondent referred to specific dates and amounts, emphasizing compliance issues with the sanction letter for the OTS proposal. The Tribunal examined the arguments, including reliance on legal precedents, and concluded that the request for another opportunity to present arguments effectively was denied.

Issue 4: The respondent relied on legal precedents regarding the discretionary power to reopen evidence and novation of contract. However, the Tribunal found that the terms of the OTS proposal were not complied with, leading to the automatic cancellation of the sanction letter. Therefore, the plea for granting another opportunity was rejected, and CA No. 1169/2019 was dismissed.

The Tribunal pronounced the judgment in open court, upholding the denial of the request for further opportunities to present arguments effectively and rejecting CA No. 1169/2019.