2021 (11) TMI 1044 - SC - Companies Law

Maintenance of status quo with regard to the distribution of funds of the corporate debtor to the financial creditors - Liquidation in process - only aspect relevant in the present case is that the applications pending before the Adjudicating Authority need to be decided without further loss of time - HELD THAT - The Adjudicating Authority is definitely expected to keep in view the requirement of expeditious proceeding under the Insolvency and Bankruptcy Code, 2016 as also the directions issued by the Appellate Tribunal, even if expressed in soft terms. In the given set of circumstances, the Appellate Tribunal, while reiterating its request to the Adjudicating Authority to decide the pending IAs at the earliest, ought not to have disposed of the appeal. Rather, the Appellate Tribunal could have kept the appeal pending, while awaiting compliance from the Adjudicating Authority and, if necessary compliance was not yet forthcoming, to withdraw the matter from the National Company Law Tribunal, Chandigarh Bench, Chandigarh and either to dispose of itself or transfer it to some other Bench of the Tribunal for necessary steps. Appeal disposed off.

Summary

Issues:
1. Delay in deciding the pending applications before the Adjudicating Authority.
2. Appropriate action by the Appellate Tribunal in response to the delay.
3. Disposal of the appeal without notice to the opposite party.

Analysis:
1. The judgment concerns a case related to the corporate insolvency resolution process of a company, where a financial creditor's claim was accepted by the liquidator. However, a suspended director of the company filed an application challenging this decision, leading to an ex parte order for maintaining status quo on fund distribution. Subsequent delays in deciding the pending applications before the Adjudicating Authority raised concerns about the timely resolution of the matter, prompting appeals and interventions by the Appellate Tribunal to expedite the process.

2. The Appellate Tribunal acknowledged the delays and expressed anguish over the situation, urging the Adjudicating Authority to decide the pending applications promptly. Despite the concerns raised and the directions issued by the Appellate Tribunal to expedite the proceedings within a specified timeframe, further adjournments and delays persisted, leading to dissatisfaction with the pace of the legal process. The judgment highlighted the necessity for expeditious proceedings under the Insolvency and Bankruptcy Code, emphasizing compliance with directives to avoid undue delays.

3. In response to the perceived inadequacies in the handling of the case by the Adjudicating Authority, the Appellate Tribunal's decision to dispose of the appeal without notice to the opposite party was deemed inappropriate. The Supreme Court set aside this aspect of the judgment, restoring the appeal for further consideration by the Appellate Tribunal. The Court emphasized the need for a more proactive approach to address delays and non-compliance with established timelines, indicating a willingness to intervene if necessary to ensure the timely resolution of the matter. The judgment underscored the importance of procedural fairness and adherence to legal requirements in handling such cases, while refraining from making any substantive comments on the merits of the case.