2017 (9) TMI 676 - Tri - Companies Law

Insolvency Application - application filed by the applicant bank as a Financial Creditor against the Corporate Debtor on the ground that the Corporate Debtor has defaulted in the payment of a sum - statutory period computation - Held that - It is not in doubt that the main insolvency application has been filed by State Bank of India being the Financial Creditor for unleashing the Corporate Insolvency Resolution Process against the Corporate Debtor on 27.6.2017. The amount which is clamed as per the insolvency application filed by the Financial Creditor is stated to be in a sum of ₹ 63,53,44,632.63/-. It is also evident from the amount claimed that it is quite substantial sum which the Financial Creditor despite repeated notices as well as approaching other forums have not be in a position to recover and this ultimately had made the Financial Creditor Bank to seek and avail the provisions of IBC, 2016 by approaching this Tribunal bringing to light the insolvency of Corporate Debtor. The statutory period fixed is 14 days and in so far as this Tribunal is concerned will operate from the date of listing before this Tribunal. The first date of listing of the matter from the records it is seen is on 5.7.2017 and as stated in the application it was again re-posted to 6.7.2017, on which date this Tribunal was compelled to dismiss the petition for non-prosecution, due to non-appearance of the Petitioner. It is further seen from the records that application for restoration of the insolvency application has been filed on 7.7.2017. The applicability of Rule 48 of National Company Law Tribunal Rules, 2016 will not be applicable to IBC,2016 stricto senso as evident from the time period provided therein for an application for restoration is 30 days whereas under IBC, 2016 this Tribunal is required to deal with the application for Insolvency itself within a period of 14 days. Keeping in view as from the date of first posting on 5.7.2017, 14 days period has not expired and also taking into consideration that the applicant bank has acted promptly in filing the application for restoration that too within the said period of 14 days, even taking into consideration the date of presentation, being 27.07.2017, we allow this application and the insolvency application in IBC No. 189/2017 stands restored to its original state, subject however to payment of costs in a sum of ₹ 25,000/- to Prime Minister s National Relief Fund within ten days from the date of this order. List the main C.P. on 11.8.2017.

Summary

Issues:
1. Application filed by the bank as a Financial Creditor against the Corporate Debtor for default in payment.
2. Dismissal of insolvency application for non-prosecution and subsequent application for restoration.
3. Interpretation of time limits under IBC, 2016 for admitting or rejecting the application.
4. Comparison between Financial Creditors and Operational Creditors under IBC, 2016.
5. Application of Rule 48 of National Company Law Tribunal Rules, 2016 in the context of IBC, 2016.

Analysis:
1. The bank, as a Financial Creditor, filed an application against the Corporate Debtor for defaulting on a substantial sum. The insolvency application was dismissed for non-prosecution, leading to a subsequent application for restoration. The bank claimed non-appearance was unintentional and sought restoration based on Rule 48 of the NCLT Regulations, 2016.

2. The bank argued that the mandatory 14-day period for admitting or rejecting the application had not expired at the time of filing for restoration. Citing a judgment, the bank highlighted the difference in treatment between Financial Creditors and Operational Creditors, asserting the need to set aside the dismissal order.

3. The Tribunal acknowledged the substantial amount claimed by the Financial Creditor and emphasized the diligence required in handling insolvency petitions, especially with public funds. It clarified that the time limit for Financial Creditors aligns with that of Operational Creditors under IBC, 2016, starting from the date of listing before the Tribunal.

4. Despite Rule 48 not directly applying to IBC, 2016's timeframe of 14 days for insolvency applications, the Tribunal considered the circumstances and prompt filing by the bank within the stipulated period. Consequently, the insolvency application was restored, subject to a cost payment to the Prime Minister's National Relief Fund within ten days.

5. The judgment highlighted the importance of timely action by Financial Creditors in insolvency matters, underscoring the need for adherence to statutory timelines and diligent prosecution of petitions. The decision to restore the insolvency application reflected a balance between procedural requirements and the circumstances presented by the bank.