2018 (1) TMI 315 - AT - Insolvency and Bankruptcy

Corporate insolvency process - plea taken by the appellants is that the respondent(s) has filed the application under Section 7 of the I & B Code in the capacity of Trustee and not as a Financial Creditor - Held that - On perusal of the record, we find that in Part-I of Form I, it has been mentioned that the respondent is a Financial Creditor . Its date of incorporation as financial creditor has been shown as 5th October, 2007 with the identification number as financial creditor. It is true that the respondent is a trustee but we find that the respondent is also a company registered under the Companies Act, 1956 and come within the definition of Financial Creditor as defined under sub-section (7) read with sub-section (8) of Section 5 of the I & B Code. In view of the fact that the respondent has filed the application in the capacity of the Financial Creditor and the application is complete, we find no ground to interfere with the impugned order.

Summary

Issues:
1. Capacity of the respondent as a Trustee vs. Financial Creditor in the insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The appeal before the National Company Law Appellate Tribunal was filed by a Shareholder/Director of a Corporate Debtor against an order passed by the Adjudicating Authority admitting an insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was filed by the respondent, a Financial Creditor, leading to the appointment of an Interim Resolution Professional and imposition of a moratorium. The appellants contended that the respondent filed the application as a Trustee and not as a Financial Creditor, citing the mention of acting as a Trustee in Form I. However, upon examination, it was found that the respondent was indeed identified as a Financial Creditor with a registration date and number, despite also being a trustee.

The Tribunal observed that although the respondent was a trustee, it was also a company registered under the Companies Act, 1956, falling within the definition of a Financial Creditor as per the relevant sections of the Insolvency and Bankruptcy Code. As the respondent had filed the application in the capacity of a Financial Creditor and the application was found to be complete, the Tribunal concluded that there was no valid reason to interfere with the impugned order. Consequently, the appeal was dismissed on the grounds of lack of merit, with no costs imposed.