2018 (3) TMI 1320 - Tri - Insolvency and Bankruptcy

Institution of proceedings in NCLT - Held that - No bar on NCLT to trigger an Insolvency Resolution Process on an application filed under sections 7,9 & 10 if a winding up petition is pending unless an official liquidator has been appointed and a winding up order is passed. The cognate question as to whether Insolvency Resolution Process could be triggered where official/provisional liquidator has been appointed is left open as in none of the cases before us such a question would arise.

Summary

Issues Involved:
1. Whether the process under the Insolvency and Bankruptcy Code, 2016 can be triggered in the face of the pendency of the winding-up petitions or it is to be considered as an independent process?
2. If the process is not independent, whether the petition filed under the Code is required to be transferred to the High Court or await the outcome of the winding-up proceedings by adjourning it sine die?
3. Whether the Code gives any room for discretion to adjourn it sine die considering the statutory mandate for expeditious disposal?
4. If the petition is adjourned sine die and the winding-up petition is dismissed or set aside, whether there is scope for revival within the framework of the Code?

Issue-wise Detailed Analysis:

Issue 1:
The core question was whether the Insolvency and Bankruptcy Code (IBC) process can be initiated if winding-up petitions are pending. The Tribunal referenced the NCLAT judgment in *Forech India (P.) Ltd. v. Edelweiss Assets Reconstruction Co. Ltd.*, which upheld that a financial creditor's petition under section 7 of the Code is maintainable even if a winding-up petition is pending, as long as no liquidation order has been made and no official liquidator has been appointed. Section 11 of the Code was pivotal, specifying that a corporate debtor undergoing a corporate insolvency resolution process or in respect of whom a liquidation order has been made is ineligible to initiate another insolvency process. The Tribunal concluded there is no bar on NCLT to trigger an Insolvency Resolution Process if a winding-up petition is pending unless an official liquidator has been appointed and a winding-up order is passed.

Issue 2:
This issue was contingent on the first question being answered in the negative. Since the Tribunal affirmed that the IBC process could proceed independently of pending winding-up petitions, the necessity to transfer the petition to the High Court or await the winding-up proceedings' outcome was obviated.

Issue 3:
The Tribunal did not find it necessary to address whether the Code allows for discretion to adjourn the petition sine die, given the affirmative answer to the first question. The statutory mandate under sections 7, 9, and 10 of the Code for expeditious disposal was highlighted, emphasizing the need for timely resolution.

Issue 4:
Similarly, the question of reviving the petition within the framework of the Code if the winding-up petition is dismissed or set aside was rendered moot by the affirmative answer to the first question.

Conclusion:
The Tribunal, guided by binding NCLAT judgments and principles of stare decisis, concluded that the IBC process could be initiated independently of pending winding-up petitions unless a liquidation order has been made and an official liquidator appointed. The remaining questions were not addressed in detail due to the resolution of the primary issue.