2018 (4) TMI 687 - AT - Insolvency and Bankruptcy

Corporate insolvency process - no notice under sub-section (1) of Section 8 of the I&B Code was issued by the Appellant, nor necessary information were furnished as per Rule 5 - Held that - We are not inclined to interfere with the impugned order dated 26th July, 2017 passed by the Adjudicating Authority, Principal Bench, New Delhi. However, the order passed by the Adjudicating Authority will not come in the way of Appellant to issue notice under sub-section (1) of Section 8 of the I&B Code to the Corporate Debtor , and to file an application under Section 9 of the I&B Code , if there is a debt and default by the Corporate Debtor . In such case, the Adjudicating Authority may decide the application uninfluenced by the impugned Order dated 26th July, 2017 and the judgment passed by this Appellate Tribunal. The appeal is dismissed with aforesaid observation. However, in the facts and circumstances of the case, there shall be no order as to cost.

Issues:
1. Condonation of delay in filing an appeal.
2. Transfer of a winding-up petition to the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016.
3. Compliance with procedural requirements under the I&B Code for initiating insolvency resolution process.
4. Abatement of application due to non-compliance with prescribed rules.

Condonation of Delay:
The appeal was filed by the Appellant against an order dated 26th July, 2017, seeking condonation of delay due to initially moving before the Delhi High Court. The Tribunal highlighted that the Limitation Act, 1963, does not apply to applications for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. Despite the delay, the appeal could not be allowed due to other grounds.

Transfer of Winding-Up Petition:
The Appellant had initially filed a winding-up application under the Companies Act, 1956 before the Delhi High Court, which was transferred to the Adjudicating Authority under the I&B Code. The Tribunal noted the specific rules governing the transfer of such cases and emphasized the need for compliance with the procedural requirements under the I&B Code.

Compliance with Procedural Requirements:
The Tribunal emphasized the importance of serving notice and submitting necessary information as required under the I&B Code after the transfer of the case. Failure to issue the required notice under Section 8 of the I&B Code and provide essential information led to the dismissal of the application by the Adjudicating Authority.

Abatement of Application:
In a similar case precedent, the Tribunal held that non-compliance with prescribed rules, including the failure to issue notices and provide required information, resulted in the abatement of the application under the Companies Act, 1956. The Tribunal reiterated the necessity of adhering to the procedural requirements outlined in the Transfer Rules, 2016.

Conclusion:
The Tribunal dismissed the appeal, upholding the decision of the Adjudicating Authority due to incomplete application and non-compliance with the prescribed rules. However, the Appellant was allowed to issue notice under Section 8 of the I&B Code and file a new application under Section 9 if necessary conditions are met. The decision emphasized the importance of procedural compliance and indicated that the Adjudicating Authority could consider a new application without influence from the previous order. No costs were awarded in this case.

← Previous Next →