9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 430 - SC - Insolvency and BankruptcyCorporate Insolvency process - NCLT ultimately found ample evidence of default in the debt that was owed- NCALT set-aside the aforesaid judgment of the NCLT on the ground that the mandatory requirement of Section 7(3)(a), which included the filling up of a statutory form not having been done, and the application being made by an advocate and not by the party in person, allowed the appeal - Held that - The present is the case of a financial creditor who has moved the NCLT. In Macquarie Bank Limited Vs. Shilpi Cable Technologies Limited (2017 (12) TMI 850 - SUPREME COURT OF INDIA) we have since taken the view that, in the case of operational creditors, the petition filed by a foreign company need not observe such requirements of a statute which are impossible of compliance, namely, of getting a certificate from Indian financial institutions evidencing default in repayment of a debt. We also think that the petition filed by an advocate would be maintainable, as has been held in Macquarie Bank supra. We are of the view that the said judgment would apply in the case of financial creditors as well We, therefore, set-aside the judgment of NCLAT and restore that of NCLT.
Issues:
- Interpretation of Section 7(3)(a) of the Companies Act - Filing requirements for petitions by financial creditors - Validity of petition filed by an advocate on behalf of a foreign company Interpretation of Section 7(3)(a) of the Companies Act: The Supreme Court analyzed the order passed by the National Company Law Tribunal (NCLT) and the subsequent decision of the National Company Appellate Tribunal (NCLAT). The NCLAT had set aside the NCLT's judgment due to the failure to comply with the mandatory requirement of Section 7(3)(a) of the Companies Act. The Court noted that the NCLAT's decision was based on the petition not being filed by the party in person and the statutory form not being filled. The Court, however, referred to a previous case involving operational creditors and held that certain requirements, like obtaining a certificate from Indian financial institutions, may be impossible for foreign companies to fulfill. Therefore, the Court concluded that the judgment in the previous case should apply to financial creditors as well. Filing requirements for petitions by financial creditors: The case involved a financial creditor moving the NCLT, and the Court emphasized the distinction between operational creditors and financial creditors. Citing a previous judgment, the Court stated that the stringent requirements imposed on operational creditors may not be applicable to financial creditors, especially in cases involving foreign companies. The Court opined that the petition filed by an advocate on behalf of a financial creditor should be considered maintainable, aligning with the principles established in the previous case. Validity of petition filed by an advocate on behalf of a foreign company: In the present case, the Court set aside the NCLAT's decision and reinstated the NCLT's judgment. By doing so, the Court affirmed the validity of a petition filed by an advocate on behalf of a foreign financial creditor. The Court's decision clarified that certain filing requirements under the Companies Act may not be as stringent for financial creditors, particularly when considering the practical challenges faced by foreign entities in meeting those requirements. In conclusion, the Supreme Court's judgment addressed the interpretation of Section 7(3)(a) of the Companies Act, highlighted the different filing requirements for petitions by financial creditors compared to operational creditors, and validated the submission of a petition by an advocate on behalf of a foreign company. The decision provided clarity on the applicability of certain statutory provisions to foreign financial creditors and emphasized practical considerations in such cases.
|
