2019 (8) TMI 686 - AT - Insolvency and Bankruptcy

Admissibility of application - initiation of Corporate Insolvency Resolution Process - default on the part of the Corporate Debtor - case of appellant is that the impugned order was passed ex-parte - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - We find that except vague statement made by the Appellant, there is nothing on the record to suggest that the Hon ble Supreme Court has passed specific order prohibiting M/s. Sahara Q Shop Unique Products Range Limited - ( Corporate Debtor ) to release or pay any amount. We are not inclined to interfere with the impugned order dated 15th December, 2017 on purported ground that there is no default on the part of the Corporate Debtor - Appeal dismissed.

Summary

Issues:
1. Adjudication of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor.
2. Challenge to the impugned order on grounds of various infirmities.
3. Allegation of default on the part of the Corporate Debtor due to restrictions imposed by the Supreme Court on Sahara Group of Companies.
4. Attachment of funds of the Corporate Debtor by SEBI and Forward Markets Commission.
5. Claim of payment by the Corporate Debtor towards salaries, income tax, and provident fund.
6. Settlement of operational debt by Sahara Group Companies.
7. Interpretation of orders passed by the Supreme Court in Contempt Petitions against specific Sahara Group Companies.
8. Lack of specific orders prohibiting the Corporate Debtor from releasing or paying any amount.
9. Settlement of claims by another Sahara Group Company, affecting the default allegation.

Analysis:

1. The judgment pertains to an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor, which was admitted by the Adjudicating Authority. The challenge to the impugned order was based on alleged infirmities in the ex-parte order passed on 15th December, 2017.

2. The appellant contended that the Corporate Debtor, being part of the Sahara Group of Companies, was restricted by the Supreme Court from making any payments, as evidenced in various orders related to contempt petitions against the Sahara Group. This restriction was cited as a defense against the default allegation.

3. The appellant highlighted the attachment of funds of the Corporate Debtor by SEBI and the Forward Markets Commission, further supporting the argument that the Corporate Debtor was unable to fulfill payment obligations due to external restrictions.

4. Contrary to the appellant's claims, the respondent argued that the Corporate Debtor had made payments towards salaries, income tax, and provident fund, even after the Supreme Court orders. Additionally, the respondent pointed out settlements of operational debts by Sahara Group Companies, indicating a willingness to fulfill financial obligations.

5. The interpretation of orders passed by the Supreme Court in contempt petitions against specific Sahara Group Companies was crucial in determining the impact on the Corporate Debtor. The court examined the context of these orders to assess their relevance to the default allegation against the Corporate Debtor.

6. Ultimately, the court found no specific orders prohibiting the Corporate Debtor from releasing or paying any amount. The settlement of claims by another Sahara Group Company further influenced the decision not to interfere with the impugned order, dismissing the appeal due to lack of merit.

7. The judgment underscores the importance of specific legal orders in determining default and financial obligations, considering the interplay between different entities within a corporate group structure.