2019 (10) TMI 964 - AT - Insolvency and Bankruptcy

Admissibility of application - sole ground taken by the Appellant is that the Adjudicating Authority has passed the order without taking counter-statement of the Appellant - HELD THAT - From the impugned order dated 30th April, 2019 we find that the Corporate Debtor was noticed and heard and one Mr. Naveen Kumar Murthi and Mr. G.V. Mohan Kumar, Advocates appeared on behalf of the Corporate Debtor . The other ground taken by the Appellant is that the Adjudicating Authority has failed to consider that the Corporate Debtor had made the payment. However, it is not disputed that there is a part default which is much more than Rupees One Lakh ( i.e. ₹ 9.5 Crores) and the Corporate Debtor has failed to pay - There are no reason to interfere with the impugned order. This apart the Appellant and the Directors and Officers had not handed over the assets and documents of the Corporate Debtor to the Resolution Professional . It will be open to the Resolution Professional to move appropriate application before the Adjudicating Authority including the application for initiation of action under Chapter VII of Part II of the I B Code . The appeal is dismissed with aforesaid liberty to the Resolution Professional with costs of Rupees One Lakh, which is to be paid by the Appellant to the Corporate Debtor through Resolution Professional .

Summary

Issues Involved:
Admission of application under section 7 of the Insolvency and Bankruptcy Code, 2016 without counter-statement of the Appellant; Failure to consider payment made by the Corporate Debtor; Non-handover of documents and assets to the Resolution Professional.

Analysis:

1. Admission of Application under Section 7 without Counter-Statement:
The appeal was filed against the order passed by the Adjudicating Authority admitting the application under section 7 of the Insolvency and Bankruptcy Code, 2016. The Appellant contended that the order was passed without taking their counter-statement. However, the Tribunal noted that the Corporate Debtor was noticed and heard through its advocates during the proceedings before the Adjudicating Authority. Therefore, the contention of lack of opportunity to present a counter-statement was found to be without merit.

2. Failure to Consider Payment by the Corporate Debtor:
Another ground raised by the Appellant was the failure of the Adjudicating Authority to consider that the Corporate Debtor had made a payment. It was acknowledged that there was a partial default amounting to over Rupees One Lakh, which the Corporate Debtor failed to pay. The Tribunal observed that the existence of a substantial default was not disputed. Hence, the argument regarding payment made by the Corporate Debtor was not considered substantial enough to interfere with the impugned order.

3. Non-Handover of Documents and Assets to Resolution Professional:
The Appellant and the Directors were found to have not handed over the assets and documents of the Corporate Debtor to the Resolution Professional as required. The Tribunal noted that despite assurances, the documents were not handed over promptly. It was revealed that the Resolution Professional had not received all the necessary documents and assets from the Appellant and other Directors. Consequently, the Tribunal emphasized the importance of complying with such obligations and directed the Appellant to hand over all relevant documents to the Resolution Professional.

4. Dismissal of Appeal and Costs Imposition:
After hearing the arguments from both parties, the Tribunal found no reason to interfere with the impugned order. The appeal was dismissed, and the Appellant was directed to pay costs of Rupees One Lakh to the Corporate Debtor through the Resolution Professional. Additionally, the Resolution Professional was given the liberty to move appropriate applications before the Adjudicating Authority, including seeking action under Chapter VII of Part II of the Insolvency and Bankruptcy Code.

In conclusion, the Tribunal upheld the order admitting the application under section 7 of the Insolvency and Bankruptcy Code, 2016, emphasizing the importance of compliance with handing over documents and assets to the Resolution Professional and imposing costs on the Appellant for the dismissal of the appeal.