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2020 (7) TMI 120 - AT - Insolvency and BankruptcyMaintainability of application - challenge on the ground that Winding up Petition against Shree Ram Urban Infrastructure Ltd. has already been admitted by the Hon'ble High Court of Bombay on 5th October, 2016 - HELD THAT - The similar issue fell for consideration before the Hon'ble Supreme Court in Forech India (P.) Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. 2019 (1) TMI 1442 - SUPREME COURT . In the said case, the Hon'ble Supreme Court noticed the pendency of the Application under sections 433 and 434 of the Companies Act, 1956 and winding up petition, being 42 of 2014 was filed by Forech India Ltd. before the Hon'ble High Court of Delhi. It was held by this Appellate Tribunal that since there was no winding up order by the Hon'ble High Court, the Financial Creditor's petition would be maintainable. As a result of this the Appellant's Appeal was dismissed. The case of the Appellant is covered by the decision of the Hon'ble Supreme Court in Forech India Ltd., therefore, the Application under section 7 of the I B code filed by the Respondent - SERI Equipment Finance Limited is not maintainable - Appeal dismissed.
Issues:
1. Maintainability of an Application under section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor when a winding-up petition has already been admitted by the High Court. 2. Interpretation of section 11(d) of the Insolvency and Bankruptcy Code in relation to the eligibility to initiate insolvency proceedings. Analysis: 1. The case involved an Application under section 7 of the Insolvency and Bankruptcy Code filed by a Financial Creditor against a Corporate Debtor. The Adjudicating Authority admitted the Application, which was challenged by a Shareholder on the grounds of a pending winding-up petition already admitted by the High Court. The Shareholder argued that the winding-up petition takes precedence over the insolvency application. The Appellant contended that the insolvency application can be filed and entertained even after the admission of a winding-up petition. The Appellate Tribunal referred to a similar case before the Supreme Court and noted that until a liquidation order is made against the Corporate Debtor, an insolvency petition may be filed. The Tribunal held that the insolvency application in question was maintainable, dismissing the appeal with no costs. 2. The Appellate Tribunal analyzed section 11(d) of the Insolvency and Bankruptcy Code, which specifies that a corporate debtor against whom a liquidation order has been made is not entitled to initiate corporate insolvency resolution proceedings. The Tribunal clarified that this section only bars a corporate debtor from initiating a petition under section 10 of the Code after a liquidation order. The Tribunal emphasized that until a liquidation order is made, an Insolvency Petition may be filed under section 7 or 9. The Supreme Court, in a similar case, disagreed with the Appellate Tribunal's interpretation of section 11 and held that the financial creditor's application admitted by the Tribunal is an independent proceeding to be decided according to the Code. The Court granted liberty to transfer the winding-up proceeding to the NCLT for treatment as a proceeding under section 9 of the Code. In conclusion, the Appellate Tribunal held that the Application under section 7 of the Insolvency and Bankruptcy Code was maintainable despite the pending winding-up petition. The Tribunal's decision was in line with the Supreme Court's interpretation of section 11(d) and the independent nature of insolvency proceedings. The appeal was dismissed, allowing the Appellant to move before the High Court regarding the winding-up petition.
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