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2020 (8) TMI 426 - AT - Insolvency and BankruptcyMaintainability of application - CIRP process initiated - moratorium declared - Appellant submitted that since the Application filed by 1st Respondent herein was admitted on 31.05.2019 against the same Corporate Debtor viz., M/s Cure Life Care Pvt. Ltd. their Application became infructuous - HELD THAT - It is a fact that the Appellant filed Company Petition under Section 7 of IBC before the Adjudicating Authority in the year 2017 itself. Subsequently, 1st Respondent herein filed CP(IB) No. 388/NCLT/AHM/2018 against the same Corporate Debtor and the Company Petition came to be admitted on 31.05.2019 and Corporate Insolvency Process was initiated by imposing moratorium under Section 14(1) of IBC - In view of admission of Company Petition filed by1st Respondent and initiation of Corporate Insolvency Resolution Process against the same Corporate Debtor, there was no option except to dispose of the Petition. Accordingly, in presence of the representatives of the Appellant as well as Respondent, the C.P.(IB) No. 157/7/NCLT/AHM/2017 was disposed of as infructuous for the reason that CP(IB) No. 388/NCLT/AHM/2018 was admitted against the same Corporate Debtor. The said decision taken in the meeting of the Committee of Creditors on 05.07.2019 and filing of Application in pursuance thereof under Section 12 A of IBC seeking withdrawal of the Petition before the Adjudicating Authority is arbitrary and against conscience of legal jurisprudence - Petition restored to its original position - appeal allowed.
Issues:
1. Adjudication of Company Petition under Insolvency and Bankruptcy Code. 2. Admission of Company Petition by the Adjudicating Authority. 3. Withdrawal of Company Petition by the 1st Respondent. 4. Consideration of claims by the Interim Resolution Professional. 5. Decision of the Committee of Creditors to withdraw the Petition. 6. Allegations of unfair advantage and lack of opportunity for verification. Analysis: 1. The Appellant initially filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) before the Adjudicating Authority. Subsequently, the 1st Respondent also filed a Company Petition against the same Corporate Debtor, leading to the initiation of Corporate Insolvency Resolution Process. 2. The Adjudicating Authority admitted the Company Petition filed by the 1st Respondent, rendering the Appellant's Petition infructuous due to the initiation of insolvency proceedings against the same Corporate Debtor. 3. The 1st Respondent sought withdrawal of the Company Petition, citing settlement with the Corporate Debtor and full satisfaction of debts. The Adjudicating Authority allowed the withdrawal, leading to the recall of the Corporate Insolvency Resolution Process. 4. The Appellant submitted a claim before the Interim Resolution Professional, which was not considered, leading to a dispute regarding the handling of claims and the timing of submission. 5. The Committee of Creditors, in its first meeting, decided to withdraw the Petition without fully considering the Appellant's claim, raising concerns about due process and fairness in decision-making. 6. Allegations were made regarding the 1st Respondent taking advantage of incomplete actions against the Corporate Debtor's assets and withdrawing the proceedings without proper consideration. The Appellant requested restoration of the Company Petition for a fair hearing. 7. The Appellate Tribunal found the decision to withdraw the Petition arbitrary and against legal principles, setting aside the Adjudicating Authority's order and restoring the Company Petition to its original position. The Appellant was granted the right to be heard before any further decision on withdrawal. 8. The Tribunal emphasized the importance of affording due process and fairness in insolvency proceedings, highlighting the need for proper consideration of claims and decisions by the Committee of Creditors. 9. The Appeal was allowed, with no costs imposed, and the parties were directed to appear before the Adjudicating Authority for further proceedings.
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