2021 (2) TMI 366 - AT - Insolvency and Bankruptcy

Right to participate in the Corporate Insolvency Resolution Process - case of the Appellant is that the Appellant is a financial service provider and a Category II- Alternate Investment Fund registered with the Securities and Exchange Board of India (SEBI) and floated by UTI Structured Debt Opportunities Trust having SEBI Registration as per the applicable laws - HELD THAT - The Appeal is disposed off with the following directions. i) Resolution Professional is permitted to receive the Resolution Plan but he will not open Resolution Plan and will not take any decision. The status quo prevailing as on today, shall be maintained till one week after the Ld. third Member decide the matter. ii) The Ld. third Member of the Adjudicating Authority is directed to hear the I.A. No. 1628 of 2020 I.A. No. 1746 of 2020 and decide the same on such as expeditiously as possible. iii) This Appeal is disposed of accordingly. iv) The Registry is directed to send the copy of this order to the Ld. Adjudicating Authority, National Company Law Tribunal, Court-V, Mumbai Bench for compliance.

Issues:
1. Appeal against the order dated 22.01.2021 in IA 24/MB/2021 in C.P. (IB) 3434/(MB)/2019.
2. Rejection of the Appellant's claim by the Respondent.
3. Participation in the Corporate Insolvency Resolution Process.
4. Extension of Expression of Interest (EOI) deadline.
5. Pending Interlocutory Applications (I.A.) before the Adjudicating Authority.
6. Maintaining status quo until the decision of the third Member of the Adjudicating Authority.

Analysis:
1. The Appellant, a financial service provider registered with SEBI, filed an appeal against the order in Company Petition (IB) 3434 of 2019. The Respondent, the Interim Resolution Professional (IRP), was appointed in the insolvency proceedings of the Corporate Debtor, Mercator Petroleum Limited. The Appellant had subscribed to Debentures issued by Mercator Limited and lodged claims after initiation of Corporate Insolvency Resolution Process.

2. The Respondent rejected the Appellant's claim and filed an Interlocutory Application seeking avoidance of the Appellant's transaction. The Appellant filed a counter Interlocutory Application challenging the rejection. The Adjudicating Authority directed both parties to complete pleadings and scheduled hearings. The Appellant contended that the rejection curtailed its right to participate in the resolution process.

3. The Appellant argued for participation in the Corporate Insolvency Resolution Process, highlighting the need to submit a resolution plan. The Appellant expressed concern over the rejection impacting its ability to propose a resolution plan. The Adjudicating Authority directed the Resolution Professional to receive but not open any resolution plan until the third Member decides on the matter.

4. The Respondent extended the Expression of Interest (EOI) deadline, allowing prospective resolution applicants more time to submit their interest. The Appellant's counsel emphasized the importance of maintaining status quo until the third Member's decision to prevent prejudice to the Appellant's position during the resolution process.

5. The Adjudicating Authority's orders directed the third Member to hear and decide on the pending Interlocutory Applications promptly. The judgment disposed of the appeal with directions to maintain status quo, delay the opening of resolution plans, and expedite the decision on the pending applications.

6. The Tribunal's decision aimed to ensure fairness and procedural compliance in the insolvency proceedings, safeguarding the Appellant's rights to participate in the resolution process and have its claims considered appropriately. The judgment reflected a balanced approach to address the concerns raised by both parties and maintain the integrity of the resolution process.

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