2021 (2) TMI 876 - AT - Insolvency and Bankruptcy

Seeking permission to contest the case before the Adjudicating authority, since, earlier, the appeal was dismissed as withdrawn - grievance of the Applicant/Appellant is that the Applicant/Appellant had approached the Adjudicating Authority in a bona-fide manner as an 'Operational Creditor' and in the absence of liberty, by Tribunal, the Applicant/Appellant will be barred by limitation to approach the Hon'ble Adjudication Authority under section 7 of the I B Code, which in turn will cause grave prejudice to it - HELD THAT - This Tribunal, after going through the withdrawal order dated 18-2-2020 passed in the instant Appeal is of the considered view that Applicant/Appellant was permitted to withdraw the present Company Appeal (AT) (Insolvency) No. 746 of 2019 and the same was dismissed as 'withdrawn' but without costs. This Tribunal makes it abundantly clear that it is open to the respective parties to raise all factual and legal pleas before the 'Competent Authority'/'Adjudicating Authority' when the necessary 'Application seeking appropriate relief is filed by the concerned party and further that said 'Authority' shall determine the said 'Application' on merits, of course, after providing due opportunities to the contesting parties to air their the views, by adhering to the 'Principles of Natural Justice' - Application disposed off.

Summary

Issues:
Interlocutory Application under Rule 11 of NCLT Rules - Liberty to approach Adjudicating Authority under Section 7 of IBC or contest the Appeal on merits.

Analysis:
The Applicant/Appellant filed an Interlocutory Application seeking liberty to approach the Adjudicating Authority under Section 7 of the Insolvency & Bankruptcy Code, 2016, or to contest the Appeal on merits. The Applicant/Appellant had initially sought permission to withdraw the Company Appeal with liberty to file an application under Section 7 of the IBC, concerning a commercial borrowing transaction. The Applicant/Appellant emphasized the necessity of the liberty sought to avoid being time-barred from approaching the Adjudicating Authority under Section 7, which would cause significant prejudice. The Tribunal had permitted the withdrawal of the Appeal but did not grant the requested liberty in the previous order dated 18-2-2020.

The Respondent argued against granting the liberty, alleging that the Applicant/Appellant was attempting to change the nature of the debt from operational to commercial borrowing. The Respondent contended that the Applicant/Appellant's actions before the Adjudicating Authority and the Tribunal were inconsistent and disregarded established precedents. The Respondent urged for the dismissal of the Interlocutory Application based on these grounds.

Upon review, the Tribunal acknowledged that while the Appeal was dismissed as withdrawn, the liberty to approach the Adjudicating Authority under Section 7 of the IBC was not explicitly granted in the previous order. In the interest of equity, fair play, and justice, the Tribunal clarified that the dismissal of the main Company Appeal would not prevent the Applicant/Appellant from seeking redressal by filing the necessary application before the Competent Authority/Adjudicating Authority, provided it complies with the law. The Tribunal emphasized that both parties could present their factual and legal arguments before the Competent Authority/Adjudicating Authority, which would decide on the application's merits while adhering to the Principles of Natural Justice.

In conclusion, the Tribunal disposed of the Interlocutory Application without costs, ensuring that the Applicant/Appellant retains the right to pursue their grievances before the Competent Authority/Adjudicating Authority in accordance with the law and established procedures.