2021 (3) TMI 934 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - HELD THAT - The present Appeal is against an Interim Order and the statement made by the Operational Creditor is already recorded. It goes without saying that it would be expected from the Respondent Operational Creditor to stand by statement made and not to create any difficulties in the day to day business of the Corporate Debtor. We expect and request the Adjudicating Authority to decide the Application under Section 9 itself at the earliest, one way or the other - Application disposed off.

Summary

Issues:
Appeal against an interim order restraining the sale of movable and immovable assets by the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Appellant, a Corporate Debtor, filed an appeal against an interim order passed by the Adjudicating Authority in response to an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the Respondent, an Operational Creditor. The Adjudicating Authority had directed the Corporate Debtor not to sell any movable or immovable assets until the disposal of the application. The Appellant contested that it had no intention to sell any assets and that the order had negatively impacted its business operations and banking relationships.

The Appellant's counsel argued that prior to the impugned order, the Operational Creditor had failed to comply with certain directions given by the Adjudicating Authority. The counsel also highlighted that the order was passed abruptly following a news article without any evidence of asset disposal by the Appellant. The Appellant emphasized that the order had created hindrances in its day-to-day business activities and financial transactions with banks.

During subsequent proceedings, the Adjudicating Authority recorded statements from both parties, with the Corporate Debtor expressing difficulties faced due to the order and seeking clarification to ensure its ordinary business operations were not affected. The Operational Creditor acknowledged that the restraint order only applied to asset sales and not regular business transactions. However, the Appellant's counsel raised concerns over the lack of express views from the Adjudicating Authority on the matter.

The Appellate Tribunal acknowledged that the appeal was against an interim order and noted the Operational Creditor's statement to allow the Corporate Debtor to continue its ordinary business activities without disruption. The Tribunal emphasized the importance of the Operational Creditor standing by its statement and refraining from creating obstacles in the Corporate Debtor's daily operations. The Tribunal urged the Adjudicating Authority to promptly decide on the Section 9 application to provide clarity to the parties involved. Consequently, the Tribunal disposed of the appeal with these observations.