2022 (9) TMI 687 - AT - Insolvency and Bankruptcy

Maintainability of application - appellant contends that the observation recorded in the order that Appellant has withdrawn earlier application under Section 76 is incorrect - HELD THAT - There is no dispute that matter has been heard thrice by the Adjudicating Authority but Section 9 Application could not be decided. Learned counsel for the Appellant submits that after order was passed on 03.06.2022, the Operational Creditor was directed to file affidavit which has already been filed. Learned counsel for the Appellant submits that it is only thereafter concealment has come which impelled the Corporate Debtor to file applications. It is true that the application under Section 76 was not listed and was laying in defect, as has been submitted by learned counsel for the Appellant, however, the order record the statement of counsel for the Corporate Debtor that they shall withdraw the application. The Adjudicating Authority has heard the parties and has to decide finally. The power of the Adjudicating Authority to take proceeding for prosecution are ample and at any stage the Adjudicating Authority can direct for the prosecution of either of the parties. Filing of applications on 30.08.2022 under Section 76 of I B Code and Section 340 of CRPC were only for the purpose of delaying the proceedings as has been observed by the Adjudicating Authority - the Adjudicating Authority who is at the helm of the affairs and made observations after consideration and conducting the proceeding, due weightage has be given to such observation. When the Adjudicating Authority has observed that the application has been filed for delaying the proceedings, there are no reason to take a different view. Appeal dismissed.

Issues:
1. Rejection of I.A. No. 4201 of 2022 and I.A. No. 4202 of 2022 under Section 76 of the I&B Code and Section 340 of CRPC.
2. Challenge to the correctness of the observation that an earlier application under Section 76 was withdrawn.
3. Filing of applications after completion of hearing in a Section 9 application.
4. Consideration of submissions and subsequent orders by the Adjudicating Authority.
5. Allegations of filing applications to delay proceedings.
6. Dismissal of the appeal.

Analysis:
1. The Appellate Tribunal heard arguments from both parties regarding the rejection of I.A. No. 4201 of 2022 and I.A. No. 4202 of 2022, which were filed under Section 76 of the I&B Code and Section 340 of CRPC in response to a pending Section 9 application by the Operational Creditor. The Adjudicating Authority rejected these applications citing reasons such as similarity to a previously withdrawn application and lack of sufficient grounds.

2. The Appellant challenged the correctness of the observation that an earlier application under Section 76 was withdrawn, contending that the application was filed but was not listed at the time the order was passed, as it was in default in the Registry. The Respondent's counsel argued that the Section 9 application had been heard multiple times, with opportunities given for written submissions, and the subsequent applications were filed after the completion of the hearing process.

3. The Respondent's counsel presented a subsequent order by the Adjudicating Authority directing both parties to file fresh written arguments within a specified timeline, emphasizing that no further extensions would be granted. The Adjudicating Authority had heard the matter multiple times but had not reached a decision on the Section 9 application.

4. The Appellate Tribunal reviewed the submissions and records presented by both parties. Despite the Appellant's arguments regarding the timing of the filing of applications and the Operational Creditor's affidavit submission, the Respondent's counsel highlighted previous statements made by the Corporate Debtor during the proceedings.

5. The Tribunal considered the Adjudicating Authority's observations that the applications under Section 76 of the I&B Code and Section 340 of CRPC were filed with the intent to delay the proceedings. The Tribunal agreed with the Adjudicating Authority's assessment, stating that due weight should be given to such observations made after conducting proceedings. It was concluded that there was no merit in the appeal, and it was ultimately dismissed.

6. In the final judgment, the Appellate Tribunal upheld the decision of the Adjudicating Authority, emphasizing that the applications were deemed to have been filed for the purpose of delaying the proceedings. The Tribunal deferred to the Authority's assessment and observations, leading to the dismissal of the appeal based on the lack of merit.

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