2022 (9) TMI 913 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - Financial Debt or not - amount was transferred to the personal account of the intermediary as well as the personal account of the directors but failed to establish that the amount was given to the corporate debtor - restraint from selling or alienating any third party rights on the assets till the disposal of the Appeal - Section 5(8) (a) to (i) of the IBC - HELD THAT - Limited protection till the next date of hearing, be granted to the Appellant in the interest of justice. Hence, status quo is directed to be maintained on the subject property in the instant matter till the next date of hearing.

Summary

Issues:
1. Dismissal of application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Appeal for immediate stay on the sale of immovable property by UBI and SIDBI.
3. Invocation of Section 11 of the NCLAT and relevant judgments.
4. Compliance with RBI Circular dated 19.12.2017.
5. Argument for protection of assets till disposal of the appeal.

Analysis:
1. The Appellant filed I.A. No. 955 of 2022 against the order dismissing the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority found that the Appellant failed to prove the money was given to the corporate debtor, hence not constituting financial debt as per Section 5(8) and not meeting the definition of a financial creditor under Section 5(7) of the IBC.

2. The Appellant sought an immediate stay on the sale of the company's immovable property by UBI and SIDBI. Referring to NCLAT rules and previous judgments, the Appellant argued for interim relief under Rule 11, emphasizing the need to prevent the disposal of assets pending the appeal process.

3. Citing judgments in Company Appeal cases, the Appellant highlighted the power of the Adjudicating Authority to pass ad-interim orders before admitting applications under Section 7, 9, or 10 of the IBC. The Appellant relied on legal precedents to support the request for a stay on the property sale.

4. The Appellant referenced a Circular by the Reserve Bank of India, emphasizing the need for financial creditors to comply with the IBC and IBBI Regulations. This was presented to support the argument for the protection of assets and adherence to relevant legal provisions.

5. In consideration of the circumstances, the Tribunal granted limited protection to the Appellant by directing the maintenance of status quo on the subject property until the next hearing date. This decision aimed to safeguard the interests of the parties involved and ensure justice pending further proceedings.