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2023 (3) TMI 1333 - AT - Insolvency and BankruptcyInitiation of CIRP - Priority of consideration and admission of application - Effect of Interim Moratorium - It is the main case of the Appellant that the Section 95 Application was filed by them three days prior to the date when the State Bank of India had filed their Application and therefore their Application ought to have been admitted first - whether Interim Moratorium ought to have commenced from the date of filing of the defective Application as it would amount to violation of natural justice? HELD THAT - It is seen from the Record that the Adjudicating Authority has not yet admitted or rejected the Application filed by the State Bank of India under Section 95. It is seen from the record that the Section 95 Application has not been admitted against the said Personal Guarantor. Liberty has also been given in accordance with law to the Appellant/Union Bank of India in the Impugned Order dated 07.06.2022 in the event that the Section 95 Application filed by SBI is admitted the Adjudicating Authority under Section 102 of the Code would issue a Public Notice within 7 days of passing of the Order inviting Claims from all the Creditors. The Appellant in the instant case namely Union Bank of India can also file their Claim under Section 103 of the Code with the RP. Hence no prejudice would be caused to the Appellant herein. Further it is seen from the Impugned Order that though both the Counsels were present it was not brought to the notice of the Bench that the Application filed by the Appellant/Union Bank of India was three days prior to the Application filed by the SBI. This Tribunal is of the considered view that indeed the Date of Filing of the Application under Section 95 is what is to be taken into account and not the date when the Application is numbered. There is no appreciable evidence on record to state that the said Application was defective - in the present case though the Section 95 Application was filed on 31.12.2021 and was assigned a Registration No. and SBI had filed an Application on 03.01.2022 the Registry had registered the Section 95 Application of SBI on 12.01.2022 and that of Union Bank of India on 09.02.2022. Though the Appellants Section 95 Application came up for Hearing on 04.03.2022 01.04.2022 02.05.2022 and on 07.06.2022 a perusal of the Order copies establishes that the Appellant/Union Bank of India had never brought to the notice of the Bench that another Application was also filed by SBI. The case of the Appellant that they had no opportunity to bring to the notice of the Bench that the Appellant s Section 95 Application was filed in prior point of time i.e. three days prior to the SBI s Application is untenable. Section 96(1)(a) provides that an interim-moratorium shall commence on the date of the Application in relation to all the debts. Section 96(1)(b) of the Code also specifies that during the Moratorium period (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and (ii) the Creditors of the Debtor shall not initiate any legal action or proceedings in respect of any debt - when an Insolvency Resolution Process commences against the Personal Guarantor all Creditors of the Personal Guarantor are taken care of in the proceedings under Chapter-III. The Code does not contemplate multiplicity of Applications against the same Personal Guarantor. This Tribunal is of the earnest view that when the Insolvency Resolution Process commences against a Personal Guarantor Claims of all Creditors are taken care of under the scheme of the I B Code 2016. Keeping in view that the Order of Admission has not yet been passed by the Adjudicating Authority and also that no prejudice would be caused to the Appellant herein as they can file their Claim with the Resolution Professional and also having regard to the fact that they were given Liberty in accordance with Law by the Adjudicating Authority this Tribunal is not inclined to set the clock back on this ground. Application dismissed.
Issues Involved:
1. Whether the application filed by the Union Bank of India under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016 was dismissed correctly. 2. Whether the date of filing should be considered the date of presentation or the date of numbering by the registry. 3. Whether the Union Bank of India faced any prejudice due to the dismissal of its application. Summary: Issue 1: Dismissal of Application under Section 95 of IBC, 2016 The Appellant, Union Bank of India, challenged the dismissal of its application under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Insolvency Resolution Process against a personal guarantor. The Adjudicating Authority had dismissed the application on the grounds that a similar application had already been filed by the State Bank of India (SBI) against the same personal guarantor, and an Interim Resolution Professional (IRP) had been appointed under Section 97 of the Code. Issue 2: Date of Filing vs. Date of Numbering The Appellant argued that its application was filed three days prior to the SBI's application and should have been considered first. The Tribunal referred to the judgment in 'Vidyawati Gupta and Ors. vs. Bhakti Hari Nayak and Ors.' and 'Krishan Kumar Basia vs. State Bank of India,' which clarified that the date of filing should be considered the date of presentation of the application, irrespective of any defects that were subsequently cured. The Tribunal held that the date of filing is what is to be taken into account, not the date when the application is numbered. Issue 3: Prejudice to Union Bank of India The Tribunal noted that the Union Bank of India had the liberty to file its claim with the Resolution Professional (RP) appointed in the SBI's application. The Tribunal emphasized that the Insolvency Resolution Process against a personal guarantor takes into account the claims of all creditors, thereby ensuring that no prejudice would be caused to the Union Bank of India. The Tribunal also observed that the Union Bank of India had multiple opportunities to bring the earlier filing date to the notice of the Bench but failed to do so. Conclusion: The Tribunal dismissed the appeal, affirming that the date of filing should be considered the date of presentation and that no prejudice would be caused to the Union Bank of India as it could file its claim with the RP. The Tribunal emphasized that the Code does not contemplate multiple applications against the same personal guarantor and that all creditors' claims are addressed within a single Insolvency Resolution Process.
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