2023 (6) TMI 418 - SC - Insolvency and Bankruptcy

Application for intervention filed by an unfortunate financial creditor - seeking to intervene in the main appeal filed by the corporate debtor against the order of admission passed in another Corporate Insolvency Resolution Process (CIRP) initiated by another financial creditor - HELD THAT - The CIRP initiated at the behest of the respondent in the above Civil Appeal is put on hold by this Court and the CIRP initiated by the proposed intervenor is put on hold by the NCLT. Therefore the intervenor is caught in the middle and hence he seeks appropriate directions. The main contention of the corporate debtor who is the appellant in the above main appeal is that there cannot be two CIRPs simultaneously going on against the same debtor. The said contention is legally well-founded. But today, both CIRPs are on hold. This is despite the fact that the order passed in favour of the proposed intervenor in his own application under Section 7 IBC, by the NCLAT has attained finality and there is no impediment for the CIPR initiated by the proposed intervenor to proceed further - It is understandable that if the CIRP initiated by the respondent in the above civil appeal is on track. If it is not on track, at least the other CIPR should be allowed to proceed. The Corporate Debtor cannot be allowed to have benefit of the best of both the worlds. Therefore the intervention application is disposed of clarifying that the intervenor may again move an application before the NCLT for restoration.

Summary

Issues involved: Application for intervention in a Corporate Insolvency Resolution Process (CIRP) initiated by a financial creditor against a corporate debtor, simultaneous CIRPs against the same debtor, finality of orders passed by NCLAT.

Summary:
The Supreme Court heard an application for intervention by a financial creditor seeking to intervene in a main appeal filed by a corporate debtor against an order of admission in a CIRP initiated by another financial creditor. The NCLT dismissed the application filed by the respondent in the main Civil Appeal under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), but the NCLAT allowed it, leading to the main appeal. Another financial creditor of the corporate debtor also filed an application under Section 7 IBC, which was initially dismissed by the NCLT but later reversed by the NCLAT. Despite the finality of the NCLAT's order, the CIRP initiated by the proposed intervenor was put on hold by the NCLT due to an interim stay granted by the Supreme Court in another proceeding. The corporate debtor argued against two simultaneous CIRPs, which is legally well-founded, but both CIRPs are currently on hold. The Court clarified that the intervenor can reapply to the NCLT for restoration, and fresh orders should be passed accordingly. The appeal is scheduled for hearing in July 2023.