2023 (6) TMI 902 - AT - Insolvency and Bankruptcy

Seeking permission from the Adjudicating Authority/Tribunal, to purchase four separate Residential Apartments from the Corporate Debtor - Moratorium was ordered in terms of Section 14 of the Insolvency and Bankruptcy Code, 2016 at the time of Admission of the Application - HELD THAT - A mere running of the eye over the contents of the ingredients of Section 43(2)(b) of the Insolvency and Bankruptcy Code, 2016 points out latently and patently that if the reliefs sought by the Appellant/Petitioner is granted by this Appellate Tribunal, it will be in the form of Alienating/Disposing/Transferring of the Corporate Debtor in relation to any of its Assets or Beneficial Interest or any Legal Rights arising thereto. By so doing, the assets of the Corporate Debtor undoubtedly, in the considered subjective opinion of this Tribunal will change in diametrical term and it will also has to effect of placing such Creditor or Surety or Guarantor in the advantageous position than it would have been at the time of distribution of assets being made, in the teeth of ingredients of Section 53 of the Insolvency and Bankruptcy Code, 2016 - It is to be remembered that Moratorium was ordered in terms of Section 14 of the Insolvency and Bankruptcy Code, 2016 at the time of Admission of the Application and that is also not a favourable circumstance to in favour of the Appellant/Petitioner, as opined by this Tribunal. This Tribunal comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in Dismissing the IA(IBC)/98(KOB)/2020 in IBA/11(KOB)/2020 (preferred by the Appellant/Applicant) by making an observation that the Appellant/Applicant is to wait till the CIRP is over and also that the Resolution Professional cannot handover possession of the four Apartments to the Appellant/Applicant are fee from any legal infirmities or does not suffer from any material irregularities. Appeal dismissed.

Summary

Issues involved:
1. Delay in representing material papers of the appeal.
2. Validity of the impugned order regarding possession of four apartments during CIRP.

Issue 1: Delay in representing material papers of the appeal
The appellant sought to condone a delay of 89 days in representing the appeal material papers due to the appellant's illness and logistical challenges. The Tribunal, satisfied with the reasons provided, allowed the condonation of delay without imposing any costs.

Issue 2: Validity of the impugned order regarding possession of four apartments during CIRP
The impugned order by the Adjudicating Authority dismissed the application seeking possession of four apartments during the CIRP period. The appellant contended that the Tribunal did not consider relevant facts and laws, leading to an incorrect decision. The appellant argued that the possession of the apartments would not violate the moratorium or relevant sections of the Insolvency and Bankruptcy Code, as the appellant had paid for the construction of the apartments. However, the Tribunal, after considering the provisions of Section 43(2)(b) of the IBC, concluded that granting possession would alter the corporate debtor's assets and put the creditor in a beneficial position, contrary to Section 53 of the IBC. The Tribunal found the impugned order to be legally sound and dismissed the appeal, stating it lacked merit.

Separate Judgment by Justice M. Venugopal
In a separate judgment, Justice M. Venugopal emphasized the importance of upholding the integrity of the insolvency process and ensuring compliance with the provisions of the Insolvency and Bankruptcy Code. The judge highlighted the need for strict adherence to legal requirements to maintain the sanctity of insolvency proceedings.