2024 (8) TMI 405 - AT - Insolvency and Bankruptcy

Application filed under Section 7 of the Code by the Appellant dismissed without the arguments having been addressed - HELD THAT - Since the Tribunal has not followed the basic principle that nobody should be condemned without hearing, therefore, the impugned order deserves to be set aside and be remanded back to take a decision on the application in accordance with law after hearing both the parties and passing a speaking order - the present appeal is allowed and the impugned order is set aside - petition is hereby restored and the matter is remanded back to the Tribunal. Application under Section 60(5), 65 and 75 of the Code has been dismissed on the ground that the application has been filed before the admission of the application filed under Section 7 of the Code - At what stage the application under Section 65 is maintainable? - HELD THAT - The answer of this question is not farfetched because of the decisions in the cases of Beacon Trusteeship Limited 2020 (4) TMI 516 - SUPREME COURT , Ashmeet Singh Bhatia 2023 (3) TMI 646 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI and Shree Ambica Rice Mill 2021 (7) TMI 581 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI . In the case of Beacon Trusteeship Limited, the Hon ble Supreme Court has held that The plea of collusion could not have been raised for the first time in the appeal before the NCLAT or before this Court in this appeal. Thus, we relegate the appellant to the remedy before the Adjudicating Authority . In the case of Ashmeet Singh Bhatia a specific question was framed in para 12 that as to whether an application filed under Section 65 of the Code is maintainable after the filing of the application under Section 7, 9 or 10 of the Code or could be maintainable only after the admission of such an application? - The answer to the aforesaid question is captured in para 16 where this order as this Court has held that the application filed under Section 65 of the Code is maintainable after the application is filed either under Section 7, 9 or 10 of the Code and not after the admission. Thus, in view of the aforesaid discussion and law laid down by the Hon ble Supreme Court and this court dismissal of the application by the Tribunal only on this ground that the application has been filed before the admission of the application under Section 7 is not sustainable. The impugned order is set aside - the impugned order is restored and the matter is remanded back to the Tribunal to decide the aforesaid application in accordance with law.

Summary

Issues:
1. Dismissal of application under Section 7 without hearing arguments.
2. Dismissal of application under Section 65 before admission of Section 7 application.

Issue 1: Dismissal of application under Section 7 without hearing arguments

In the first case, the Appellate Tribunal set aside an order dismissing an application under Section 7 of the Code for resolution of an amount without hearing arguments. The Tribunal emphasized the importance of the principle that no party should be condemned without a fair hearing. The Tribunal held that the impugned order was unjust as the arguments were not addressed before dismissal. Consequently, the appeal was allowed, and the matter was remanded back to the Tribunal to decide on the application after hearing both parties and issuing a detailed order.

Issue 2: Dismissal of application under Section 65 before admission of Section 7 application

In the second case, the Appellate Tribunal addressed the dismissal of an application under Section 65 filed before the admission of an application under Section 7. The Counsel for the Appellant argued that the dismissal based solely on the timing of the application was erroneous, citing legal precedents. The Tribunal referred to judgments by the Hon'ble Supreme Court and previous cases to establish that an application under Section 65 can be maintainable even before the admission of an application under Section 7, 9, or 10. The Tribunal emphasized the need for a thorough investigation by the Adjudicating Authority to prevent misuse of the insolvency resolution process. The appeal was allowed, the impugned order was set aside, and the matter was remanded back to the Tribunal for a decision in accordance with the law. The Tribunal also directed the Tribunal to consider the objection raised regarding the intervenor's locus.

These judgments highlight the significance of procedural fairness and adherence to legal principles in insolvency proceedings. The Appellate Tribunal's decisions underscore the need for thorough consideration of applications and the importance of hearing arguments before making determinations. The judgments also emphasize the need for proper interpretation of relevant provisions and the prevention of misuse of insolvency processes.