2018 (1) TMI 1193 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - liberty to file a petition within 180 days after coming into force of Insolvency & Bankruptcy Code - Held that - Since the petition filed under section 10 of IB Code is, in fact, a Reference, which was earlier pending before BIFR and when the IB Code came into force then on account of the amendment in SICA Repeal Act, 2003, petitioner was given liberty to file a petition within 180 days after coming into force of Insolvency & Bankruptcy Code. Undoubtedly IB Code 2016 came into effect w.e.f. 1st December, 2016, therefore petition under IB Code could have been filed only within 180 days. The fact of this case differs from the case of Leo Duct Engg. (2017 (6) TMI 1169 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI), and a petition has been filed beyond the statutory time limit of 180 days from the date of coming into force of Insolvency & Bankruptcy Code. Thus it is clear that the petition is not maintainable and deserves to be rejected. ORDER

Summary

Issues Involved:
1. Eligibility of the Corporate Applicant to file the petition under Section 10 of the Insolvency & Bankruptcy Code, 2016.
2. Admissibility of the petition considering the statutory time limit under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003.
3. Non-disclosure of relevant facts by the Corporate Applicant.

Issue-wise Detailed Analysis:

1. Eligibility of the Corporate Applicant to file the petition under Section 10 of the Insolvency & Bankruptcy Code, 2016:
The Corporate Applicant filed the petition under Section 10 of the Insolvency & Bankruptcy Code, 2016 (IBC) for initiating the Corporate Insolvency Resolution Process (CIRP). The petition was supported by a Board Resolution dated 3rd July 2017, authorizing the Deputy Chief Financial Officer to initiate the CIRP. The Corporate Applicant argued that the application was complete in all respects and complied with Form VI requirements, with no ineligibility under Section 11 of the IBC. The Tribunal noted that if the application is complete and the Corporate Applicant is not ineligible under Section 11, the Adjudicating Authority is bound to admit the application.

2. Admissibility of the petition considering the statutory time limit under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003:
The Corporate Applicant had previously referred the matter to the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1995 (SICA), which was repealed effective from 1st December 2016. The Repeal Act provided that any reference pending before BIFR would abate, and the company could file a reference to the National Company Law Tribunal (NCLT) within 180 days from the commencement of the IBC. The Tribunal observed that the petition was filed on 13th July 2017, beyond the 180-day statutory limit, making it inadmissible under the Repeal Act.

3. Non-disclosure of relevant facts by the Corporate Applicant:
The Tribunal highlighted that the Corporate Applicant did not disclose the abatement of the reference before BIFR due to the SICA Repeal Act in the initial petition. This fact was only revealed after an intervening application was filed by the authorized representative of the workers. The Tribunal emphasized that non-disclosure of such critical information affected the maintainability of the petition. Additionally, the Corporate Applicant did not mention the rejection of the application for closing the undertaking by the Labour Employment and Training Department, Government of Jharkhand, which was later confirmed by the High Court of Jharkhand.

Conclusion:
The Tribunal concluded that the petition was not maintainable as it was filed beyond the statutory time limit of 180 days from the commencement of the IBC. The Tribunal also noted the non-disclosure of relevant facts by the Corporate Applicant. Consequently, the petition was rejected as not maintainable.