2018 (2) TMI 444 - AT - Insolvency and Bankruptcy

Corporate insolvency process - winding proceeding already initiated by the High Court is still pending - Held that - In the present case as we find that a winding up proceeding has been passed and is pending against the appellant, we hold that the application under section 10 of I&B code at the instance of the corporate applicant is not maintainable in view of the bar imposed under Section 11(d) of I&B Code. Appeal dismissed.

Summary

Issues:
1. Rejection of application under Section 10 of the Insolvency & Bankruptcy Code, 2016 by the Adjudicating Authority.
2. Jurisdiction of the Adjudicating Authority in determining the revival of the company.
3. Stay order by the Division Bench of the Hon'ble High Court of Andhra Pradesh on the winding up proceedings.
4. Interpretation of the stay order and its impact on the winding up proceedings.
5. Application of Section 11(d) of the Insolvency & Bankruptcy Code on the corporate applicant.

Analysis:
1. The corporate applicant filed an application under Section 10 of the Insolvency & Bankruptcy Code, 2016 for corporate insolvency process initiation. The Adjudicating Authority rejected the application citing reasons including the pendency of winding up proceedings against the company.
2. The appellant argued that the Adjudicating Authority overstepped its jurisdiction by considering the revival of the company during the application under Section 10, which is beyond the Authority's purview.
3. The Hon'ble High Court of Andhra Pradesh had issued an order for winding up the appellant company under the Companies Act, 1956, which was stayed due to the matter's pendency before the BIFR. The corporate applicant contended that the Adjudicating Authority erred in concluding that the company had undergone liquidation.
4. The respondent referred to a previous order by the High Court of Andhra Pradesh, which had ordered the winding up of the corporate debtor due to an inability to pay debts. The appellant had appealed this order, resulting in an interim stay order by the Division Bench.
5. The respondent argued that the interim stay order did not halt the winding up proceedings or the appointment of a liquidator, citing legal precedent to distinguish between quashing an order and staying its operation. Additionally, Section 11(d) of the I&B Code prohibits a corporate applicant against whom a liquidation order has been made from filing a petition under Section 10.
6. Citing a previous judgment, the Appellate Tribunal held that an application under Section 10 must be admitted if all statutory requirements are met, and the applicant is not ineligible under Section 11. The Tribunal emphasized that unrelated facts beyond the I&B Code requirements need not be disclosed unless directly related to ineligibility under Section 11.
7. Given the pending winding up proceedings against the appellant, the Tribunal found the application under Section 10 not maintainable under Section 11(d) of the I&B Code, leading to the dismissal of the appeal without costs.