2020 (5) TMI 97 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - non-payment of the operational debt has not been filed - existence of debt and dispute or not - HELD THAT - The Hon ble Supreme Court also considered the order of this Appellate Tribunal in the case of SMART TIMING STEEL LTD. VERSUS NATIONAL STEEL AGRO INDUSTRIES LTD. 2017 (8) TMI 1590 - SC ORDER , the Adjudicating Authority dismissed the petition as the second petition was for same cause of action, was not maintainable. In view of the fact that earlier petition under Section 9 was filed by the Appellant- Smart Timing Steel Ltd. - for initiation of the Corporate Insolvency Resolution Process against National Steel Agro Industries Ltd. - (Corporate Debtor) was earlier dismissed by the Adjudicating Authority and affirmed by the Hon ble Supreme Court, we agree with the observations made by the Adjudicating Authority that the second petition for same cause of action is not maintainable. Appeal dismissed.

Summary

Issues:
1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to non-filing of certificate from Financial Institution.
2. Dismissal of petition for initiation of Corporate Insolvency Resolution Process based on the same cause of action.

Analysis:
1. The Appellant, 'Smart Timing Steel Ltd.' filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against 'National Steel & Agro Industries Ltd.' for the initiation of Corporate Insolvency Resolution Process. The Adjudicating Authority rejected the application on the grounds of non-filing of a certificate from the Financial Institution reflecting non-payment of operational debt, as required by Section 9 of the I&B Code. The Demand Notice was issued by the Appellant on 23rd December, 2016, demanding payment from the Corporate Debtor. However, as the Appellant failed to produce the required certificate, the claim was rejected by the Adjudicating Authority.

2. A subsequent petition under Section 9 was filed by the Appellant after the initial rejection, which was dismissed by the Adjudicating Authority and affirmed by the Hon'ble Supreme Court. The Adjudicating Authority dismissed the second petition citing that it was for the same cause of action and hence not maintainable. Despite giving an opportunity to settle the matter, no progress was made, leading to the dismissal of the appeal by the Appellate Tribunal. The Tribunal concurred with the Adjudicating Authority's decision that the second petition for the same cause of action was not maintainable based on previous judgments.

In conclusion, the Appellate Tribunal upheld the dismissal of the appeal, emphasizing that the second petition for the same cause of action was not maintainable as per the previous decisions of the Adjudicating Authority and the Hon'ble Supreme Court. The failure to produce the required certificate from the Financial Institution led to the rejection of the initial application under Section 9 of the I&B Code, highlighting the importance of complying with statutory requirements in insolvency proceedings.