9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 556 - SC - Insolvency and BankruptcyMaintainability of CIRP application - Corporate Debtor failed to make repayment of dues - NCLT allowed the application - NCLAT set aside the order of NCLT on the ground that applicant failed to prove that there was an outstanding amount - HELD THAT - A bare reading of the NCLT order shows that it is only after a perusal of the documents, pleadings, and the supplementary affidavit of 03.08.2018, including the counter affidavit in the earlier section 7 application, that the NCLT came to the conclusion that a loan amount remained outstanding. The NCLAT, when it dealt with the NCLT order, wrongly recorded that documents which were already rejected by the adjudicating authority could not have been the basis of the order of admission. The NCLAT also wrongly recorded that there was no further evidence in support of the fact that any amount was outstanding. Further, the NCLAT also held that a document filed in the earlier petition that was dismissed as withdrawn could not have been relied upon by the adjudicating authority. The NCLAT is wrong on all these counts. The NCLAT order is set aside and that of the NCLT is restored. The resolution proceedings will continue from the stage at which they were interrupted.
Issues:
1. Interpretation of loan agreements under the Insolvency and Bankruptcy Code, 2016. 2. Admissibility of documents and affidavits in insolvency proceedings. 3. Applicability of principles of estoppel in insolvency matters. 4. Review of NCLT and NCLAT orders in insolvency cases. Issue 1: Interpretation of loan agreements under the Insolvency and Bankruptcy Code, 2016: The appellant filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016, concerning a loan restructuring. The NCLT initially admitted the application, appointing a Resolution Professional and forming a Committee of Creditors. However, the NCLAT set aside the NCLT order, stating that the loan amount was repaid, and the documents relied upon were not supported by evidence. Upon review, the Supreme Court found that the NCLAT's conclusions were erroneous. Documents supporting the outstanding loan amount were produced, including a supplementary affidavit and a counter affidavit admitting the debt's existence. The Court reinstated the NCLT order, allowing the resolution proceedings to continue. Issue 2: Admissibility of documents and affidavits in insolvency proceedings: The NCLAT had criticized the NCLT for relying on documents previously rejected and for lacking further evidence of the outstanding amount. However, the Supreme Court disagreed, emphasizing that the documents presented, including the supplementary affidavit and the counter affidavit from the first round of litigation, were admissible. The Court clarified that the counter affidavit's admission of the debt was valid evidence, not merely a document from a withdrawn petition. Therefore, the NCLAT's objections on the admissibility of documents were deemed incorrect. Issue 3: Applicability of principles of estoppel in insolvency matters: The NCLT had based its decision on the principle of estoppel, emphasizing that the corporate debtor could not take a contrary stand after admitting to the loan restructuring. The Court upheld this reasoning, stating that the corporate debtor's admission in the counter affidavit bound them, and estoppel principles applied. This played a crucial role in determining the outstanding loan amount and the validity of the insolvency application. Issue 4: Review of NCLT and NCLAT orders in insolvency cases: The Supreme Court reviewed the NCLT and NCLAT orders in detail. It found that the NCLAT had misinterpreted the evidence and wrongly concluded that the documents were inadmissible. By reinstating the NCLT order, the Court clarified the correct application of law in insolvency cases. The judgment in Civil Appeal No. 9425 of 2019 impacted related appeals (Civil Appeal No. 1911 of 2020 and Civil Appeal No. 3112 of 2020), ensuring consistency in the resolution proceedings. Additionally, the Court allowed intervenors to withdraw their application for directions, redirecting it to the appropriate forum.
|
