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2021 (5) TMI 711 - Tri - Insolvency and BankruptcyMaintainability of petition - seeking to delete the name of the Respondent No. 2 from the array of parties - Section 60(5) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Respondent No. 2 is not a party to the Business Transfer Agreement which is carried on between the Petitioner and the Respondent No. 1. Respondent No. 2 is an affiliate company of the Respondent No. 1 since April, 2020. All the rights and the liabilities arising out of the BTA are only within the domain of the Respondent No. 1 and the same cast no shadow up on the functioning or liabilities of the Respondent No. 2. Hence, this Application was made for deletion of Respondent No. 2. The instant Application is filed in accordance with extant provisions of Code, and the reasons for removal of Respondent No. 2 are convincing, and as agreed to by the Petitioner. Therefore, it would be just and proper to remove the Respondent No. 2 from the list of Respondents - petition disposed off.
Issues Involved:
1. Maintainability of the petition against Respondent No. 2. 2. Authorization to file the petition and compliance with Adjudicating Rules. 3. Furnishing of affidavit under Section 9(3)(b) of the IBC. 4. Privity of contract and liabilities of Respondent No. 2. 5. Adding multiple respondents in a petition under Section 9. 6. Removal of Respondent No. 2 from the list of parties. Analysis: Issue 1: Maintainability of the petition against Respondent No. 2 The application filed sought to delete the name of Respondent No. 2 from the array of parties, as it was contended that the petition was not maintainable against Respondent No. 2. It was argued that the Business Transfer Agreement (BTA) forming the basis of the petition was strictly between the Petitioner and Respondent No. 1, and Respondent No. 2 had no privity to contract with the Petitioner regarding the BTA. The Tribunal found that Respondent No. 2 was not a party to the BTA and that all rights and liabilities arising from the BTA were within the domain of Respondent No. 1, not affecting Respondent No. 2. The Petitioner had failed to demonstrate any claim against Respondent No. 2, leading to the conclusion that the petition was not maintainable against Respondent No. 2. Issue 2: Authorization to file the petition and compliance with Adjudicating Rules The Petitioner had appointed an authorized signatory to file the petition, supported by a Board Resolution. However, it was argued that the signatory was not duly authorized, and the petition did not comply with the requirements of the Adjudicating Rules. Additionally, the Petitioner failed to furnish an affidavit under Section 9(3)(b) of the IBC, which is a mandatory requirement. These deficiencies were highlighted as grounds for rejecting the petition outright. Issue 3: Adding multiple respondents in a petition under Section 9 The Tribunal referred to a previous order by the NCLT Delhi, emphasizing that an application under Section 9 can only be against a single Corporate Debtor. Therefore, adding more than one respondent to the petition was deemed not maintainable under the Code. The Petitioner's attempt to include multiple respondents was found to be in violation of the prescribed rules. Issue 4: Removal of Respondent No. 2 from the list of parties After considering the arguments presented and the agreement of the Petitioner, the Tribunal concluded that it would be just and proper to remove Respondent No. 2 from the list of respondents, as requested in the application. The application for removal of Respondent No. 2 was disposed of, granting liberty to the Petitioner to modify the petition if desired, with no order as to costs. This detailed analysis of the judgment highlights the key issues addressed by the Tribunal regarding the maintainability of the petition, compliance with legal requirements, and the removal of a respondent from the proceedings.
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