2024 (1) TMI 42 - AT - Insolvency and Bankruptcy

Maintainability of application for restoration of the petition before the Adjudicating Authority - failure to cross the threshold limit - appeal dismissed also on the ground of threshold limit and not only on the ground of non-appearance of the appellant. HELD THAT - In the ordinary course, had an order been passed by the Adjudicating Authority dismissing the petition filed under Section 9 of the Code only on the ground of non-appearance of the appellant then the application for recalling of the order dated 20.09.2022 could have been maintainable but the facts are otherwise because the order dated 20.09.2022 was passed on merits by the Adjudicating Authority holding that the petition under Section 9 is not maintainable as it has failed to cross the threshold limit as per Notification dated 24.03.2020 issued by the MCA. This order could have been challenged by way of an appeal by the Appellant before the Appellate Authority but the Appellant did not choose to file the appeal rather filed a frivolous application for restoration of the petition, may be under wrong belief, that the petition has been dismissed for non-appearance of the appellant only - Thus, no error is committed by the Adjudicating Authority in dismissing the application for restoration vide impugned order dated 23.03.2023 because it has been observed that the order dated 20.09.2022 has been passed on merits much less on the ground that the Appellant has failed to cross the threshold limit as provided because the amount which has been sought to be resolved was Rs. 75 Lakh whereas after the amendment the threshold has been increased to Rs. 1 Crore. There are no merit in this appeal and the same is hereby dismissed.

Summary

Issues Involved:
The issues involved in this case are the maintainability of an application for restoration of a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, the dismissal of the application for restoration, and the subsequent filing of an appeal against the dismissal orders.

Issue 1: Application for Restoration of the Petition
The appeal was filed against two orders, one dismissing a petition under Section 9 of the Code for being below the threshold limit, and the other dismissing an application for restoration of the petition. The Adjudicating Authority held that the petition was not maintainable due to the amount being below the threshold limit as per the MCA notification. The appellant filed the restoration application after the initial dismissal, claiming the petition was dismissed in their absence. However, the Adjudicating Authority found the restoration application not maintainable as the original dismissal was on merits, not for non-prosecution.

Issue 2: Maintainability of the Appeal
The respondent objected to the maintainability of the appeal against the two dismissal orders, arguing that the appellant should have directly appealed the order dismissing the petition under Section 9. The appellant's counsel contended that the order was passed in their absence, leading to the filing of the restoration application. The appellant sought a re-hearing of the petition. Despite the appeal being filed 7 days late, the appellant argued it should be considered against the later dismissal order only.

Conclusion
The Tribunal found that the application for restoration was not maintainable as the original dismissal was on merits, not due to non-appearance. The appellant should have appealed the initial dismissal directly. The threshold amount for the petition had been increased, making it non-maintainable. The delay in filing the appeal was noted, but no adverse comments were made. Ultimately, the appeal was dismissed, citing no merit.