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TMI Blog2017 (9) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... made later on within 14 days of admission under Section 16, then in case of appointment of an ineligible 'Interim Resolution Professional' against whom a Departmental proceeding is pending, can the 'Corporate Debtor' prefer appeal under Section 61 challenging the appointment of 'Interim Resolution Professional', if the 'Corporate Debtor' is asked to be represented through the same very 'Interim Resolution Professional'? The answer will be in negative means a 'Corporate Debtor' in such case cannot be represented to the 'Interim Resolution Professional', whose appointment is under challenge and for all purpose to be represented through the person who represented the 'Corporate Debtor' at the stage of admission before the Adjudicating Authority. At this stage, it is desirable to notice that though pursuant to Section 17, the Board of Directors of a 'Corporate Debtor' stand suspended (for a limited period of 'Corporate Resolution Process maximum 180 days or extended period of 90 days i.e. 270 days), but they continued to remain as Directors and members of the Board of Directors for all purpose in the records of Registrar of Companies under the Companies Act 2013. For the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 7 to suggest that record of default recorded with the information utility or such other record or evidence of default as specified by Insolvency Bankruptcy Board of India (IBBI) has not been filed. 5. On the other hand, according to Learned Counsel for the respondents, the appellant has no locus to file this appeal after appointment of Interim Resolution Professional, who has already taken over the management of the 'Corporate Debtor'. The powers of Board of Directors, since then stands suspended in terms of Section 17(1)(a) (b) of the 'I B Code. 6. In so far as notice under Rule 4(3) is concerned, according to Learned Counsel for the respondent proper notice was issued to the 'Corporate Debtor' who had appeared before Learned Adjudicating Authority on 17th April 2017 and was given ample opportunity to present the case. 7. Relying on the decision of the Appellate Tribunal in M / s . Innoventive Industries Ltd . Vs ICICI Bank Ann (Company Appeal (AT)(Ins.) Nos. 1 and 2 of 2017 decided on 15th May 2017), it was contended that the Adjudicating Authority is required to issue only a limited notice to the 'Corporate Debtor&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Limited (Appellant), but the said appellant having appeared and heard by Adjudicating Authority at the time of admission of the application under Section 9 of the 'I B Code', observe and held as under: - 65 . In the present case though no notice was given to the Appellant before admission of the case but we find that the Appellant intervened before the admission of the case and all the objections raised by appellant has been noticed, discussed and considered by the 'adjudicating authority' while passing the impugned order dated 17th January 2017 . Thereby, merely on the ground that the Appellant was not given any notice before admission of the case cannot render the impugned order illegal as the Appellant has already been heard . If the impugned order is set aside and the case is remitted back to the adjudicating authority, it would be 'useless formality' and would be futile to order its observance as the result would not be different . Therefore, order to follow the principles of natural justice in the present case does not arise . 12. In the present case we find that the respondent issued post filing notice under Rule 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that Board has not stipulated or framed Regulations with regard to sub - section 3 ( a ) of Section 7 . The language of Section 240, whereby Board have been empowered to frame regulations is clear that the said regulation should be consistent with the 'I B' Code and the rules made thereunder by the Central Government . 19 . In exercise of power conferred by Section 239 read with Sections 7, 8, 9 and 10 of the 'I B code, the Central Government framed the rules known as Insolvency Bankruptcy ( Application to Adjudicating Authority ) Rules, 2016 ( hereinafter referred to as 'Adjudicating Authority Rules, 2016 ). As per Rule 41, a 'Financial Creditor' required to apply itself or jointly in an application under Section 7 in terms of For - m - 1 attached thereto . Part V of Form - 1 deals with particulars of 'Financial Debt' ( documents, record and evidence of default ) , as quoted below : - PART V PARTICULARS OF FINANCIAL DEBT [ DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT ] 1 . PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r record or evidence of default in addition to the records as mentioned in Part V of Form - I . 22 . At this stage, it is pertinent to note that the Board has also framed Insolvency Resolution Process for Corporate Persons, Regulations, 2016 ( 'Corporate Persons Regulation' for short ). It has come into force since Notification dated 30th November 2016 was issued . Regulation 8 of 'Corporate Persons Regulation', 2016 relate to claims by 'Financial Creditor' . Regulation 11 ( 2 ) relates to existence of debt due to 'Financial Creditor', which is to be proved on the basis documents mentioned therein and quoted below : - 8 . Claims by financial creditors . ( 1 ) A person claiming to be a financial creditor of the corporate debtor shall submit proof of claim to the interim resolution professional in electronic form fn Form C of the Schedule : Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee . ( 2 ) The existence of debt due to the financial creditor may be proved on the basis of - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as may be required by the interim resolution professional; ( d ) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional . ( 2 ) The interim resolution professional vested with the management of the corporate debtor shall - ( a ) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other documents, if any; ( b ) take such actions, in the manner and subject to such restrictions, as may be specified by the Board; ( c ) have the authority to access the electronic records of corporate debtor from information utility having financial information of the corporate debtor; ( d ) have the authority to access the books of account, records and other relevant documents of corporate debtor available with government authorities, statutory auditors, accountants and such other persons as may be specified . 16. From Clause (a) of sub-section (1) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Adjudicating Authority. Once a 'Corporate Debtor' appeared before the Adjudicating Authority through its Board of Director(s) or its officers or through authorised person and is heard before admission of an application under '1 B Code', being aggrieved such 'Corporate Debtor' cannot prefer an appeal under Section 61 on the ground that the 'Corporate Debtor' appeared through another person 'Interim Resolution Professional', though he had not appeared before the Adjudicating Authority. 20. Though the Board of Directors or partners of 'Corporate Debtor', as the case may be is suspended and their power can be exercised by the 'Interim Resolution Professional', but such exercise of power is limited to the extent to sub-section (2) of Section 17 of the 'I B Code' and not for any other purpose. If the matter is looked from another angle, it will be clear as to why 'Corporate Debtor' should not be represented through 'Interim Resolution Professional' for preferring an appeal under Section 61 of the 'I B Code'. The Role of 'Interim Resolution Professional' starts after in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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