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TMI Blog2018 (9) TMI 1925X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the corporate debtor when a 'default' has occurred. Therefore, the filing of application for initiating Corporate Insolvency Resolution Process by the petitioner who is a financial creditor is not prohibited under law even if there is no direction to the said effect by the RBI - Therefore, the direction of the RBI dated 14.8.2018 has no material bearing upon the proceedings initiated by ICICI Bank under Section 7 of the IBC. The writ petition is dismissed with liberty to the petitioner to participate in the proceedings under the IBC before the NCLT and may raise all possible objections as are permissible in law. - WRIT - C No. - 31329 of 2018 - - - Dated:- 24-9-2018 - Hon'ble Pankaj Mithal And Hon'ble Mukhtar Ahmad, JJ. For the Petitioner : Rajendra Prasad Agrawal, Abhay Kumar Singh For the Respondent : Amit Saxena, Manish Trivedi ORDER Heard Sri Ranjit Kumar, Senior counsel assisted by Sri R.P. Agrawal, learned counsel for the petitioner, Sri Anurag Khanna, Senior counsel assisted by Sri Amit Saxena Sri J.K. Chokshi, learned counsel appearing for respondent no. 1, Reserve Bank of India and Sri V.K. Uh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner. At the very outset Sri Anurag Khanna and Sri V.K. Upadhyaya, Senior counsel for the respondents raised a preliminary objection regarding maintainability of this petition primarily for the reason that the proceedings before the NCLT have been initiated in pursuance of the directions of the Supreme Court and in turn that of the RBI. The petitioner has already filed objections taking the grounds on which the present petition has been filed before the NCLT and that the same can be considered and decided by the NCLT. Thus, there is no purpose for interference in exercise of writ jurisdiction in the matter. Sri Ranjit Kumar, Senior Advocate made submissions not only meeting out the preliminary objections so raised on behalf of the respondents but substantially addressed the problem on merits as well. Sri Ranjit Kumar argued that the directions of the RBI contained in its order dated 14th August 2018 is patently illegal and bad in law for the reason that insolvency proceedings can be initiated against the petitioner only if it is a 'defaulter'. In this regard he drew the attention of the Court to the provisions of Section 35 AA of the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the insolvency resolution process in respect of 'default' committed by the petitioner under the provisions of IBC. In pursuance of this direction the ICICI Bank has applied under Section 7 of the IBC to the NCLT at Allahabad for the corporate insolvency of the petitioner. The said petition has been entertained and notices have been directed to be served upon the petitioner fixing 17th September 2018 for admission which has now been adjourned for 26th September 2018 as is informed by both sides. Thus, insolvency proceedings against the petitioner under Section 7 of the IBC are pending before the NCLT. Sub-section (4) of Section 7 of the IBC empowers the Adjudicating Authority ie. NCLT to ascertain the existence of 'default' from the records or on the basis of the evidence furnished by the financial creditors on receiving application for initiation of corporate insolvency. This has to be done by it within a specified period of 14 days of the receipt of the application. Sub-section (5) of Section 7 of the IBC provides that where the Adjudicating Authority/NCLT is satisfied that 'default' has occurred and the application filed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for vacating the above direction of deposit of ₹ 2,000 crores or to modify the same. In the said proceedings the RBI also moved interlocutory application on 10th January 2018 seeking permission to move before the NCLT against JAL under the provisions of the IBC. The Apex court in this situation observed that during the course of hearing there was unanimity of opinion that the liquidation of JIL alone will not sub-serve the interest of the home buyers whose interest is also sought to be protected with the amendment brought in force w.e.f. 7th June 2018 in the matter of corporate insolvency. The proposals put-forth on behalf of the petitioner were not accepted by the Court as it was of the opinion that it would cause serious prejudice to the discipline of the IBC and would set-at-naught the salutary provisions of the said statute. At the same time, serious doubts were caste about the credentials of the petitioner which was said to have diverted funds from JIL towards its own business. The court observed that it ought to follow the discipline of IBC which has been enacted for streamlining the resolution of corporate insolvencies through expert determination. The said s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests of the home buyers have been sought to be safeguarded. Accordingly, we accede to the request made on behalf of the RBI to allow it to follow the recommendations of the IAC to initiate a CIRP against JAL under the IBC. 42. We, accordingly, issue the following directions: (i) ....................... (ii) ....................... (iv) ....................... (v) RBI is allowed, in terms of its application to this Court to direct the banks to initiate corporate insolvency resolution proceedings against JAL under the IBC. (vi)............................ The aforesaid decision of the Supreme Court clearly indicates that the proposals of the petitioner were not accepted and that on the interlocutory application of the RBI, it found that the petitioner is under financial distress and to safeguard the interest of the home buyers the request of the RBI to allow it to initiate CIRP against the petitioner under IBC is acceded to and the RBI is allowed to direct the Banks to initiate corporate insolvency resolution proceedings(CIRP) against the petitioner under IBC. In view of the above conclusion drawn by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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