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TMI Blog2021 (1) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... the debt has been legally assigned or transferred. This, however, does not apply to the definition of Corporate Debtor as found in Section 3(8). Section 3(8) states that Corporate Debtor means a corporate person who owes a debt to any person. Thus, when the definitions of Financial Creditor and Operational Creditor are read with the definition of Corporate Debtor, it is clear that while Financial Creditor and Operational Creditor can assign their debt, the same is not applicable to a Corporate Debtor. Thus no such defence can be taken to show existence of dispute - The claim of the Appellant trying to build a case of collusion and fraud is thus not appealing to us. Even if Respondent No.2, a Corporate Debtor had debts to pay of M/s. Guptaji, it can have debt of its own to recover from Respondent No.1 who is another Corporate Debtor. CIRP against Respondent No. 1 maintainable or not - HELD THAT:- Orris Infrastructure has itself filed Application seeking intervention pointing out proceedings which have taken place before Haryana Real Estate Regulatory Authority and High Court with the prayer that the amounts lying in Escrow Account in view of Orders of the High Court should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal (AT) (Ins) No.891 of 2020 - - - Dated:- 6-1-2021 - [Justice A.I.S. Cheema] Member (Judicial) And [V.P. Singh] Member (Technical) For the Appellant : Mr. Piyush Singh, Mr. Aditya Parolia, Mr. Prateek Vats and Ms. Aditi Sinha, Advocates For the Respondent : Mr. Jayant K. Mehta, Mr. Pankaj Agarwal, Ms. Sonal Alagh, Ms. Shreya Kohli and Mr. Nikhil Jain, Advocates for R-1. Mr. Amarpal, IRP Mr. GP Madaan, Ranjeet Kumar Verma and Mr. Pranay Chitale (RP), R-2. Mr. Deepak Garg, Advocate for R-2. Ms. Asmita Chaudhary, for Impleadment Mr. Sumedha Dang and Mr. Viabhav Gaggar, for Interveners JUDGMENT A.I.S. Cheema, J. : 1. Appellant claims to be association representing 350 home buyers in the project Greenopolis of the Respondent No.1 - Three C Shelters Pvt. Ltd. (Corporate Debtor). The Appeal has been filed against the admission of Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC in short) in C.P. IB-2721/ND/2019 dated 20th July, 2020 (Impugned Order No.1) (Annexure A-1 Page 34) and against Order dated 17th September, 2020 (Page 34A Impugned Order No.2) by which Order I.A. No.3491 of 2020 filed by the Appellant in the Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure Pvt. Ltd. and the project was of 38 towers and thousands of flats were to be developed by the Corporate Debtor in conjunction with Orris Infrastructure Pvt. Ltd. It is claimed that for fruitful CIRP (Corporate Insolvency Resolution Process), the Corporate Debtor cannot be subjected to the CIRP process alone since the project was being developed jointly with Orris Infrastructure. It is claimed that it is not feasible to only subject one participant into one CIRP. According to Appellant, there should be group insolvency of Respondent No.1 with Oriss Infrastructure. 4. The Appellant claims that Respondent No.2 Operational Creditor could not have initiated insolvency proceedings against the Corporate Debtor as there was bar under Section 11(b) of IBC. Appellant stated that in the matter of M/s. Gupta Ji when the Appeal was filed, matter between the Respondent No.2 and Gupta Ji was settled in Company Appeal (AT) (Ins) No.388 of 2020. Respondent No.2 exited rigours of CIRP only on 13th March, 2020 and thus 12 months were not over as required by Section 11(b) of IBC. 5. The Appellant further claims and it is argued that the Impugned Order of admission is perverse a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tribunal and the same was disposed by the Order dated 13th March, 2020 (Annexure A-3 Page 46) and MOU between present Respondent No.2 who was Corporate Debtor in that matter with M/s. Guptaji, the Operational Creditor in the earlier matter was recorded and the admission Order dated 26th February, 2020 was set aside and Gupta Ji withdrew that Application. Liberty was given to Gupta Ji and IRP (Insolvency Resolution Professional) in that matter to approach this Appellate Tribunal in case the Corporate Debtor in that matter (present Respondent No.2) commits default in honouring the MOU. Thus at that point of time, the CIRP had ceased to exist, in CP IB No.1071/2019. 8.3 On 20.07.2020, the present Impugned Order No.1 came to be passed in IB 2721/ND/2019 in Application filed by M/s. Straight Edge Contracts Pvt. Ltd. as Operational Creditor against M/s. Three C Shelters Pvt. Ltd. which we have reproduced above. In the Cause Title, reference has been made to Section 7 of IBC which was error apparent as the Order refers to submissions made by Operational Creditor. (This and other mistakes in Order Adjudicating Authority corrected later on 14.10.2020 vide Annexure R-5 filed by Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Impugned Order No.1. The Order passed was as under:- IA No.3079 of 2020 IA No.3079 of 2020 is heard and the application is allowed. By this order the typographical errors of order dated 20.07.2020 are corrected:- (i) The word Section 7 is replaced with Section 9 in the order dated 20.07.2020. (ii) Annexure A10 which is an affidavit of admission is replaced with the words Annexure A to the affidavit of admission. (iii) the detailed order/final judgement will be uploaded within next three days. 8.11. On 15th October, 2020, the Impugned Order No.1 and Impugned Order No.2 came up for consideration before this Appellate Tribunal when matter had come up for admission and after hearing Counsel for the Appellant and Respondent No.1, Notice was issued and it was directed Meanwhile, till next date of hearing, the Impugned Orders are stayed . 8.12 On 16th October, 2020, the Adjudicating Authority passed detailed Order/Judgement (Annexure R-6 Reply of R-1) recording that vide Order dated 20th July, 2020, the Petition (2721/2019) was allowed and the Order which was now being passed (on 16.10.2020) shall be read along with the Order dated 20th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor. The Appellant is banking on such defence recorded in earlier matter. On such basis, collusion and fraud is alleged. We do not find any substance in such averments made by the Appellant. Present Application under Section 9 is undisputedly filed by the Respondent No.2 at a time when CIRP against the Respondent No.2 had been set aside on 13.03.2020, has to be appreciated on its own facts and documents. The definition of Financial Creditor in Section 5(7) and definition of Operational Creditor in Section 5(20) includes any person to whom the debt has been legally assigned or transferred. This, however, does not apply to the definition of Corporate Debtor as found in Section 3(8). Section 3(8) states that Corporate Debtor means a corporate person who owes a debt to any person. Thus, when the definitions of Financial Creditor and Operational Creditor are read with the definition of Corporate Debtor, it is clear that while Financial Creditor and Operational Creditor can assign their debt, the same is not applicable to a Corporate Debtor. Thus no such defence can be taken to show existence of dispute. As such, even if Respondent No.2 had taken defence in earlier pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave avoided passing Impugned Order No.1, in the manner as it did. It would have been appropriate and proper that the Order as passed on 16th October, 2020 should have been passed on 20th July, 2020. The Petition which had been moved for initiating CIRP under Section 9 of IBC was allowed on 20th July, 2020 and when the Petition was allowed, provisions of the Insolvency and Bankruptcy Code got attracted. Provisions require Adjudicating Authority to pass further consequential Orders like appointing of IRP, declaration of Moratorium, etc. It is inappropriate for Adjudicating Authority to pass Orders as it did on 20th July, 2020 and leave the rest in suspense till further Orders dated 16th October, 2020 were passed. Although the procedures of the Code of Civil Procedure do not strictly apply under Section 424 of the Companies Act, 2013, still the principles of natural justice, and other provisions of IBC required that proper and complete Order (as was done on 16.10.2020) should have been passed in the first instance itself. We are aware NCLT is overburdened. Still such procedure to pass Orders, as in the present matter, should be avoided. 13. The grievance of the Appellant appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority in its Order dated 14th October, 2020 (Annexure R-5). The Adjudicating Authority cured defect and we do not wish to interfere on technical grounds, as it will serve no purpose. Record shows that both Respondents are now under CIRP and we would trust the IRPs/RPs to follow the law. As such, alleged collusion would be irrelevant, even otherwise. The alleged Bar under Section 11 of IBC 15. The other grievance of the Appellant is that on 28th September, 2020, this Tribunal set aside the Order dated 13th March, 2020 in the matter of Gupta Ji and thus the CIRP against Respondent No.2 had been restored. The Counsel for Appellant referred to Section 11(a) and (b) to state that the Respondent No.2 who was itself undergoing CIRP could not have filed Application in view of bar under Section 11 of IBC. Section 11 of IBC reads as under:- 11. Persons not entitled to make application.-The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:- (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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