9911796707
TMI Blog2022 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the Corporate Debtor before it when the matter was argued and reserved and still it is recorded in its order that it had heard the arguments of the Corporate Debtor. All these facts cumulatively shows that there was no application of mind much less judicious in passing of the impugned order which has been apparently passed in a most mechanical manner. The Adjudicating Authority has to take into consideration the fact that the proceedings of CIRP, initiated after the admission of the application, has an immense adverse effect upon the Corporate Debtor, therefore, such application should not be admitted as a matter of routine and that too in a mechanical manner. The impugned order suffers from non-application of mind and is not a reasoned/speaking order, therefore, the same is hereby set aside and the matter is remanded back to the concerned Adjudicating Authority to decide the lis again by passing a speaking order. - Company Appeal (AT) (Ins) No. 1042 of 2021 - - - Dated:- 1-12-2022 - [Justice Rakesh Kumar Jain] Member (Judicial) And [Mr. Kanthi Narahari] Member (Technical) For the Appellant : Ms. Ruby Singh Ahuja, Mr. Lakshya Khanna, Ms. Honey Maini, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses the default as prescribed under Section 2(12) of the Code. Rather it is submitted that the principal amount was to be repaid from the sale proceeds of the principal assets (Club Premises) which is the subject matter of the arbitration and litigation, therefore, the principal loan amount has not become due and payable and as such there was no default on the part of the Corporate Debtor (Respondent No. 4) which may trigger the cause of action for the filing of application under Section 7 of the Code. 4. Counsel for the Appellant has submitted that the Adjudicating Authority has passed the impugned order without applying its mind to the facts and circumstances much less the evidence brought on record as according to the Appellant the amount of Rs. 3,59,00,000/- is shown in the balance sheet of the year 2013 -14 only and in this regard, he has drawn our attention to the auditor s report pertaining to the assessment year 2013- 14 in which clause 3(b) provides as under:- (b) The Company has taken unsecured loans from other parties listed in the register maintained under Section 301 of the Act and the maximum outstanding balance and also the closing balance of the said parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt and default are the two main components of Section 7 which provides that an application may be filed for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. The sum and substance of the arguments of Counsel for the Appellant is that not only the Respondents No. 1 to 3 had to plead and prove that there was a debt but also it had become payable and in the event of non-payment a default has occurred to attract the provision of Section 7 of the Code for seeking initiation of CIRP against the Corporate Debtor. It is further submitted that in the latest decision of the Hon ble Supreme Court in the case of Vidarbha Industries Power Limited Vs. Axis Bank Limited, 2022 SCC Online SC 841, it has been held that the Adjudicating Authority is not to pass an order of admission mechanically even if the discretionary powers have been conferred upon it. It is argued that the impugned order has been passed mechanically, without application of mind and also without giving any reasons. In this regard, it is submitted that the Adjudicating Authority has observed in Para 11 of the impugned order that we have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record with their able assistance. 9. In the matter of judicial review in appeal, the Appellate Court is more concerned about the manner in which the findings are ultimately recorded, while admitting or rejecting the application filed either under Section 7, 9 or 10 of the Code as the case may be because a reasoned and speaking order is the soul of principle of natural justice which has to be observed by the Adjudicating Authority being a quasi judicial authority. It has been found from the impugned order that the Adjudicating Authority has divided its order in three parts. The first part deals with the submissions of Financial Creditor, second part deals with the submissions of Corporate Debtor and the third is about its satisfaction for admitting the application filed under Section 7 of the Code. We have carefully gone through the impugned order and are surprised to note that none of the contentions of the Corporate Debtor have been discussed except for noticing in the fact that a demand notice was issued by the Financial Creditor, there was an acknowledgement by the Corporate Debtor in various financial statements and that the understanding that money shall be paid after sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
