2017 (1) TMI 1430 - Tri - Companies Law

Tribunal's Powers under Companies Act 2013: Clarification on Corporate Debtor's Submissions

The Tribunal invoked inherent powers under the Companies Act 2013 to address issues raised in a case involving a Corporate Debtor. Despite a delay in ... Non-service of notice upon the Debtor - Held that:- Non-service of notice would pale into insignificance because this Bench heard on the other CA upon which the corporate debtor vehemently argued. Though it normally does not happen, in rush of work, we inadvertently decided that IA 6/2017 basing on the argument of the counsel of Corporate Debtor, because that plea would not survive because hearing has already been given to the Corporate Debtor in the earlier application. Delay has also occurred in passing this order owing to the application filed by the Corporate Debtor. Indeed, this Code has nowhere given any explicit opportunity to the Corporate Debtor to exercise the right of making submissions, but this Bench heard and passed orders in the earlier application on 17.1.2017. Corporate Debtor could have raised this plea of no default, which he raised along with the issue already raised in the earlier CA already adjudicated. Having not raised the said plea along with other application, this Bench hereby held that this application is not entertainable for two reasons, one - the corporate debtor cannot raise objection, because no audience has been given to the corporate debtor in the Code, two - even if right is assumed as exercisable by the Corporate Debtor, since he has not taken this relief in the earlier application, the corporate debtor is barred from raising such plea in subsequent application. Creditor application shall be decided within 14 days from the date of filing creditor petition by ascertaining as to whether petition is in compliance of Section 7 of the Insolvency & Bankruptcy Code, therefore this Bench is under no obligation to hear the Corporate debtor, hence this CA is hereby dismissed even without going into the merits of the application. Issues Involved:1. Clarification on two issues - another CA filed by the Corporate Debtor and putting the name of the agency (CIBIL).Analysis:1. The Tribunal invoked inherent powers under the Companies Act 2013 to address the issues raised. The Corporate Debtor's Counsel mentioned non-service of notice in another application (IA 6/2017). The Tribunal noted that the argument of non-service would be insignificant as the Corporate Debtor had been heard on a previous application. Despite the delay in passing the order, the Tribunal decided that the Corporate Debtor had the opportunity to make submissions, even though not explicitly provided for in the Code.2. The Tribunal held that the Corporate Debtor should have raised the plea of no default in the initial application (CA 6/2017) along with other issues. Since the Corporate Debtor failed to do so, the Tribunal deemed the subsequent application as not entertainable for two reasons: first, the Corporate Debtor had not been granted an audience in the Code, and second, even if assumed to have the right to raise objections, the failure to do so in the earlier application barred the Corporate Debtor from raising such pleas in subsequent applications.3. The Tribunal clarified that creditor applications must be decided promptly within 14 days of filing to ensure compliance with the Insolvency & Bankruptcy Code. In this case, since the application did not meet the requirements of Section 7 of the Code, the Tribunal dismissed the application without delving into its merits. Additionally, the Tribunal corrected that the default had been considered based on the report from CIBIL, addressing the second issue raised regarding the agency's involvement in the matter.