NCLAT includes Corporate Debtor in CIRP case, emphasizes IBC compliance

The National Company Law Appellate Tribunal directed the inclusion of the Corporate Debtor through the Interim Resolution Professional as Respondent No. 2 in a case involving a stay on the Corporate Insolvency Resolution Process (CIRP) due to a preexisting dispute. The tribunal ordered the handover of the corporate debtor's assets and records to the IRP, allowing the IRP to operate the company's bank accounts for essential functions. The tribunal emphasized adherence to the time-bound procedures under the Insolvency and Bankruptcy Code (IBC) and the need to avoid delays that could hinder the IBC's objectives, while also highlighting the importance of further examination regarding the nature of a dispute.

---

---

Issues: Preexisting dispute, stay of CIRP, interim relief, corporate debtor's assets handover, operation of bank accounts, filing of reply-affidavits, admission hearing date

In this judgment by the National Company Law Appellate Tribunal, the appellant's counsel argued for a stay on the Corporate Insolvency Resolution Process (CIRP) due to a preexisting dispute, citing a letter as evidence. However, the tribunal noted that the Interim Resolution Professional (IRP) had not been made a respondent and directed the appellant to include the Corporate Debtor through IRP as Respondent No. 2. The tribunal ordered the handover of the corporate debtor's assets and records to the IRP immediately if not done already, emphasizing the need for the company to remain a going concern. The IRP was authorized to operate the company's bank accounts for day-to-day functions like bill payments and employee salaries, subject to certain conditions. The respondents were given a deadline to file reply-affidavits and brief written submissions, with an admission hearing scheduled for a specific date. The tribunal declined to grant interim relief, highlighting the time-bound nature of procedures under the Insolvency and Bankruptcy Code (IBC) and the importance of avoiding delays that could undermine the IBC's objectives. It was emphasized that the decision on whether a letter requesting reconciliation constitutes a dispute needed further examination. The tribunal's order aimed to ensure the smooth functioning of the company under the supervision of the IRP and involved various procedural directions for the parties involved in the appeal.

---