Tribunal dismisses appeal, upholds rejection of amendment application, directs consideration of original claims

The Tribunal dismissed the appeal, affirming that the order dated 09.03.2018 became operative on the date of pronouncement. The Memorandum of Understanding dated 19.04.2018 was deemed void due to the ongoing Corporate Insolvency Resolution Process. The rejection of the amendment application was upheld as the basis for the amendment was invalid. The Appellant's original claims were to be considered on their merits as directed by the Adjudicating Authority, unaffected by the rejection of the amendment application.

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Issues Involved:
1. Operative Date of Adjudicating Authority's Order
2. Validity of Memorandum of Understanding dated 19.04.2018
3. Rejection of Application for Amendment (I.A No. 445 of 2021)
4. Consideration of Appellant’s Claim on Merits

Issue-wise Detailed Analysis:

1. Operative Date of Adjudicating Authority's Order:
The primary issue was whether the order passed by the Adjudicating Authority becomes operative from the date it is pronounced or when it is uploaded on the website. The order dated 09.03.2018 was pronounced and shown in the cause list on that date. Despite being uploaded only on 22.06.2018, the Tribunal held that the order became operative on 09.03.2018 when it was pronounced. Rule 150 of the National Company Law Tribunal Rules, 2016, which governs the pronouncement of orders, was cited to support this conclusion. The Tribunal emphasized that the legal consequences of the order flow from its pronouncement, and any delay in uploading does not suspend its operation.

2. Validity of Memorandum of Understanding dated 19.04.2018:
The Appellant argued that based on a Memorandum of Understanding (MoU) dated 19.04.2018, he should be considered a Financial Creditor instead of an Operational Creditor. However, since the Corporate Insolvency Resolution Process (CIRP) had already commenced on 09.03.2018, the Tribunal held that the Corporate Debtor had no authority to enter into the MoU. The MoU was deemed void and inoperative as it violated Section 14 of the Insolvency and Bankruptcy Code, 2016, which imposes a moratorium on the transfer of assets once CIRP is initiated.

3. Rejection of Application for Amendment (I.A No. 445 of 2021):
The Appellant sought to amend his earlier application to include claims as a Financial Creditor based on the MoU. The Tribunal upheld the Adjudicating Authority’s decision to reject this amendment. The Tribunal reasoned that since the MoU was void, the basis for the amendment was invalid. Thus, the application for amendment (I.A No. 445 of 2021) was rightly rejected.

4. Consideration of Appellant’s Claim on Merits:
The Appellant expressed concern that the rejection of his amendment application might prejudice the consideration of his original claim. The Tribunal clarified that the Adjudicating Authority’s earlier order dated 26.07.2021, which directed the Resolution Professional to consider the Appellant’s claim on merits, remained unaffected by the rejection of the amendment application. The Tribunal assured that the Resolution Professional must consider the Appellant’s claims in accordance with the law and procedure, but it did not express any opinion on the merits of such claims.

Conclusion:
The Tribunal dismissed the appeal, affirming that the order dated 09.03.2018 became operative on the date of pronouncement, and the MoU dated 19.04.2018 was void. The rejection of the amendment application was upheld, and the Appellant’s original claims were to be considered on their merits as per the Adjudicating Authority’s prior directions.

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