2019 (9) TMI 1638 - Tri - Insolvency and Bankruptcy

Tribunal admits insolvency, rejects stay, imposes cost on Corporate Debtor. Upheld admission order, dismissed objections.

Vejas Power projects Limited Versus Vaayu Infrastructure LLP

The Tribunal admitted insolvency proceedings against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code. The Corporate Debtor's ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- When the matter was called on 28.08.2019 neither the Respondent (Corporate Debtor) nor a duly authorized representative was present. Under the circumstances when the respondent debtor remained absent; although opportunities were granted, the Bench had no option but to proceed as per the provision of Insolvency Code. Section 7 (4) the Insolvency Code has prescribed a time limit of 14 days. The Adjudicating Authority on receipt of application shall ascertain the existence of ‘default’ within 14 days and under Section 7 (5) on satisfaction that the ‘default’ had occurred, admit the application by passing an order. This procedure was duly followed and the order was passed. There was no irregularity hence the prayer for recalling such an order, which is valid in the eyes of law, deserves rejection. Otherwise also this Bench has no jurisdiction to review its own order. The prayer for staying the operation of Insolvency is also not sustainable in the eyes of law. The applicant has not demonstrated any provision of the Insolvency Code under which the staying of Insolvency proceedings could be demanded. In the absence of any jurisdiction being not vested with NCLT Bench to stay the operation of Insolvency, this prayer as well, is hereby dismissed. Application dismissed. Issues:1. Admission of insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code.2. Stay application filed by the Corporate Debtor.3. Argument regarding the Corporate Debtor's status as a guarantor, not a principal borrower.4. Allegation of lack of proper hearing opportunity and service of notice to the Corporate Debtor.5. Compliance with notice requirements and timelines under the Insolvency and Bankruptcy Code.6. Jurisdiction of the National Company Law Tribunal to review its own orders and stay insolvency proceedings.Analysis:1. The Financial Creditor filed a petition under Section 7 for insolvency proceedings against the Corporate Debtor, which was admitted on 30.08.2019, leading to the commencement of insolvency proceedings.2. The Corporate Debtor filed a stay application seeking to halt the operation of the admission order until another application was heard. The Tribunal rejected the stay application and imposed a cost of Rupees Two Lakhs to be paid before considering the other application.3. The Corporate Debtor argued that they were a guarantor, not the principal borrower, and thus, the initiation of proceedings under Section 7 was incorrect. They provided documentation to support this claim.4. The Corporate Debtor alleged that they were not properly served notice and were deprived of a fair hearing opportunity, leading to an ex-parte order. They sought to stop the advertisement by the Interim Resolution Professional to prevent irreparable loss.5. The Financial Creditor claimed to have provided sufficient notice to the Corporate Debtor through various letters and affidavits, demonstrating compliance with the notice requirements under the Insolvency and Bankruptcy Code.6. The Tribunal upheld the admission order, stating that the Corporate Debtor's absence led to the proceedings following the Code's prescribed timeline. The Tribunal also clarified that it lacked jurisdiction to review its order or stay insolvency proceedings, dismissing the stay applications.This detailed analysis covers the issues raised in the judgment, including the admission of insolvency proceedings, stay applications, arguments regarding the debtor's status, notice compliance, and the Tribunal's jurisdiction to review orders and stay proceedings.