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of <h1>Directors not needed for creditor's application! NCLAT sets aside order, emphasizes procedural compliance</h1> <h3>Prayag Polytech Pvt. Ltd. Versus Hind Tradex Ltd.</h3> Prayag Polytech Pvt. Ltd. Versus Hind Tradex Ltd. - TMI Issues:Application under Section 7 of Insolvency and Bankruptcy Code, 2016; Intervention of Directors of Financial Creditor before admission of application; Interpretation of Section 7 of IBC; Requirement of intervention of Directors or shareholders of Financial Creditor before admission of application.Analysis:The case involved an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by the Appellant, a Financial Creditor, against the Corporate Debtor. The Adjudicating Authority allowed the intervention of Directors of the Financial Creditor without impleading them as parties. The main issue was whether intervention of Directors or shareholders of the Financial Creditor was necessary before the admission of the application under Section 7 of IBC.The National Company Law Appellate Tribunal referred to the judgment in 'Innoventive Industries Ltd. Vs. ICICI Bank and Anr.' where the Supreme Court explained the scheme of the Code concerning defaults, debts, financial creditors, and operational creditors. The Tribunal highlighted the provisions of Section 7 of IBC, emphasizing that the Adjudicating Authority, after notice and hearing the Corporate Debtor, may admit or reject the application. The Tribunal concluded that there was no requirement for the intervention of Directors or shareholders of the Financial Creditor before the admission of the application under Section 7 of IBC.Based on the interpretation of the law and the Supreme Court's observations, the Appellate Tribunal set aside the impugned order and directed the Financial Creditor and Corporate Debtor to appear before the Adjudicating Authority for further proceedings. The Tribunal clarified that if the application is admitted, any aggrieved party could approach the Appellate Tribunal. The appeal was allowed with these observations, emphasizing the importance of following the procedures outlined in the law without the need for additional intervention before the admission of the application under Section 7 of IBC.
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