Appeal against rejection of insolvency application dismissed, costs imposed

The appeal filed by 'M/s Stressed Assets Stabilization Fund' against the rejection of their application related to 'M/s Datre Corporation Ltd.' was dismissed by the Adjudicating Authority. The Appellant's attempt to recall the order admitting the Corporate Insolvency Resolution Process was deemed outside the Authority's jurisdiction. The Appellant's exclusion from the Committee of Creditors and challenges to the admission of the application were rejected. The Authority found the Interlocutory Application frivolous and imposed a cost of Rs.1 Lakh on the Appellant. The appeal outcome favored the Adjudicating Authority, upholding the dismissal and cost imposition.

---

---

Issues:
- Appeal against the rejection of an application by the Adjudicating Authority.
- Exclusion of the Appellant from the Committee of Creditors.
- Filing of an Interlocutory Application to recall/vacate the order admitting Corporate Insolvency Resolution Process.
- Jurisdiction of the Adjudicating Authority to entertain a recall application.
- Imposition of cost on the Appellant for filing a frivolous application.

Analysis:

The appeal was filed by 'M/s Stressed Assets Stabilization Fund' against the Adjudicating Authority's order rejecting their application in a case related to 'M/s Datre Corporation Ltd.' The Corporate Insolvency Resolution Process was initiated against the Corporate Debtor, and the Appellant, a related party to the Promoter, was excluded from the Committee of Creditors. The Appellant filed an Interlocutory Application seeking various reliefs, including recalling the order admitting the CIRP. The Adjudicating Authority noted the impending completion of the 180-day period and extended it for 90 days under the Insolvency and Bankruptcy Code, 2016, before dismissing the application on its merits.

The Appellant contended that they were wrongly kept out of the Committee of Creditors and that the application under Section 7 of the I&B Code was improperly admitted. However, it was established that no application for recalling an order admitting an application under Section 7 could be entertained by the Adjudicating Authority due to lack of jurisdiction. The Appellant's failure to challenge the initial order before the Appellate Tribunal within the prescribed limitation period further weakened their position. Additionally, the Appellant, as a Financial Creditor, could not claim aggrieved status when another Financial Creditor's application was admitted.

The Adjudicating Authority deemed the Appellant's Interlocutory Application as a deliberate attempt to delay the process and frivolous in nature. Consequently, the appeal was dismissed, and a cost of Rs.1 Lakh was imposed on the Appellant to be paid to the Registrar, National Company Law Appellate Tribunal, within 30 days. The imposition of costs was justified based on the circumstances surrounding the filing of the application and its impact on the insolvency resolution proceedings.

---