2021 (6) TMI 114 - Tri - Insolvency and Bankruptcy

Tribunal Upholds Hearing Date for IA 18 of 2021, Emphasizes Timely Adherence to Insolvency Process

The Tribunal maintained the original hearing date of 01.03.2021 for IA 18 of 2021 and related applications, emphasizing the need for detailed ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- It is noted that eight (8) Section 9 applications are pending out of which three (3) are pending before Court No. 1 and five (5) are pending before Court No. 2. One application under Section 7 of IBC, 2016, i.e., CP(IB) No. 276 of 2020 is also pending. Four applications which have been disposed of would have to be revived if the order of CIRP is set aside. Apart from this situation, I state that no financial plan has been provided to us so as required since beginning so that we could consider the claim of the applicant as per law. As without such plan no effective purpose can be envisaged by setting aside of one CIRP order particularly when the Hon'ble NCLAT has itself, in recent orders held that IBC is a time-bound process and time-lines must be adhered to. Hence, all old petitions need to be disposed of ASAP. Discretion to prepone the matter needs to be utilised in a cautious manner - matter be heard on 01.03.2021 which is also the conclusion of the Learned Judicial Member. Issues Involved:1. Preponement of hearing for IA 18 of 2021.2. Withdrawal of CP(IB) 759 of 2019.3. Objections by Financial Creditor and IRP.4. Continuation of IRP's management of Corporate Debtor.5. Pending applications under Sections 7 and 9 of IBC, 2016.Detailed Analysis:1. Preponement of Hearing for IA 18 of 2021:The Applicant/Corporate Debtor filed IA 18 of 2021 under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, requesting preponement of the hearing due to hardships caused by a fire at the factory premises. The Tribunal noted that the Applicant had informed the other side about the preponement request. Despite the urgency claimed by the Applicant, the Tribunal found no sufficient reason to prepone the hearing and thus maintained the original hearing date of 01.03.2021. The Learned Judicial Member emphasized that routine orders such as adjournments fall under the category of orders that can be signed by the Court Master as per Rule 92 of NCLT Rules, 2016.2. Withdrawal of CP(IB) 759 of 2019:The Corporate Debtor sought to withdraw CP(IB) 759 of 2019, which was admitted under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor had entered into a Memorandum of Understanding (MoU) with the Corporate Debtor, agreeing to a payment schedule. The Operational Creditor confirmed receipt of part payment and had no objection to the withdrawal. However, the Financial Creditor objected to the withdrawal on the grounds that another application was pending before the Adjudicating Authority.3. Objections by Financial Creditor and IRP:The Financial Creditor objected to the withdrawal of the application and the preponement of the hearing, arguing that another application was pending. The IRP, representing the interests of the Corporate Debtor, stated that no Committee of Creditors (CoC) had been constituted yet and that the company was running well under the IRP's management. The IRP also highlighted that some workers and employees had not been paid yet and that the fire in the factory premises had caused substantial loss. The IRP argued that if CP(IB) 759 of 2019 was not withdrawn, it would be difficult to regularize the company's work.4. Continuation of IRP's Management of Corporate Debtor:The IRP submitted that the affairs of the Corporate Debtor were being managed better than by the Suspended Management. The IRP was paying salaries and wages, although some payments were still pending. The IRP also mentioned that they were facing issues in procuring raw materials from a related party due to the requirement of CoC approval under Section 28 of IBC, 2016. The Tribunal directed the IRP to continue procuring materials as done earlier, despite the requirement of CoC approval.5. Pending Applications under Sections 7 and 9 of IBC, 2016:The Tribunal noted that several applications under Sections 7 and 9 of IBC, 2016, were pending against the Corporate Debtor. The Tribunal emphasized the need for a comprehensive financial plan to address these pending applications before setting aside the CIRP order. The Tribunal highlighted the importance of adhering to the time-bound process of IBC and the need to dispose of old petitions as soon as possible.Conclusion:The Tribunal decided to maintain the original hearing date of 01.03.2021 for IA 18 of 2021 and other related applications. The Tribunal emphasized that the matter required detailed consideration of various legal aspects and pending applications. The Tribunal directed the IRP to continue managing the Corporate Debtor's affairs and procuring materials as previously done. The Tribunal concluded that there was no urgency to prepone the hearing and that the matter should be heard by the regular Division Bench on the scheduled date.