2021 (7) TMI 238 - Tri - IBC

Tribunal Rejects Corporate Debtor's IA, Restores Management, Discharges IRP; Section 7 IBC Application Still Active.

The tribunal declined to entertain the IA filed by the Corporate Debtor, setting aside the CIRP, and returning management to the erstwhile management on ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The learned Counsel appearing for the FC submits that the Hon’ble Tribunal may not entertain this IA filed by the CD on account of the Appeal preferred by the FC before the Hon’ble Supreme Court against the order of the Hon’ble NCLAT dated 18/06/2020 [2020 (8) TMI 424 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]. The Learned Counsel also submits that this matter may be taken up only after the verdict of the Hon’ble Supreme Court on the appeal preferred - the Learned Counsel for the CD also submits that the matter need not be taken up before the verdict of the Hon’ble Supreme Court on the appeal preferred by the FC. From the documents, affidavits, orders of the Hon’ble NCLAT and the Hon’ble Supreme Court made available, there are no reason to entertain this IA - matter remanded back the matter to this Bench to pass an order afresh after providing an opportunity to the opposite party - the CIRP has been set aside but the Application filed by the FC before this Bench under Section 7 of the IBC is alive and not dismissed. Issues Involved:1. Admission of Interlocutory Application (IA).2. Setting aside the impugned order dated 23.08.2019.3. Compliance with the directions of the Hon'ble NCLAT's judgment dated 18.06.2020.4. Status of Corporate Insolvency Resolution Process (CIRP) and the role of Interim Resolution Professional (IRP).5. Pendency of appeals before the Hon'ble Supreme Court.Issue-wise Detailed Analysis:1. Admission of Interlocutory Application (IA):The Corporate Debtor, M/s. Shree Sai Prakash Alloys Pvt. Ltd., filed the IA in compliance with the Hon'ble NCLAT's order dated 18.06.2020, seeking to admit the IA, set aside the impugned order dated 23.08.2019, and pass an order afresh after providing an opportunity to the party. The matter was taken up on multiple dates, and both sides were heard extensively.2. Setting Aside the Impugned Order Dated 23.08.2019:The Hon'ble NCLAT, in its final order dated 18.06.2020, noted that the adjudicating authority had passed the order of admission on 23.08.2019 without considering the status quo order of the Hon'ble High Court dated 19.08.2019. The NCLAT found that there was no proper compliance under Section 7(5)(a) of the Insolvency and Bankruptcy Code (IBC), but this defect was curable. Consequently, the NCLAT set aside the impugned order and remanded the matter back to the adjudicating authority to pass an order afresh, providing an opportunity to the opposite party.3. Compliance with the Directions of the Hon'ble NCLAT's Judgment Dated 18.06.2020:The NCLAT directed the adjudicating authority to provide an opportunity for the parties to consider the renewal of the One-Time Settlement (OTS). The Corporate Debtor filed three IAs (IA Nos. 39, 40 & 41 of 2020) after the final order of the NCLAT. Due to the Covid-19 pandemic, the matter was not listed on 29.06.2020. The tribunal noted that the Financial Creditor (FC) had filed an SLP before the Hon'ble Supreme Court against the NCLAT's order, and the matter was pending before the Supreme Court.4. Status of Corporate Insolvency Resolution Process (CIRP) and the Role of Interim Resolution Professional (IRP):The IRP was appointed on 23.08.2019 and continued performing duties despite the stay by the NCLAT. The IRP handed over the management back to the Corporate Debtor on 20.06.2020 after the NCLAT's order. The IRP filed an affidavit detailing the assignment and expenses incurred. The tribunal noted that the IRP had not entered into any agreement with the FC regarding his fees and had stopped controlling the affairs of the Corporate Debtors after the NCLAT's order.5. Pendency of Appeals before the Hon'ble Supreme Court:The FC preferred three appeals before the Hon'ble Supreme Court against the NCLAT's order. The Corporate Debtor also filed an appeal before the Supreme Court. The tribunal observed that the Supreme Court had not stayed the NCLAT's order. Both parties agreed that the matter need not be taken up before the Supreme Court's verdict on the appeals.Order:The tribunal, after hearing both sides and considering the documents, affidavits, and orders, decided not to entertain the IA filed by the Corporate Debtor. The CIRP was set aside, and the management was handed back to the erstwhile management by the IRP on 20.06.2020. The IRP was discharged from his assignment, and the issue of his fees and CIRP costs was amicably settled between the IRP and FC. The application filed by the FC under Section 7 of the IBC remains alive and not dismissed. Both the FC and the Corporate Debtor are at liberty to approach the tribunal regarding the petition filed under Section 7 of the IBC after the Supreme Court's decision on the appeals.