Appeal Dismissed for Misuse of IBC

The Appellate Tribunal dismissed the appeal in Company Appeal (AT) (CH) (INS) No. 33 of 2022, as the Appellant failed to demonstrate sufficient cause for non-appearance and repeated adjournments. The Tribunal found the Restoration Application defective and concluded that the Appellant misused the IBC as a money recovery forum, lacking bonafides in their approach. The appeal was dismissed without costs, emphasizing that the IBC is intended for insolvency resolution, not money recovery.

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Issues Involved:
1. Restoration of dismissed application due to non-prosecution.
2. Sufficiency of cause for non-appearance.
3. Adherence to principles of natural justice.
4. Validity of demand notice and claim amount.
5. Application of limitation period on claims.
6. Use of IBC as a money recovery forum.

Issue-Wise Detailed Analysis:

1. Restoration of Dismissed Application Due to Non-Prosecution:
The Appellant, an Operational Creditor, challenged the impugned order dated 02.11.2021, which dismissed their application for restoration of IBA/358/2020. The original application was dismissed on 08.02.2021 due to non-prosecution. The Appellant argued that the non-appearance was due to connectivity issues during the virtual hearing on 18.02.2021.

2. Sufficiency of Cause for Non-Appearance:
The Appellant contended that the Adjudicating Authority failed to consider the sufficient cause (technical/connectivity issues) for their non-appearance. The Appellant's counsel also cited being occupied in another court as a reason for non-appearance on subsequent dates. The Tribunal emphasized that mere absence of counsel or engagement in another court is not a sufficient reason for restoration. The Tribunal concluded that the Appellant failed to show sufficient cause for non-appearance and repeated adjournments.

3. Adherence to Principles of Natural Justice:
The Appellant argued that the Adjudicating Authority ignored valid submissions and failed to adhere to principles of natural justice. The Tribunal noted that the Restoration Application was defective and the Appellant failed to address arguments on multiple occasions. The Tribunal found no merit in the Appellant's claim of violation of natural justice principles.

4. Validity of Demand Notice and Claim Amount:
The Appellant issued a demand notice on 02.04.2019 for Rs.13,49,016/- under Section 8 of the IBC, 2016. The Respondent replied on 12.04.2019, disputing the claim and alleging false allegations. The Tribunal observed that the demand notice and claim amount were disputed by the Respondent, and the Appellant failed to substantiate the claim during the hearings.

5. Application of Limitation Period on Claims:
The Respondent argued that the claims were time-barred, with dues extending from 2011 to 2018. The Tribunal noted that the Appellant's claims included invoices from periods beyond the limitation period, making them improper and time-barred.

6. Use of IBC as a Money Recovery Forum:
The Respondent contended that the Appellant was using the IBC as a money recovery forum, which is impermissible. The Tribunal agreed, emphasizing that the IBC is not meant for money recovery but for insolvency resolution.

Appellate Tribunal's Decision:
The Tribunal concluded that the Appellant failed to show sufficient cause for non-appearance and repeated adjournments. The Restoration Application was found defective, and the reasons provided for non-appearance were not justifiable. The Tribunal dismissed the appeal, stating that the Appellant's approach lacked bonafides and the IBC was being misused as a money recovery forum.

Result:
The Company Appeal (AT) (CH) (INS) No. 33 of 2022 was dismissed without costs.

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