TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) whether the appellant, claiming as assignee of the original financial creditor, had locus to intervene and seek dismissal of the company petition; (ii) whether the admission of the section 7 application could stand when allegations of collusion and fraudulent initiation were raised and were not examined on merits.
Issue (i): whether the appellant, claiming as assignee of the original financial creditor, had locus to intervene and seek dismissal of the company petition.
Analysis: The appellant asserted a direct interest in the subject property and the underlying security, and its application invoked the tribunal's jurisdiction under section 60(5) of the Insolvency and Bankruptcy Code, 2016, along with section 65 of the Code and Rule 11 of the National Company Law Tribunal Rules, 2016. The pleadings disclosed that the appellant was not a stranger to the proceedings but claimed to have stepped into the shoes of the financial creditor and also placed reliance on prior enforcement action and other pending proceedings concerning the corporate debtor. In that setting, a summary rejection on the ground of absence of locus without examining the pleaded facts was held to be erroneous.
Conclusion: The appellant had locus to maintain the intervention application, and the rejection of the application for want of locus could not be sustained.
Issue (ii): whether the admission of the section 7 application could stand when allegations of collusion and fraudulent initiation were raised and were not examined on merits.
Analysis: The application specifically alleged that the insolvency process had been initiated maliciously and collusively, attracting section 65 of the Insolvency and Bankruptcy Code, 2016. The pleadings also referred to prior mortgage and enforcement events, which were said to bear on the maintainability and bona fides of the section 7 proceeding. Since those allegations were not examined by the Adjudicating Authority and the order admitting the petition proceeded without considering the appellant's material, the admission order was found unsustainable. The matter was directed to be reconsidered afresh after hearing the parties.
Conclusion: The admission order under section 7 was set aside and the company petition was revived for fresh consideration.
Final Conclusion: Both appeals succeeded, the appellant was permitted to intervene, and the insolvency proceedings were restored for reconsideration on merits before the Adjudicating Authority.
Ratio Decidendi: Where a person claiming a direct interest in the insolvency proceedings raises a properly pleaded objection of collusion or fraudulent initiation under section 65 of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority must examine those allegations on merits and cannot reject the application merely on a bare plea of want of locus.
TaxTMI 
TaxTMI 
