2022 (11) TMI 348 - AT - Insolvency and Bankruptcy

Appellate Tribunal upholds Insolvency Application, deems Appeal infructuous, affirms Adjudicating Authority's Order.

The Appellate Tribunal affirmed the Impugned Order passed by the Adjudicating Authority, dismissing the Appeal as it had become infructuous due to the ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The reasons given by the Adjudicating Authority while passing the impugned order is agreed upon and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous. The Impugned Order is hereby affirmed. The instant Appeal is hereby dismissed. Issues Involved:- Maintainability of the Insolvency Application under Section 7 of the IBC- Authorization to file the Insolvency Application- Competency of the AGM to file the Application- Recommendation of the Committee of Creditors for liquidationAnalysis:Maintainability of the Insolvency Application under Section 7 of the IBC:The Appellant contended that the Insolvency Application filed by the Respondent was not maintainable as it lacked proper authorization. The Appellant argued that the Assistant General Manager (AGM) who filed the application was not authorized to initiate the corporate insolvency resolution process. The Appellant highlighted the absence of a Board Resolution or letter of authority authorizing the AGM to file the application. Additionally, discrepancies in documents related to the delegation of powers were pointed out by the Appellant to challenge the maintainability of the application.Authorization to file the Insolvency Application:The Respondent, on the other hand, defended the authorization of the AGM to file the Insolvency Application. The Respondent presented clauses from additional affidavits to support the contention that the AGM was authorized by the General Manager (GM) of IDBI Bank to file the application. The Respondent emphasized that the AGM met the criteria specified for filing claims as per the internal guidelines of the bank. The Respondent argued that the AGM was competent to initiate the insolvency process based on the authorization received from the GM.Competency of the AGM to file the Application:The Adjudicating Authority considered the competency of the AGM to file the Insolvency Application and concluded that the AGM was indeed competent to initiate the process. The Authority reviewed the arguments raised by both parties regarding the competence of the AGM and found in favor of the Respondent. The Authority's decision was based on a thorough examination of the relevant provisions and internal guidelines governing the filing of such applications.Recommendation of the Committee of Creditors for liquidation:The Committee of Creditors had resolved to initiate the liquidation of the Corporate Debtor, leading to the filing of an application under Section 31 of the IBC for the same. The Respondent pointed out that the recommendation for liquidation was pending consideration before the Adjudicating Authority. The Respondent argued that since the CoC had proposed the liquidation of the Appellant Company based on commercial wisdom, the appeal had become infructuous. The Respondent contended that the impugned order was justified, considering the pending liquidation recommendation.Final Decision:After considering the arguments presented by both parties and examining the relevant documents and provisions, the Appellate Tribunal affirmed the Impugned Order passed by the Adjudicating Authority. The Tribunal dismissed the Appeal, stating that it had become infructuous due to the recommendation for liquidation pending before the Adjudicating Authority. The Tribunal directed the Registry to upload the Judgment on its website and send a copy to the Adjudicating Authority promptly.