Appeal Dismissed, Tribunal Upholds Adjudicating Authority's Order. Appellant to Return Rs. 11 Crores.

The appeal was dismissed, affirming the Adjudicating Authority's order to admit the Section 7 application. The Tribunal found no merit in the Appellant's arguments regarding the violation of natural justice, the Respondent's locus standi, and the NPA status. The Tribunal ordered the return of Rs. 11 Crores deposited by the Appellant within one month, as per the interim order dated 23.05.2022.

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Issues Involved:
1. Alleged violation of principles of natural justice.
2. Locus standi of the Respondent to file the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
3. Determination of Non-Performing Asset (NPA) status and its impact on the initiation of Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Alleged Violation of Principles of Natural Justice:
The Appellant argued that the Adjudicating Authority did not provide a fair opportunity to present additional documents and subsequent developments, particularly during the hearing on 15.03.2022. The Appellant's request for an adjournment to submit these documents was denied, and the order was reserved without allowing oral arguments. An affidavit from the Appellant's counsel was submitted to support this claim. However, the Respondent countered that due opportunity was provided, and the presence of another counsel for the Appellant was recorded. The Tribunal referenced the Supreme Court cases of State of Maharashtra Vs. Ramdas Shrinivas Nayak and Dharampal Satyapal Limited Vs. Deputy Commissioner of Central Excise, Gauhati & Ors., concluding that the principles of natural justice were not violated. The Tribunal noted that the subsequent events, such as the DRT Pune's order on 28.02.2022, could still be considered.

2. Locus Standi of the Respondent to File the Application under Section 7 of the Code:
The Appellant challenged the Respondent's locus standi, arguing that the assignment deed dated 28.06.2019 was null and void, as declared in an ad-interim injunction by the Bombay High Court on 19.04.2022. However, this order was stayed by the Division Bench of the Bombay High Court on 05.05.2022, and further upheld by the Supreme Court on 19.09.2022. The Tribunal found that the stay effectively nullified the Appellant's challenge to the Respondent's locus standi, confirming that the Respondent was entitled to initiate CIRP proceedings.

3. Determination of NPA Status and its Impact on the Initiation of CIRP:
The Appellant argued that the DRT Pune's order on 28.02.2022, which held that the account had not become an NPA, negated the basis for the Section 7 application. However, this order was stayed by the DRAT Mumbai on 03.06.2022. The Tribunal noted that the stay on the DRT Pune's order, along with the confirmation of the debt and default, justified the initiation of CIRP under Section 7 of the Code. The Tribunal emphasized that the existence of debt and default was sufficient for the proceedings, irrespective of the NPA status.

Conclusion:
The appeal was dismissed, affirming the Adjudicating Authority's order to admit the Section 7 application. The Tribunal found no merit in the Appellant's arguments regarding the violation of natural justice, the Respondent's locus standi, and the NPA status. The Tribunal ordered the return of Rs. 11 Crores deposited by the Appellant within one month, as per the interim order dated 23.05.2022.

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