Tribunal confirms Corporate Debtor's admission into CIRP under Insolvency and Bankruptcy Code

Sanjeev Kumar Sharma Shareholder and suspended Director of Dadheech Infrastructures Private Limited Versus SREI Equipment Finance Ltd., Mr. Soumendra Poddar Interim Resolution Professional of Dadheech Infrastructure Private Limited

Sanjeev Kumar Sharma Shareholder and suspended Director of Dadheech Infrastructures Private Limited Versus SREI Equipment Finance Ltd., Mr. Soumendra ... Issues Involved:
1. Maintainability of the main petition under Section 7 of the Insolvency and Bankruptcy Code (IBC).
2. Alleged denial of natural justice to the Corporate Debtor.
3. Establishment of debt and default by the Corporate Debtor.
4. Applicability of the Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. decision.
5. Impact of the Financial Creditor being under CIRP on its ability to initiate CIRP against the Corporate Debtor.

Summary:

1. Maintainability of the Main Petition:
The appellant, the suspended Director of the Corporate Debtor, challenged the maintainability of the main petition on the grounds of discrepancies in the Power of Attorney (PoA). The main petition was initially signed by Mr. Projoy Chatterjee based on a PoA dated 31.03.2021. When the Financial Creditor entered CIRP, the PoA signed by the erstwhile management was argued to be non-maintainable. The Administrator appointed Mr. Sohan Kumar Jha with a new PoA to re-sign and re-verify the main petition, which was allowed by the Adjudicating Authority. The Tribunal found that the institution of the main petition and continuance of the proceedings were done by duly authorized persons at all times, thus the main petition was maintainable.

2. Alleged Denial of Natural Justice:
The appellant contended that the main petition was not heard by the Adjudicating Authority, denying them the opportunity to defend their cause. However, the Tribunal noted that several hearings took place, and the Adjudicating Authority had heard both parties on merits in respect of the IAs as well as the main petition. The Adjudicating Authority had clubbed together the main petition and IA 1184/2022 for conjoint disposal, and the appellant was given the opportunity to file pleadings, which they availed. The Tribunal found no denial of justice or fair opportunity of hearing.

3. Establishment of Debt and Default:
The Adjudicating Authority found that the debt due from the Corporate Debtor to the Financial Creditor and the default in payment were established. The Corporate Debtor's plea that the Financial Creditor had obtained signatures on blank papers and inserted fraudulent entries was rejected. The Tribunal upheld the findings that the debt and default above the threshold limit were established, justifying the admission of the Corporate Debtor into CIRP.

4. Applicability of Vidarbha Industries Power Ltd. vs. Axis Bank Ltd.:
The appellant argued that the admission of the Corporate Debtor into CIRP runs contrary to the Vidarbha Industries Power Ltd. decision. The Tribunal noted that the Hon'ble Supreme Court had clarified that the Vidarbha judgment was limited to the facts of that case and was not to be applied as a general rule. The Tribunal found no error in the Adjudicating Authority's decision to admit the Section 7 application.

5. Impact of Financial Creditor Being Under CIRP:
The appellant argued that since the Financial Creditor was under CIRP, it was barred from initiating CIRP against the Corporate Debtor. The Tribunal referred to the Hon'ble Supreme Court's decision in Manish Kumar vs. Union of India, which held that Section 11(a) of IBC does not hinder the resolution of a Corporate Debtor and allows it to undertake recovery actions against its own debtors. The Tribunal found no merit in the appellant's argument.

Conclusion:
The Tribunal dismissed the appeal, finding no sufficient and plausible grounds to interfere with the impugned order. The main petition was maintainable, there was no denial of natural justice, debt and default were established, and the admission of the Corporate Debtor into CIRP was justified.