Resolution Professional has valid locus standi to file applications under Section 95 proceedings despite appellant's challenge

NCLAT Principal Bench dismissed an application seeking clarification of judgment dated 30.05.2023 regarding Resolution Professional's locus standi. The court held that RP has valid locus to file applications under Section 95 proceedings, rejecting appellant's contention otherwise. Appellant failed to implead RP when challenging RP's appointment order dated 10.04.2023, and cannot benefit from this procedural error. Court noted appellant's objections were attempts to prolong Section 95 proceedings. NCLAT directed Adjudicating Authority to proceed with Section 95 proceedings per established law, confirming RP's right to submit reports and participate in proceedings as mandated by Supreme Court precedents.

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Issues Involved:
1. Clarification of the judgment dated 30.05.2023 in terms of the Supreme Court judgment in Dilip B Jivrajka vs. Union of India.
2. Validity of the appointment of the Resolution Professional (RP) and the objections raised by the Personal Guarantors.
3. Applicability of principles of natural justice in the Corporate Insolvency Resolution Process (CIRP) for Personal Guarantors.
4. Locus standi of the RP to file applications.
5. Adjudicatory role of the Adjudicating Authority at various stages of the insolvency process.

Detailed Analysis:

1. Clarification of the Judgment Dated 30.05.2023:
The RP sought clarification regarding the judgment dated 30.05.2023, in light of the Supreme Court's ruling in Dilip B Jivrajka vs. Union of India. The Tribunal had permitted the Personal Guarantors to file objections, which were to be considered by the Adjudicating Authority. The Supreme Court judgment, however, clarified that adjudicatory issues should be decided at the time of hearing the application under Section 100, not at the stage of RP appointment.

2. Validity of the Appointment of the RP and Objections by Personal Guarantors:
The Financial Creditor filed applications under Section 95 against the Personal Guarantors, leading to the appointment of the RP by the Adjudicating Authority. The Personal Guarantors challenged this appointment, arguing that they were not served with the application and could not present their objections. The Tribunal allowed them to file objections, but the Supreme Court later clarified that such objections should be considered at the Section 100 hearing.

3. Applicability of Principles of Natural Justice:
The Supreme Court emphasized that principles of natural justice apply but vary with the situation. The Court held that the adjudicatory role of the Adjudicating Authority begins at the Section 100 stage, not at the RP appointment stage. The RP's role is facilitative, and the debtor's engagement is ensured under Section 99. The Tribunal noted that principles of natural justice are applicable but must align with the statutory scheme.

4. Locus Standi of the RP to File Applications:
The RP's locus standi to file applications was contested by the Personal Guarantors. The Tribunal rejected this contention, stating that the RP should have been impleaded in the original appeal challenging his appointment. The RP's application was deemed necessary to clarify the applicability of the Supreme Court's judgment.

5. Adjudicatory Role of the Adjudicating Authority:
The Supreme Court clarified that no judicial adjudication is involved at the stages of Sections 95 to 99. The Adjudicating Authority's role is to appoint the RP, who then facilitates the process by collating relevant facts. The adjudicatory function commences under Section 100, where the Authority decides whether to accept or reject the RP's report. The Tribunal reiterated that the objections of the Personal Guarantors should be considered at this stage.

Conclusion:
The Tribunal clarified that the Adjudicating Authority must proceed according to the Supreme Court's judgment in Dilip B Jivrajka vs. Union of India. The RP is allowed to file its report, and the objections by the Personal Guarantors will be addressed at the Section 100 hearing. The applications filed by the RP were disposed of, with no order as to costs.

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