Insolvency impleadment order stayed for prima facie non-compliance with statutory requirements; main application may continue.

An order impleading a company as an additional corporate debtor in a pending insolvency application was found prima facie unsustainable because the compliance required under Section 9(1) of the Insolvency and Bankruptcy Code, 2016 had not been made. Interim protection was granted by staying the impleadment order. The underlying application against the original corporate debtor was permitted to proceed.

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Issues: Whether the order impleading a company as an additional corporate debtor in a pending application under Section 9(1) of the Insolvency and Bankruptcy Code, 2016 was prima facie unsustainable for want of compliance with the statutory requirements, and whether interim stay ought to be granted.

Analysis: The order impleading the additional corporate debtor was found, prima facie, to be illegal because the compliance contemplated by Section 9(1) of the Insolvency and Bankruptcy Code, 2016 had not been made. On that basis, the impugned order was stayed. The underlying application against the original corporate debtor was left free to proceed.

Outcome: Interim protection was granted by staying the impleadment order, while permitting the main application to continue against the original corporate debtor.

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