2026 (1) TMI 21 - AT - IBC

Section 9 IBC insolvency admission after prior appellate mandate: lower forum barred from rechecking preconditions; appeal dismissed

Where a prior NCLAT judgment had already adjudicated the propriety of admitting a s.9 IBC application and directed admission, the NCLT was bound to give ... Initiation of the CIRP process - case of appellant is that the factors that were required to be established prior to initiation of Section 9 of the I & B Code, 2016, were not prevailing at the time when CIRP was commenced - non-participation of the proceedings - HELD THAT:- Examining and scrutinizing the aspect pertaining to the non-issuance of the notice to the Appellant, even presuming that, he was not heard before passing of the order dated 03.03.2022, would be an exercise in futility, for the reason being that, the propriety of admission of the application under Section 9 of the I & B Code, had already been adjudicated upon by this Appellate Tribunal by the Judgment of 07.09.2021, and nothing much material was required to be tested by the Learned Adjudicating Authority by revisiting the evidence, and rather they were bound to pass an order of admission of the Appellant into the CIRP process in pursuance to the direction that were issued by the Appellate Tribunal on 07.09.2021, hence even if an opportunity would have been granted, then too it would have been inconsequential because there already stood direction in the judgment of 07.09.2021 [2021 (9) TMI 415 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] to admit the application under Section 9 of the I & B Code, which in the absence of its challenge under Section 62 of the I & B Code, before the Hon’ble Apex Court, had attained finality and could find the Learned Adjudicating Authority, couldn’t have re-tested the ingredients required to be satisfied for invoking Section 9 of the I & B Code. In these eventualities, so far as the impugned order is concerned, that is not required to be ventured into by this Appellate Tribunal because of the earlier decision taken by this Appellate Tribunal of admitting the Appellant to face the CIRP process under Section 9 of the I & B Code, particularly when the finding has been recorded by the Appellate Tribunal that there exists a prima facie case establishing the ingredients of Section 9 of the I & B Code. The appeal lacks merit, and the same is accordingly dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1) Whether the Appellant could, in an appeal against the later admission order, re-agitate the contention that the statutory 'ingredients' for admission of an application under Section 9 of the I & B Code were not satisfied, when an earlier appellate decision had already directed admission and had attained finality. 2) Whether the admission order was liable to be interfered with on the ground of lack of opportunity/non-service, when the Adjudicating Authority recorded service after revival and, in any event, the Adjudicating Authority was bound to admit pursuant to the final appellate direction. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Re-opening Section 9 'ingredients' after a final appellate direction to admit Legal framework: The Court considered the effect of its prior appellate determination directing admission of the Section 9 application, and the consequence of that determination having 'attained finality' due to absence of further challenge. Interpretation and reasoning: The Court held that it had already, in the earlier appellate proceedings, scrutinized the record and concluded that the Section 9 application 'deserves to be admitted,' issuing a positive direction to initiate CIRP. Since that adjudication had attained finality and was not challenged further, the Court held it could not 'revisit' or 'judicially scrutinize' the same admission grounds in a subsequent appeal aimed at the later consequential order. Conclusions: The Court conclusively decided that the Appellant was barred from re-arguing non-satisfaction of Section 9 requirements at this stage; the earlier direction to admit governed, and the merits of admission could not be reopened. Issue 2: Effect of alleged lack of notice/opportunity before the consequential admission order Legal framework: The Court examined the contention of absence of notice/hearing in light of the Adjudicating Authority's recorded finding of service and the binding nature of the appellate direction requiring admission. Interpretation and reasoning: The Court noted the unchallenged finding that fresh notices were issued after revival and were recorded as delivered, but the Appellant did not appear despite service. The Court further held that, even presuming absence of hearing, examining the point would be futile because the propriety of admission had already been adjudicated by the earlier appellate judgment, leaving the Adjudicating Authority bound to pass an admission order in compliance with that direction, without re-testing Section 9 ingredients. Conclusions: The Court rejected the natural justice challenge as providing no basis to interfere with the admission order, both because service was recorded and because any hearing would have been inconsequential given the final and binding appellate direction to admit. Final outcome: The appeal was dismissed as lacking merit, and the impugned admission order was not interfered with.