2026 (3) TMI 34 - AT - IBC

Right to file additional evidence restores insolvency petition to permit fuller adjudication on outstanding liability.

Whether an order dismissing a Section 7 insolvency petition should be set aside to allow filing omitted documents was examined; the tribunal found that ... Failure to consider material documents - part-adjustment of debt is not full and final settlement - restoration of petition for fresh consideration Failure to consider material documents - part-adjustment of debt is not full and final settlement - Whether the impugned order was vitiated by the NCLT's non-consideration of material documents which led to an incorrect finding that the sale proceeds constituted full and final settlement of the corporate debtor's dues. - HELD THAT: - The Tribunal found that the NCLT's reasoning in paragraph 11 of the impugned order was factually incorrect because it treated the sale proceeds as having discharged the debt in full. Correspondence produced before the Appellate Tribunal - including letters permitting sale and acknowledging receipt of Rs. 1.85 crores, the OTS proposal dated 15.12.2021 and the bank's response dated 28.01.2022 - demonstrate that the amount credited represented a part-adjustment and that substantial dues remained payable. In view of these omitted documents, the Tribunal concluded that the NCLT did not consider material evidence and that the impugned factual finding could not stand without permitting fresh consideration of those records before the NCLT. [Paras 3, 8, 9, 10] Impugned order set aside; C.P. (IB) No. 1929/KB/2019 restored and the appellant permitted to place the relevant documents before the NCLT for fresh adjudication. Final Conclusion: The Appellate Tribunal allowed the appeal by setting aside the NCLT's dismissal of the Section 7 petition because the NCLT failed to consider material documents showing the sale proceeds were only a part-adjustment; the petition has been restored for fresh consideration with directions to place the omitted documents on record. Issues: Whether the impugned order dated 12.01.2023 dismissing the petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 should be set aside and the company petition restored to enable the financial creditor to place additional relevant documents before the Adjudicating Authority.Analysis: The appellate record shows that documents evidencing that Rs. 1.85 crores received from sale of two properties were part adjustments (and not full and final settlement) were not placed before the Adjudicating Authority. Correspondence and account statements annexed to the appeal indicate remaining liability and communications between the financial creditor and the asset reconstruction entity offering permission for sale and particulars of outstanding dues. The respondent did not file a reply and failed to appear before the Tribunal. In these circumstances, allowing the appellant an opportunity to place the omitted documents before the Adjudicating Authority is necessary to enable an overall adjudication on the merits of the Section 7 petition rather than permitting a potentially incomplete factual basis to determine the petition.Conclusion: The impugned order dated 12.01.2023 is set aside and C.P. (IB) No. 1929/KB/2019 is restored to permit the appellant to file relevant documents before the Adjudicating Authority; appeal disposed of in favour of the appellant.