TaxTMI 
TaxTMI 
2021 (1) TMI 812
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....porate Applicant) against the order dated 11/2/2020 passed by the Adjudicating Authority (NCLT, Division Bench-I, Chennai) whereby the application preferred by the appellant under section 10 of the Insolvency & Bankruptcy Code, 2016 (In brief I&B Code) in Form 6 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules 2016 (in Brief the Adjudicating Authority Rules) has been rejected. 2. Brief facts of this case is that the Corporate Applicant (appellant therein) is a Guarantor to the Financial creditor (Respondent herein) to secure the amount borrowed by one JR Foods Ltd. (the borrower) from the Financial creditor i.e. Bank of Baroda. The borrower defaulted in its repayment obligations to the financ....
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....ding on 15/09/2019. It is further held that there is a depletion in the amount of general reserve as on 31/03/2018 as compared to 15/09/2018. The reason for drain in reserve could not be explained by the Corporate Applicant. With this finding, Adjudicating Authority held that the application filed by the corporate applicant is surrounded with doubts, therefore, rejected the application. 5. Being aggrieved with this order, the appellant (Corporate Applicant) filed this appeal. 6. Ld. Counsel for the appellant submitted that the Adjudicating Authority has acted beyond its scope by getting into details of the financial statements of the appellant though this Appellate Tribunal in Leo Duct Engineers & Consultants Ltd vs.....
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....ndent submits that ld. Adjudicating Authority has rightly held that Rule 7 of Adjudicating Authority Rules empowers the Adjudicating Authority to ascertain whether the documents filed along with the application are in order. Ld. Adjudicating Authority after examining the documents found that there are discrepancies in financial statements. However, the appellant was unable to explain the same. The application was incomplete and the corporate applicant could not rectify the defects even after granting time. In such a situation the Adjudicating Authority has no option but to reject the application. For this purpose, ld. counsel for the appellant placed reliance on the judgment of this appellate tribunal in the case of Unigreen Global Pvt. Ltd....
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....e is no default or that debt is not due and is not payable in law or in fact. They may also oppose admission on the ground that the Corporate Applicant is not eligible to make application in view of ineligibility under Section 11 of the I & B Code. The Adjudicating Authority on hearing the parties and on perusal of record, if satisfied that there is a debt and default has occurred and the Corporate Applicant is not ineligible under Section 11, the Adjudicating Authority has no option but to admit the application, unless it is incomplete, in which case the Corporate Applicant is to be granted time to rectify the defects. 22. Section 10 does not empower the Adjudicating Authority to go beyond the records as prescribed und....
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.... a liquidation order has already been made can be a ground to reject the application under Section 10 on the ground of suppression of fact/not come with clean hand. xxx xxx xxx 25. Similarly, if any action has been taken by a 'Financial Creditor' under Section 13(4) of SARFAESI Act, 2002 against the Corporate Debtor or a suit is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate Tribunal cannot be a ground to reject an application under Section 10, if the application is complete." 12.&....
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....ancial statements annexed with the application. Ld. Counsel for the respondent has placed reliance on the judgment of Unigreen Global Pvt. Ltd. There is no ratio of this judgment that Rule 7 of Adjudicating Authority Rules empowers the Adjudicating Authority to examine the documents annexed with the application under Section 10 of I&B Code. Thus, this judgment is not helpful to the respondent. Ld. Adjudicating Authority has analyzed the financial statements of the corporate applicant and held that there are discrepancies in financial statements. We are of the view that ld. Adjudicating Authority exceeded its jurisdiction in analyzing the financial statements of the Corporate Applicant. 15. As we held in the case of Unigreen G....