TaxTMI 
TaxTMI 
2021 (2) TMI 451
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....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 financial creditor and accordingly on 30/03/2019 the accounts o....
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....hown in the heading "Property Development" in the balance sheet. 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 versus. Canara Bank and Standard Charted Bank CA (AT) (Ins. 100/2017) has laid down the prerequisites for admission i.e. existence of debt, occurrence of default and the corporate a....
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.... 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. VS. Punjab National Bank & Ors. CA(AT) (Ins. 81/2017). Thus, the appeal is liable to be dismissed. 9. After hearing ld. counsel for the parties we have perused the record. 10. The question f....
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....e 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 under Section 10 and the information as required to be submitted in Form 6 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 subject to ineligibility prescribed under Section 11. If all information are provided ....
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....itor' 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. With the aforesaid the moment the Adjudicating Authority is satisfied that there is a debt and a default has occurred, the application must be admitted unless it is incomplete. Section 10 of I&B Code does not empower the Adjudicating Authority to go beyond the records as prescribed under Section 10 and the information as required to be submitted in Form 6 of Adjudicating Authority Rules. 13.....
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....ing 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 Global Pvt. Ltd. (supra) that if any action has been taken by the financial creditor under SARFAESI Act 2002, against the Corporate Debtor or a suit is pending against the corporate debtor under Section 19 of DRT ACT before a Debt Recovery Tribunal or appeal pending before the Debt Recovery AT cannot be a ground to reject an application under Section 10 of I&B Code. In the present case the financial creditor has initiat....