TaxTMI 
TaxTMI 
2024 (8) TMI 1344
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....ations (IAs) have bene filed by the Resolution Professional ("RP") with regard to the Corporate Insolvency Resolution Process ("CIRP") of the Personal Guarantors, praying for certain clarifications with respect to judgment of this Tribunal dated 30.05.2023 in Company Appeal (AT) (Insolvency) No. 692 and 693 of 2023 as well as the judgment and order of this Tribunal dated 02.06.2023 in Company Appeal (AT) (Insolvency) No. 716 of 2023. 2. IA No.5603 of 2024 has been filed by RP in Company Appeal (AT) (Insolvency) No. 692 of 2023, in which following prayers have been made: "A) Allow the present Application and vacate the stay granted by this Hon'ble Tribunal vide order dated 30.05.2023 in terms of judgment passed by Hon'ble Supreme Court in the matter of Dilip B Jivrajka versus Union of India [Writ Petition (Civil) No. 1281 of 2021]; and/or, b. Pass any other further order as this Appellate Tribunal may deem appropriate in the facts and circumstances of the instant case." 3. Learned Counsel for the RP during the course of his submissions has confined his submission praying for clarification of the judgment dated 30.05.2023 in terms of the judgment passed by....
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....es appear that Adjudicating Authority has fixed 14th June, 2023 for further consideration. We are of the view that ends of justice will be served in giving an opportunity to the Appellant to file an objection before the Adjudicating Authority on or before 14th June, 2023 which may be considered by the Adjudicating Authority while proceeding further in the matter. Issuing notice to the Respondent and keeping the Appeal pending shall result further delay in matter. In view of the aforesaid, we permit the Appellant to file an objection, it shall be open for the Adjudicating Authority to proceed further after considering objections of the Appellant. 4. With these observations, the Appeals are disposed of. In view of the fact that we have permitted the Appellant to file an objection, IRP shall not submit any report in the meantime. We make it clear that we are not expressing any opinion on merit." (iv) Company Appeal (AT) (Insolvency) No.716 of 2023 came for consideration before this Tribunal subsequently on 02.06.2023, on which date, this Tribunal disposed of Company Appeal (AT) (Insolvency) No.716 of 2023 in terms of order dated 30.05.2023 passed in Company Appeal (A....
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..... On the next date of hearing, the Ld. Counsels for the parties should remain present physically. List on 22.05.2024." (vi) In the above order, the Adjudicating Authority has also observed that RP is not giving any assistance. It appears that after the aforesaid order, the RP filed IA No.5603 of 2024 in this Tribunal on 05.08.2024. This Tribunal issued notice on the Applications filed in all the three IAs by order dated 08.08.2024. The replies have been filed by the Appellant(s) to the IAs. 5. We have heard learned Counsel for the RP; learned Counsel for the Financial Creditor - Asset Care & Reconstruction Enterprise Ltd. as well as learned Counsel for the Appellant - Personal Guarantors. 6. Learned Counsel for the RP submits that the order which was passed by this Tribunal on 30.05.2023 granting liberty to the Personal Guarantors to file objections was prior to judgment of the Hon'ble Supreme Court dated 09.11.2023 in Dilip B Jivrajka versus Union of India [Writ Petition (Civil) No. 1281 of 2021 the Hon'ble Supreme Court having declared the law pertaining to Personal Guarantors, the Adjudicating Authority has to proceed in accordance with law decla....
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....gment of the Hon'ble Supreme Court in Dilip B Jivrajka, which was delivered on 09.11.2023. In paragraphs 3 and 4 of the judgment passed by this Tribunal on 30.05.2023, following was observed: "3. From the order impugned, it does appear that Adjudicating Authority has fixed 14th June, 2023 for further consideration. We are of the view that ends of justice will be served in giving an opportunity to the Appellant to file an objection before the Adjudicating Authority on or before 14th June, 2023 which may be considered by the Adjudicating Authority while proceeding further in the matter. Issuing notice to the Respondent and keeping the Appeal pending shall result further delay in matter. In view of the aforesaid, we permit the Appellant to file an objection, it shall be open for the Adjudicating Authority to proceed further after considering objections of the Appellant. 4. With these observations, the Appeals are disposed of. In view of the fact that we have permitted the Appellant to file an objection, IRP shall not submit any report in the meantime. We make it clear that we are not expressing any opinion on merit." 11. This Tribunal had no doubt permitted the Ap....
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....cation. Bearing in mind the statutory scheme, it would be impermissible for this Court to allow for the adjudicatory intervention of the adjudicating authority in adjudicating what is described as a jurisdictional question at the stage of Section 97(5)." 13. There cannot be any denial that principles of natural justice are also attracted in the proceeding in Application under Section 95. However, the Hon'ble Supreme Court, after noting the scheme of insolvency proceeding, has held that Adjudicating Authority role cannot be held to be applicable at the stage of Section 97(5), i.e., at the stage when RP has been appointed. It has further been held by the Hon'ble Supreme Court that right of representation has been provided under Section 99, sub-section (2). In paragraphs 75, 76 and 77, the Hon'ble Supreme Court has laid down following: "3. A right of representation has been provided under Section 99(2) 75. On behalf of the petitioners, it has been submitted that the resolution professional has been empowered to make wide ranging enquiries for the purpose of eliciting information under sub-section (4) of Section 99. In our view, it is necessary to clarify the ambit....
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....uding the disability on accessing institutional finance. That may be contra-distinguished with the procedure under Section 95 to Section 99. In this, a person is not deemed a debtor but a resolution professional is appointed to ascertain whether the facts substantiate the application for an IRP. An interim-moratorium is placed on legal proceedings concerning the debt to safeguard the debtor from further legal action. However, the interim-moratorium does not act to freeze the assets and legal rights and title of the debtor. Once a recommendation is made, it is not binding on the adjudicating authority. The authority would only decide after looking at the recommendation of the resolution professional and affording full opportunity of hearing to the debtor or the personal guarantor, as the case may be. Consequently, the petitioners' argument lacks merit when assessed against these established legal principles. 77. Rules have been framed in 2019 in pursuance of the provisions of Section 239(2). The Rules, inter alia, provide for the Form (Form A) in which an application under Section 94 has to be submitted; the Form (Form B) in which a demand notice has to be served under ....
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....ining 'jurisdictional facts' at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review; (iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application; (v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional; (vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authori....
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....p B Jivrajka of the Hon'ble Supreme Court is binding on all including NCLT, NCLAT and both the parties of the proceedings. The Hon'ble Supreme Court has now authoritatively laid down that all adjudicatory functions is to be adopted by the Adjudicating Authority, only at the time of hearing of the Application under Section 100. We, thus, are of the view that as per the judgment of the Hon'ble Supreme Court, all objections of the Appellant/ Personal Guarantor have to be looked into at the time of hearing of the Application under Section 100. It has been held by the Hon'ble Supreme Court in paragraph 74 that adjudicatory function of the Authority commences under Section 100 after the submission of the Report. Paragraph 74 of the Hon'ble Supreme Court order is as follows: "74. The true adjudicatory function of the authority commences under Section 100 after the submission of the report. Another reason why we are not inclined to accept the submission is that what is described as a jurisdictional question by the petitioners may not be a simple matter to be decided as a question of law. The jurisdictional questions of the nature which have been suggested by the petitioners, namel....