Proviso to Section 33(5) of IBC is mandatory | Proceedings instituted by Liquidator without prior approval of NCLT is unauthorized and incompetent | Post facto approval for continuation of proceedings shall make proceedings authorized and competent from the date when post facto approval is granted | Before granting approval, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily – Slimline Realty Pvt. Ltd. Vs. Mr. Jigar Bhatt – NCLAT New Delhi
In this judgment, Hon’ble NCLAT has answered the following issues:
(1) Whether the statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement or only a directory requirement?
(2) What are the consequences and status of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority?
(3) Whether a post facto approval granted by the Adjudicating Authority of proceedings instituted by the Liquidator without obtaining prior approval shall make the proceedings authorized/ competent?
(4) Whether before approval under Section 33(5) to the Liquidator to institute proceeding on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted has to be given an opportunity?
(5) Whether the impugned order dated 07.02.2024 passed by the Adjudicating Authority is unsustainable and deserves to be set aside?
