Proceedings under Insolvency and Bankruptcy Code, 2016 are only meant to resolve the insolvency issues and not adjudge a claim – Vijayalakshmi Enterprises Vs. Malabar Hotels Pvt. Ltd. – NCLAT New Delhi

NCALT held that Appellant  has  sought  initiation  of  CIRP against the Corporate Debtor by filing an application under Section 7 of the I&B Code which cannot be held to be a legal proceeding dealing with the adjudication of the disputed claims. From tone and tenor of Clause (9) of the order approving the resolution plan, it can be easily gathered that outcome of adjudication of legal proceedings postulates pendency of any proceedings on the date of approval of the Resolution Plan or even a suit or arbitration proceeding taken in respect of the claim thereafter. However, there is no difficulty in holding that initiation of CIRP would not tantamount to adjudication of the claim in regard to right to recover money which claimant in respect of a disputed claim, claims to be entitled to. Adjudication has to be, in respect of the claim, by a Civil Court and other adjudicatory mechanism like Arbitral Proceedings. Proceedings under Insolvency and Bankruptcy Code, 2016 are only meant to resolve the insolvency issues and not adjudge a claim. Therefore, the Appellant cannot bank on this clause, while referring to filing application under Section 7 of the I&B Code. The remedy available to him did not lie in triggering Corporate Insolvency Resolution Process by taking resort to provisions of Section 7 of the I&B Code.

Proceedings under Insolvency and Bankruptcy Code, 2016 are only meant to resolve the insolvency issues and not adjudge a claim – Vijayalakshmi Enterprises Vs. Malabar Hotels Pvt. Ltd. – NCLAT New Delhi Read Post »