An initiation of CIRP does not amount to recovery proceedings and that the AA at the time of determination as to whether to admit or reject an application u/s 7 of the Code is not to take into account the reasons for the Corporate Debtor’s default – Drip Capital Inc. Vs. Concord Creations (India) P. Ltd. – NCLAT Chennai

The NCLAT set aside the impugned order and held that it is to be pointed out that the Adjudicating Authority in the impugned order had observed that the Respondent was not an Insolvent Company and that it was of the considered view that Respondent should be given some more time to repay the debt etc. had directed the Respondent/Corporate Debtor to repay the balance debt or the amount as settled with the Appellant within a period of six months failing which the Appellant/Petitioner would be at liberty to file a fresh petition for admission, which in the considered opinion of this Tribunal is in negation of the principles laid down in judgement of the Hon’ble Supreme Court in Innovative Industries Ltd. Vs. ICICI Bank [2017] ibclaw.in 02 SC. Therefore, this Tribunal holds that the Adjudicating Authority had exceeded its jurisdiction by taking the defense of the Corporate Debtor, especially in the absence of any ‘Reply’ or objections projected by the Corporate Debtor. Consequently, this Tribunal interferes with the impugned order, since it suffers from patent legal infirmities. The instant Appeal succeeds.

An initiation of CIRP does not amount to recovery proceedings and that the AA at the time of determination as to whether to admit or reject an application u/s 7 of the Code is not to take into account the reasons for the Corporate Debtor’s default – Drip Capital Inc. Vs. Concord Creations (India) P. Ltd. – NCLAT Chennai Read Post »