Brief about decision:

(i) Whether a notice is required to be given to the Corporate Debtor for initiation of Corporate Insolvency Resolution Process under I&B Code, 2016 and if so, at what stage and for what purpose?
-The Adjudicating Authority is bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of existence of default based on material submitted by the corporate debtor and to find out whether the application is complete and or there is any other defect required to be removed. In some of the cases initiation of Insolvency Resolution Process may have adverse consequences on the welfare of the Company. Therefore, it will be imperative for the “adjudicating authority” to adopt a cautious approach in admitting Insolvency Application by ensuring adherence to the principle of natural justice

(ii) Whether ‘Maharashtra Relief Undertaking (Special Provisions) Act (Bombay Act XCVI of 1958)’ (hereinafter referred to as MRU Act 1958) shall prevail over I&B Code 2016. In other words, whether a Corporate Debtor who is enjoying the benefit of MRV Act, can be subjected to I&B Code 2016?
-The Appellant is not entitled to derive any advantage from MRU Act, 1956 to stall the insolvency resolution process under Section 7 of the Insolvency & Bankruptcy Code, 2016.

Read Supreme Court’s verdict on above question-Innoventive Industries Ltd. (Corporate Debtor) Vs. ICICI Bank & Anr.- Supreme Court.

(iii) Whether in a case where Joint Lender Forum (JLF) have reached agreement and granted permission to the Corporate Debtor prior consent of JLF is required by financial creditor, before filing of an application under Section 7 of the I&B Code 2016?
-Beyond the some specific practice, the ‘adjudicating authority’ is not required to look into any other factor, including the question whether permission or consent has been obtained from one or other authority, including the JLF. Therefore, the contention of the petition that the Respondent has not obtained permission or consent of JLF to the present proceeding which will be adversely affect loan of other members cannot be accepted and fit to be rejected.

Analysis of the case:

These appeals have been preferred by the Appellant Corporate Debtor – M/s. Innoventive Industries Limited against order(s) dated 17th January, 2017 and 23rd January, 2017 passed by the ‘adjudicating authority’ (National Company Law Tribunal), Mumbai Bench, Mumbai (hereinafter referred to as ‘Adjudicating Authority’) under Section 7 of the Insolvency & Bankruptcy Code, 2016  in C.P. No. 1/I&BP/NCLT/MB/MAH/20 16.

Facts:

By the impugned order dated 17th January 2017, the ‘adjudicating authority’ rejected all the contentions raised by the Appellant/ Corporate Debtor and held that the application preferred by the financial creditor – M/s. ICICI Bank – (respondent herein) is complete under sub-section (2) of Section 7 of the Insolvency & Bankruptcy Code, 2016 and admitted the application declaring ‘moratorium’ in regard to the affairs of the company; appointed ‘Interim Resolution Professional’ and passed interim order (s) in terms of Section 7 of the Insolvency & Bankruptcy Code, 2016.

In the other impugned order dated 23rd January, 2017 the ‘adjudicating authority’ while admitted that there was a rush of work, in deciding the IA No. 6/2017 which inadvertently based on the argument of the Ld. Counsel for the Corporate Debtor, observed that delay in passing the order owing to the application filed by the Corporate Debtor in raising plea of no default, having raised in earlier C.A, the matter stands adjudicated.

The question (s) involved in this appeal:

(i) Whether a notice is required to be given to the Corporate Debtor for initiation of Corporate Insolvency Resolution Process under I&B Code, 2016 and if so, at what stage and for what purpose?

(ii) Whether ‘Maharashtra Relief Undertaking (Special Provisions) Act (Bombay Act XCVI of 1958)’ (hereinafter referred to as MRU Act 1958) shall prevail over I&B Code 2016. In other words, whether a Corporate Debtor who is enjoying the benefit of MRV Act, can be subjected to I&B Code 2016? and

(iii) Whether in a case where Joint Lender Forum (JLF) have reached agreement and granted permission to the Corporate Debtor prior consent of JLF is required by financial creditor, before filing of an application under Section 7 of the I&B Code 2016?

NCLAT Verdict:

(i) Whether a notice is required to be given to the Corporate Debtor for initiation of Corporate Insolvency Resolution Process under I&B Code, 2016 and if so, at what stage and for what purpose?

For determination of first issue, it is desirable to notice different decisions of Hon’ble Apex Court on the question as to how far rules of natural justice is an essential element.

Case Referred during the hearing:

  1. Maneka Gandhi v UoI & Anr (1c78) 1 SCC 248-Apex Court
  2. Union of India v J N Sinha (1970) 2 SCC 458-Supreme Court
  3. Swadeshi Cotton Mills v. Union of India, (198 1) 1 SCC 664,
  4. Maneka Gandha, State of Orissa v. Dr. Bina Pani Dei, AIR 1967 SC 1269 and A. K. Kraipak v. UoI, (19 69) 2 SCC 262
  5. Liberty Oil Mills & Ors. v. UoI & Ors., (1984) 3 SCC 465, Larger Bench of the Apex Court
  6. UoI & Anr. Vs. Tulsiram Patel, (1985) 3 SCC 398 = AIR 1985 SC 1416-Apex Court
  7. Union of India and another v W.N. Chadha 1993 Supp. (4) SCC 260
  8. D.K. Yadav v. J.M.A. Industries Limited (1993) 3 SCC 259-Supreme Court
  9. Dr. Rash Lal Yadav v. State of Bihar & Ors., (1994) 5 SCC 267, the Apex Court, after referring to the decisions in A.K. Kraipak v. UoI, (1969) 2 SCC 262, Dr. Bina Pani Dei, AIR 1967 SC 1269, Union of India v J N Sinha (1970) 2 SCC 458, Swadeshi Cotton Mills
    v. UoI, (198 1) 1 SCC 664 and Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, 439,
  10. Mangilal v. State of M.P., (2004) 2 SCC 447
  11. Union of India v Tulsiram Patel AIR 1985 SC 1416-Supreme court
  12. Dharampal Satyapal v Deputy commissioner central Excise (2015) 8SCC 519-Apex court
  13. Union of India v W.N. Chaddha AIR 1993 Sc 1082-Apex Court
  14. State of Maharashtra v. Jalgaon Municipal Council, (2003) 9 SCC 731-Supreme Court
  15. A.K. Kraipak v. Union of India, (1969) 2 SCC-Supreme Court
  16. C.B. Gautam vs Union Of India 1993 (1) SCC 78-Apex Court
  17. M.P. Industries Ltd. v. Union of India, AIR 1966 SC 671
  18. S.L Kapoor v. Jagmohan, (1980) 4 SCC 379-Supreme Court

The aforesaid observation has been highlighted by Hon’ble Supreme Court, in a different way, observing that “useless formality” is another exception to the ratio of natural justice. Where on the admitted or undisputed facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not insist on the observance of the principles of natural justice because it would be futile to order its observance. Therefore, where the result would not be different, and it is demonstrable beyond doubt, order of compliance with the principles of natural justice will not be justified.

From the aforesaid decisions of Hon’ble Supreme Court, the exception on the Principle of Rules of natural justice can be summarised as follows:-

(i) Exclusion in case of emergency,
(ii) Express statutory exclusion
(iii) Where discloser would be prejudicial to public interests
(iv) Where prompt action is needed,
(v) Where it is impracticable to hold hearing or appeal,
(vi) Exclusion in case of purely administrative matters.
(vii) Where no right of person is infringed,
(viii) The procedural defect would have made no difference to the outcome.
(ix) Exclusion on the ground of ‘no fault’ decision maker etc.
(x) Where on the admitted or undisputed fact only one conclusion is possible – it will be useless formality.

There is no specific provision under the I&B Code, 2016 to provide hearing to Corporate debtor in a petition under Section 7 or 9 of the I&B Code, 2016.

Sub-section (1) of Section 5 defines “adjudicating authority” for the purpose of that part means “National Company Law Tribunal”, (NCLT) constituted under Section 408 of the Companies Act, 2013 (18 of 2013).

Section 420 of the Companies Act, 2013 relate to ‘orders of Tribunal’. Sub-Section (1) of Section 420 mandates the Tribunal to provide the parties before it, the reasonable opportunity of being heard before passing orders as it thinks fit, as quoted below:-

” 420. Orders of Tribunal.— (1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.”

I&B Code, 2016 empowers ‘adjudicating authority’ to pass orders under Section 7, 9 and 10 of the Code, 2016 and not the National Company Law Tribunal. It is by virtue of the definition under sub-Section (1) of Section 5 read with section 60 of the I&B Code, 2016, the National Company Law Tribunal plays role of an “adjudicating authority”.

Section 60 of the I&B Code, 2016 which relate to ‘Adjudicating Authority’ for corporate persons which empowers the National Company Law Tribunal to entertain and dispose of the petition as stipulated under sub-section (5) of Section 60.

By Section 255 of the I&B Code 2016 certain provisions of the Companies Act, 2013 has been amended in the manner as specified in the XIth Schedule. By virtue of Article 32 of XIth Schedule, the Section 424 of the Companies Act, 2013 stands amended as follows:

“32. In section 424, – Commencement of winding up by Tribunal. (i) in sub-section (1), after the words, “other provisions of this Act”, the words “or of the Insolvency and Bankruptcy Code, 2016″ shall be inserted; (ii) in sub-section (2), after the words, “under this Act”, the words “or under the Insolvency and Bankruptcy Code, 2016″ shall be inserted.”

As amended Section 424 of the Companies Act, 2013 is applicable to the proceeding under the MB Code, 2016, it is mandatory for the adjudicating authority to follow the Principles of rules of natural justice while passing an order under I&B Code, 2016. Further, as Section 424 mandates the ‘Tribunal’ and Appellate Tribunal, to dispose of cases or/appeal before it subject to other provisions of the Companies Act, 2013 or MB Code 2016 such as, Section 420 of the Companies Act 2013 was applicable and to be followed by the Adjudicating Authority.

One “Sree Metaliks Limited & Ann” moved before the Hon’ble Calcutta High Court in Writ Petition 7144 (W ) of 2017 assailing the vires of Section 7 of the Code, 2016 and the relevant rules under the Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 (hereinafter referred to as I&B Rules, 2016). The challenge was premise upon the contention that the Code, 2016 does not afford any opportunity of hearing to a corporate debtor in a petition under Section 7 of I&B Code, 2016. The Hon’ble High Court noticed relevant provision of Section 7 of the I&B Code 2016, the definition of ‘adjudicating authority’ as defined under Section 5(1), Section 61 of the I&B Code, 2016 relating to appeal and amended Section 424 of the Companies Act, 2013 and by judgment.

As per clause (3) of Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the financial creditor is required to despatch forthwith a copy of the application filed with the ‘adjudicating authority’ to the corporate debtor as quoted below:-

“4(3) The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor.”

Thus it is clear that sub-Rule (3) of Rule 4 of I&B (Application to Adjudicating Authority) Rules, 2016, mandates the applicant to dispatch forthwith, a copy of the application “filed with the Adjudicating Authority”. Thereby a post filing notice required to be issued and not as notice before filing of an of application. The purpose for the same being to put corporate debtor to adequate impound notice so that the Corporate Debtor may bring to the notice of Adjudicating Officer “mitigating factor/records before the application is accepted even before formal notice is received.”

The insolvency resolution process under Section 7 or Section 9 of I&B Code, 2016 have serious civil consequences not only on the corporate debtor – company but also on its directors and shareholders in view of the fact that once the application under Sections 7 or 9 of the I&B Code, 2016 is admitted it is followed by appointment of an ‘interim resolution professional’ to manage the affairs of the corporate debtor, instant removal of the board of directors and moratorium for a period of 180 days. For the said reason also the Adjudicating Authority is bound to issue limited notice to the corporate debtor before admitting a case under section 7 and 9 of the ‘I & B Code’, 2016.

In view of the discussion above, we are of the view and hold that the Adjudicating Authority is bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of existence of default based on material submitted by the corporate debtor and to find out whether the application is complete and or there is any other defect required to be removed. Adherence to Principles of natural justice would not mean that in every situation the adjudicating authority is required to afford reasonable opportunity of hearing to the Corporate debtor before passing its order.

Purpose of Issuance of Notice:
Section 7 of the Code provides for process of initiation of corporate Insolvency Resolution process by a financial creditor, Section 8 and 9 provide for process of initiation of Insolvency Resolution process by an operational creditor and Section 10 of the Code provides for process of initiation of Insolvency Resolution process by the corporate debtor itself.

Process of initiation of Insolvency Resolution process by a financial creditor is provided in Section 7 of the I & B Code. As per sub-section (1) of Section 7 of the I & B Code, the trigger for filing of an application by a financial creditor before the Adjudicating Authority is when a default in respect of any financial debt has occurred. Sub-section (2) of Section 7 provides that the financial creditor shall make an application in prescribed form and manner and with prescribed documents, including:

i. “record of the default” recorded with the information utility or such other record or evidence of default as may be specified;
ii. the name of the resolution professional proposed to act as an interim resolution professional; and
iii. any other information as may be specified by the Board

The procedure once an application is filed by the financial creditor with the Adjudicating Authority is specified in sub-section (4) of Section 7 to sub-section (7) of Section 7 of the Code. As per sub-section (4) of Section 7 of the I & B Code:

“(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).” 

Sub-section (5) of Section 7 of the I & B Code provides for admission or rejection of application of a financial creditor Where the Adjudicating Authority is satisfied that-…’. the documents are complete or incomplete.

The Adjudicating Authority post ascertaining and being satisfied that such a default has occurred may admit the application of the financial creditor. In other words, the statute mandates the Adjudicating Authority to ascertain and record satisfaction as to the occurrence of default before admitting the application. Mere claim by the financial creditor that the default has occurred is not sufficient. The same is subject to the Adjudicating Authority’s summary adjudication, though limited to ‘ascertainment’ and ‘satisfaction’.

Unlike Section 7 of the I & B Code, before making an application to the Adjudicating Authority under Section 9 of the I & B Code, the requirements under Section 8 of the I & B Code are required to be complied with.

Under sub-section (1) of Section 8 of the Code, an Operational Creditor, on occurrence of a default, is required to deliver a notice of demand of unpaid debt or get copy of the invoice demanding payment of the defaulted amount served on the corporate debtor. This is the condition precedent under section 8 and 9 of the I & B Code, unlike in Section 7, before making an application to the Adjudicating Authority.

Under Section 9 of the Code, a right to file an application accrues after expiry of ten days from the date of delivery of the demand notice or copy of invoice as the case may be, demanding payment under sub-section (1) of Section 8 of the I & B Code. The operational creditor would receive either the payment or a notice of dispute in terms of sub-section (2) of Section 8 of the I & B Code.

Thus, it is evident from Section 9 of the I & B Code that the Adjudicating Authority has to, within fourteen days of the receipt of the application under sub-section (2), either admit or reject the application. Section 9 has two-fold situations insofar as notice of dispute is concerned. As per sub-section (5) (1) of Section 9, the Adjudicating Authority can admit the application in case no notice raising the dispute is received by the operational creditor (as verified by the operational creditor on affidavit) and there is no record of a dispute is with the information utility.

On the other hand, sub-section (5) of Section 9(5) mandates the Adjudicating Authority to reject the application if the operational creditor has received notice of dispute from the corporate debtor. Section 9 thus makes it distinct from Section 7. While in Section 7, occurrence of default has to be ascertained and satisfaction recorded by the Adjudicating Authority, there no similar provision under Section 9. The use of language in sub-section (2) of Section 8 of the I & B Code provides that the “corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1), ‘bring to the notice of the operational creditor… the existence of a dispute ” Under Section 7 neither notice of demand nor a notice of dispute is relevant whereas under Sections 8 and 9 notice of demand and notice of dispute become relevant both for the purposes of admission as well as for and rejection.

While ascertaining the ‘Adjudicating Authority’ to comes to a conclusion whether there is an existence of default for the purpose of section 7 or there is a dispute raised by the corporate debtor and all other purpose whether an application is complete or incomplete, it is not only necessary to hear the financial creditor! ‘Operational Creditor but also the corporate debtor.

The different decisions of the Hon’ble Supreme Court, as referred to above and exception of principles of natural justice as noticed and summarised in the preceding paragraphs is not applicable to the insolvency resolution process as it is not a case of emergency declared or prejudicial to public interest or that there is a statutory exclusion of rules of natural justice or it is impracticable to hold hearing. It is not the case that no right of any person has been affected, as immediately on appointment of an Interim Resolution Professional, the Board of directors stand superseded. There are other persons who are also affected due to order of moratorium. Therefore, the ‘adjudicating authority’ is duty bound to give a notice to the corporate debtor before admission of a petition under Section 7 or Section 9.

In the present case though no notice was given to the Appellant before admission of the case but we find that the Appellant intervened before the admission of the case and all the objections raised by appellant has been noticed, discussed and considered by the ‘adjudicating authority’ while passing the impugned order dated 17th January 2017. Thereby, merely on the ground that the Appellant was not given any notice before admission of the case cannot render the impugned order illegal as the Appellant has already been heard. If the impugned order is set aside and the case is remitted back to the adjudicating authority, it would be ‘useless formality’ and would be futile to order its observance as the result would not be different. Therefore, order to follow the principles of natural justice in the present case does not arise.

However, in some of the cases initiation of Insolvency Resolution Process may have adverse consequences on the welfare of the Company. Therefore, it will be imperative for the “adjudicating authority” to adopt a cautious approach in admitting Insolvency Application by ensuring adherence to the principle of natural justice.

(ii) Whether ‘Maharashtra Relief Undertaking (Special Provisions) Act (Bombay Act XCVI of 1958)’ (hereinafter referred to as MRU Act 1958) shall prevail over I&B Code 2016. In other words, whether a Corporate Debtor who is enjoying the benefit of MRV Act, can be subjected to I&B Code 2016?

The next question is whether the Appellant can claim any protection having granted benefit under MRU Act, 1956. The protection granted by notification issued under Section
4 of the MRU Act, 1956 is limited to the enactments as specified in the Schedule to the MRU Act, as apparent from Section 4(1) (a) (1) of the MRU Act.

The Schedule to the MRU Act specifies only certain acts to which the restriction applies. Accordingly, the application of the MRU Act can only be extended to such acts as specified in the schedule and no other legislation. The legislations referred to in the ‘schedule’ to the MRU Act are employment welfare related which is in consonance with the objects and purposed of the MRU Act i.e. ’employment and unemployment’. The protection under the MRU Act, therefore, cannot be extended to other legislations especially to union legislation which is subsequent to the MRU Act and related to insolvency resolution i.e. I&B Code, 2016

Section 4 of the MRU Act, including Section 4 (iv), therefore, is limited in scope to the acts listed in the schedule thereto.

Section 238 of the I&B Code, 2016 is non-obstante clause which overrides the operation of the MRU Act. As per Section 238 of the I&B Code, 2016 the provisions of the Code are to are to be given effect to notwithstanding anything contrary contained any other law or any instrument having effect under such law.  Section 238 states as follows:

“238 – The provisions of this Code shall have effect, notwithstandinganything inconsistent therewith contained in anti other law for the time beingin force or anti instrument havina effect by virtue of any such law.”

In light of the aforementioned non-obstante provision (which is a subsequent Union Law), the provisions of the I&B Code, 2016 shall prevail over the provisions of the MRU Act and any instrument issued under the MRU Act including the Notification.

It was submitted on behalf of the Appellant that by virtue of the provisions of Sections 3 and 4 of the MRU Act read with the notification issued thereunder, a creditor is restrained from exercising its statutory rights under the provisions of the Code. But such submission cannot be accepted as Section 238 of the I&B Code, 2016 clearly mandates that the provisions of the I&B Code, 2016 shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. This being the position and considering the mandate laid down in Section 238, which is a subsequent law enacted by Parliament, the provisions of the Section 238 would have effect notwithstanding the provisions of the MRU Act and any notification issued thereunder, insofar as it restrains the creditor from enforcing its security interest against the relief undertaking in whose favour a notification has been issued.

The MRU Act operates in a different field from the I&B Code, 2016. MRU Act is an Act to make temporary provisions for industrial relations and other matters to enable the State Government to conduct or to provide a loan, guarantee or financial assistance for the conduct of certain industrial undertakings ‘as a measure of preventing unemployment or of unemployment relief.’

On the other hand the I&B Code, 2016 is an Act enacted to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the order of priority of payments of Government dues. The I&B Code, 2016, which is later act of greater specificity, seeks to balance the interests of all stake holders.

In view of the aforesaid objects of the two enactments it is apparent that the two enactments operate in entirely different fields. This is further made clear by the fact that the MRU Act is enacted under Entry 23 of List III while the Code has been enacted under
Entry 9 of the List III. The stand taken by the learned counsel for the Appellant that the MRU Act has been enacted under Entry 24 of List II cannot be accepted as the MRU Act has received Presidential assent under Article 2 54(2) of the Constitution of India, which is only required for statutes enacted by the State Government in exercise of its legislative competence under the Concurrent List.

Case Referred during the hearing:

  1. In Yogender Kumar Jaiswal Vs. State of Bihar, (2016) 3 SCC 183, the Hon’ble Supreme Court, while dealing with Article 254, noticed the decision in “Hoechst Pharmaceuticals Ltd. (1983) 4 SCC 45”
  2. In “Madras Pet rochem Limited and Another Vs Board for Industrial and Financial Reconstruction and Others,” (2016)4, SCC 1, the Hon’ble Supreme Court was considering the question whether pendency of reference before BIFR bar enforcement of secured assets under SARFAESI Act, 2002. In the said case, the Hon’ble Supreme Court.

Following the law laid down by Hon’ble Supreme Court in “Yogendra Krishnan Jaiswal” and “Madras Petrochem Limited” we hold that there is no repugnancy between I&B Code, 2016 and the MRU Act as they both operate in different fields. The Parliament has expressly stated that the provisions of the I&B Code, 2016 (which is a later enactment to the MRU Act) shall have effect notwithstanding the provisions of any other law for the time being in force. This stipulation does not mean that the provisions of MRU Act or for that matter any other law are repugnant to the provisions of the Code.

In view of the finding as recorded above, we hold that the Appellant is not entitled to derive any advantage from MRU Act, 1956 to stall the insolvency resolution process under Section 7 of the Insolvency & Bankruptcy Code, 2016.

Insofar as Master Restructuring Agreement dated 8th September 2014 is concerned; the appellant cannot take advantage of the same. Even if it is presumed that fresh agreement came into existence, it does not absolve the Appellant from paying the previous debts which are due to the financial creditor.

(iii) Whether in a case where Joint Lender Forum (JLF) have reached agreement and granted permission to the Corporate Debtor prior consent of JLF is required by
financial creditor, before filing of an application under Section 7 of the I&B Code 2016?

The Tribunal has noticed that there is a failure on the part of  appellant to pay debts. The Financial Creditor has attached different records in support of default of payment. Apart from that it is not supposed to go beyond the question to see whether there is a failure on fulfilment of obligation by the financial creditor under one or other agreement, including the Master Restructuring Agreement. In that view of the matter, the Appellant cannot derive any advantage of the Master Restructuring Agreement dated 8th September, 2014

As discussed in the previous paragraphs, for initiation of corporate resolution process by financial creditor under sub-section (4) of Section 7 of the Code, 2016, the ‘adjudicating authority’ on receipt of application under sub-section (2) is required to ascertain existence of default from the records of Information Utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). Under Section 5 of Section 7, the ‘adjudicating authority’ is required to satisfy –

(a) Whether a default has occurred;
(b) Whether an application is complete; and
(c) Whether any disciplinary proceeding is against the proposed Insolvency Resolution Professional.

Once it is satisfied it is required to admit the case but in case the application is incomplete application, the financial creditor is to be granted seven days’ time to complete the application. However, in a case where there is no default or defects cannot be rectified, or the record enclosed is misleading, the application has to be rejected.

Beyond the aforesaid practice, the ‘adjudicating authority’ is not required to look into any other factor, including the question whether permission or consent has been obtained from one or other authority, including the JLF. Therefore, the contention of the petition that the Respondent has not obtained permission or consent of JLF to the present proceeding which will be adversely affect loan of other members cannot be accepted and fit to be rejected.

In the aforesaid circumstances the ‘adjudicating authority’ having satisfied on all counts, including default and that the application is complete and that there is no disciplinary proceeding pending against the Insolvency Resolution Professional, no interference is called for against the impugned judgment.

We find no merit in this appeal. It is accordingly dismissed. However, in the facts and circumstances, there shall be no order as to cost.

Case Reference: In the National Company Law Appellate Tribunal Company Appellate Jurisdiction, in case of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr.. Company Appeal (AT) (Insolvency) No. 1 & 2 of 20171, Date of Order: 15.05.2017.

Supreme Court decision on above matter- Innoventive Industries Ltd. (Corporate Debtor) Vs. ICICI Bank & Anr.- Supreme Court.

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1. arising out of Order dated 17th January, 2017 and Order dated 23rd January, 2017 passed by National Company Law Tribunal, Mumbai Bench, Mumbai in C.P. No. 1/I&BP/NCLT/MB/MAH/2016

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