The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi comprising Justice Rakesh Kumar Jain, Judicial Member and Mr. Naresh Salecha, Technical Member has dismissed an appeal filed by the Insolvency and Bankruptcy Board of India (IBBI), challenging the dismissal of a Section 7 petition in a matter to which IBBI was not a party. The IBBI filed the appeal while contending that the petition was dismissed upon a wrong interpretation of Section 7 by the Adjudicating Authority . The Appellate Tribunal noted that IBBI is not aggrieved by the Adjudicating Authority’s order and has nothing to do with the litigation between the Financial Creditor and Corporate Debtor.
In the present case, the Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of corporate insolvency resolution process (CIRP) against the Corporate Debtor for Rs. 646,38,06,271/-.
The Adjudicating Authority dismissed the petition and noted that the Corporate Debtor was a viable going concern, as it has monthly revenues of Rs. 120 Crores (net of GST). Further, the Corporate Debtor repaid Rs. 16,915 Crores between 2011 to 2018, which depicts its reasonably healthy position to repay the debt.
The Financial Creditor filed two appeals before the NCLAT challenging the order of dismissal which are pending adjudication. The Insolvency and Bankruptcy Board of India which was not a party in the proceedings before NCLT, filed a third appeal before the NCLAT challenging the order dated 18.11.2022. The Corporate Debtor was impleaded as Respondent and the Financial Creditor has been made Performa Respondent.
In the present case, the Appellant argued that it is responsible for the enforcement of rules and regulations pertaining to corporate insolvency resolution. Therefore, it is imperative for IBBI to challenge the Order of dismissal as it is based upon an incorrect interpretation of Section 7 of IBC.
The Bench observed that the Appellant's cause of concern behind filling of the appeal was not known, since the Financial Creditor had already filed two appeals for challenging the order of dismissal.
The Appellate Authority noted, “However, from the perusal of the memorandum of appeal, we could not find the cause of concern much less the grievance of the Appellant for preferring the present appeal especially when the appeals have already been filed by the aggrieved person. In this regard, we may also refer to an order passed by this Tribunal in the case of Insolvency and Bankruptcy Board of India v. Wig Associates Private Limited and Others, REED 2018 NCLAT Del 08557, in which the Tribunal has recorded its displeasure while noticing the fact that the appeal has been filed by the board as an aggrieved person which was held to be not maintainable.”
It was observed that the IBBI is not aggrieved by the Adjudicating Authority’s order and has nothing to do with the litigation between the Financial Creditor and Corporate Debtor.
The Appellate authority noted, “The appeal is thus totally misconceived and not maintainable and hence, the same is hereby dismissed. No costs.”
The Appellate Tribunal dismissed the appeal file filed by IBBI for being misconceived and not maintainable.