The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Rakesh Kumar Jain, Judicial Member and Naresh Salecha, Technical Member was hearing an appeal of the Corporate Debtor against the admission of Section 7 application and held that the plea of the Appellant regarding violation of the RBI Guidelines on ‘Priority Sector Lending’ cannot be allowed to affect the fate of the application filed under Section 7 of the Code.
As per section 7 of the IB Code, the Adjudicating Authority is required to ascertain the existence of default within 14 days from the date of receipt of the application. Once the Adjudicating Authority is satisfied regarding the existence of default and that the application is complete and no disciplinary proceeding is pending against the proposed Interim Resolution Professional, the Adjudicating Authority is required to admit the application and is not required to look into any other criteria for the admission of the application. It is nobody’s case to cause a delay in the admission of CIRP on miscellaneous grounds.
In the present case, the Appellate Tribunal noted that the Hon’ble Supreme Court as well as the Appellate Tribunal itself has held in catena of judgments that there is no scope for judicial interventions and overreach by the Appellate Tribunal to interpret any further if the existence of due and subsequent default is established.
The Appellate Authority observed that the plea of the Appellant regarding violation of the RBI Guidelines on ‘Priority Sector Landing’ cannot be allowed to affect the fate of the application filed under Section 7 of the Code. It is for the Appellant to seek necessary remedies, if any and if required against Respondent No. 1 for violation of the Master Circular of RBI regarding Priority Sector Lending at an appropriate forum in accordance with the law.
As regards the date of default, it has been observed that Respondent No. 1 has been writing from time to time to the Appellant to clear the dues to avoid his account becoming NPA. The date of default has been clearly stipulated as 31.12.2013 and the date of NPA has been indicated as 31.03.2014 which has been accepted by the Adjudicating Authority after examining the supplementary affidavit of the Respondent No. 1. It is also noted that the Corporate Debtor has acknowledged the debt time and again at various places including 6 consecutive Balance- Sheets.
The Appellate Authority noted that as regards pending suits before the Debt Recovery Tribunal for adjudication, it is settled law that such pending adjudication does not come in the way of deciding application filed under Section 7 of the Code.
The Appellate Tribunal was also conscious of the fact that the Insolvency & Bankruptcy Code, 2016 is a self-contained ‘Code’ and its proceedings are summary in nature. In view of forgoing detailed examination of various facts and laws, the Appellate Tribunal did not find any error in the impugned order.
The Appeal was dismissed.