NCLAT Delhi: Upholding Dismissal Of Application Seeking Restraint On OYO From Proceedings With IPO

Tribunal in the case Jagadish v Oyo Hotels & Homes Pvt. Ltd, the Principal Bench, comprising of Chairperson, Justice Ashok Bhushan and the Technical Member, Mr. Barun Mitra observed while adjudicating an appeal filed and has upheld the order of Adjudicating Authority for rejecting applications filed by Operational Creditor to direct Oyo not to proceed with its IPO and furnish its financial statements. Therefore, the relief being sought by the Operational Creditor have been regarded as premature, since CIRP has not yet been initiated against Oyo. 

Facts of the Case: 

The Corporate Debtor, Oyo Hotels & Homes Pvt. Ltd. owns and operates a chain of hotels located across India under the banner ‘OYO’. Recently, it has been announced by the Corporate Debtor the Initial Public Offering (IPO) of its shares and the IPO is still under process. A petition was filed by Operational Creditor, Mr. Jagadish under Section 9 of the Insolvency and Bankruptcy Act, 2016, wherein seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. Thus, the plea filed was pending admission, the Operational Creditor filed applications before the Adjudicating Authority wherein seeking direction to the Corporate Debtor not to proceed with IPO and to furnish their latest financial statement. The adjudicating authority dismissed the applications vide order dated 11.05.2022. It has further been observed by the Adjudicating Authority that the Corporate Debtor was not yet admitted in CIRP, the application filed were premature as they sought prohibitory orders against the Corporate Debtor. An appeal was filed before the NCLAT by the Operational Creditor against the order dated 11.05.2022. 

NCLAT Decision: 

It has been observed by the bench that the pending Section 9 petition is to be considered on its own merits. Further, it has been upheld by the bench that order of Adjudicating Authority regarding the reliefs sought by Operational Creditor as premature. At the said stage that the Adjudicating Authority has not even heard the Section 9 petition for admission, the applications were rightly rejected. However, it has been observed by the NCLAT that that it is being open for the Adjudicating Authority for asking any documents from either of the parties, at any stage of the proceedings, if it so deemed fit and proper.