The National Company Law Appellate Tribunal (“NCLAT”), in the case Mr. Rakshit Dhirajlal Doshi v IDBI Bank Limited, the Principal Bench, comprising of Judicial Member, Justice Anant Bijay Singh and the Technical Member, Mr. Barun Mitra observed while adjudicating in an appeal filed and has held that an appeal challenging the order initiating CIRP becomes infructuous if the Committee of Creditors decided to liquidate the Corporate Debtor and an application for the process of liquidation has been filed.
Facts of the Case
The Appellant/Corporate Debtor, Doshion Private Limited had obtained financial assistance for an amount to Rs. 32.70 Crores from the IDBI Bank Ltd and the Consortium of various banks. The Respondent/Financial Creditor was a leading bank in the Consortium.
On 29.10.2015, the account of the Corporate Debtor was declared as a Non-Performing Asset. A petition was filled by the Financial Creditor after 3 years of NPA classification on 19.12.2018, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), wherein seeking initiation of Corporate Insolvency Resolution Process initiated against the Corporate Debtor. The plea was admitted vide order dated 31.08.2021 by the Adjudicating Authority and initiated CIRP. An appeal has been filled by the Corporate Debtor before NCLAT against the order dated 31.08.2021.
Contentions Made By Appellant
It has been argued by the Appellant that the plea filled was not maintainable as the same has not been instituted by the Financial Creditor. The petition was instituted by Assistant General Manager (AGM) alleging as an Authorized Signatory of the Bank. Moreover, no letter of authority or board resolution had been annexed along with the plea authorizing the AGM for initiating CIRP under Section 7 of IBC.
Contentions Made By Respondent
It has been submitted by the Bank/Financial Creditor that the AGM was authorized by General Manager of IDBI Bank. Further, it has been concluded by the Adjudicating Authority that the AGM was competent to file the Petition.
Further, it has been resolved by the Committee of Creditors for liquidating the Corporate Debtor.
An application was filled by the Corporate Debtor application under Section 31 of IBC and the same is pending for consideration. Therefore, as the CoC by applying its commercial wisdom, had already proposed liquidation of the Corporate Debtor Company and the appeal has become infructuous.
NCLAT Decisionw
It was observed by the bench that the appeal challenging the initiation of CIRP had become infructuous as the Coc has already decided to liquidate the Corporate Debtor.
An application was also pending before the Adjudicating Authority for liquidation process of the Corporate Debtor.
The bench stated after hearing the parties and going through the pleadings made on behalf of the parties, the bench agrees with the reasons given by the Adjudicating Authority while passing the impugned order and it has been recommended by the CoC for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence the said Appeal has become infructuous.
Accordingly, the bench affirmed the Order passed by the Adjudicating Authority on 31.08.2021 and the bench dismissed the appeal.
