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Bank Of India v. Indu Projects Ltd. .
Factual and Procedural Background
The appellant filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) on 7th June 2018, which was pending consideration before the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench) at the pre-admission stage. The Adjudicating Authority had issued a notice to the Enforcement Directorate (ED) to ascertain the status of proceedings related to the attachment of properties of the Corporate Debtor. The matter was adjourned multiple times due to the non-appearance of the ED, with the latest adjournment set for 25th February 2019.
Legal Issues Presented
- Whether the Adjudicating Authority should consider and decide the appellant's application under Section 7 of the I&B Code on its merits without further delay.
- How the moratorium, if the application is admitted, affects the properties of the Corporate Debtor attached by the Enforcement Directorate.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M/S. Innoventive Industries Ltd. v. ICICI Bank & Anr. (2018) 1 SCC 407 | Standards for admission of applications under Section 7 of the I&B Code and the requirement that the application be considered on its merits if it is complete and conforms to legal requirements. | The Court directed the Adjudicating Authority to consider the appellant's Section 7 application on its merits and in accordance with the principles laid down in this precedent without further delay. |
Court's Reasoning and Analysis
The Court observed that the appellant’s application under Section 7 of the I&B Code had been pending since June 2018 without any order on admission or rejection, despite the appellant’s claim that the application was complete and complied with legal requirements. Relying on the Supreme Court’s ruling in Innoventive Industries Ltd., the Court emphasized that the Adjudicating Authority must examine the application on its merits promptly and in accordance with the law. The Court noted that the effect of the moratorium on the attached properties of the Corporate Debtor, if the application is admitted, should be considered only after the application is decided and an appropriate order is passed. Hence, the Court directed the Adjudicating Authority to dispose of the application by 25th February 2019 to avoid further delay.
Holding and Implications
The Court’s final decision was to DISPOSE OF the appeal by directing the Adjudicating Authority to pass an appropriate order on the appellant’s Section 7 application under the I&B Code by 25th February 2019.
This decision ensures that the Adjudicating Authority addresses the pending application without undue delay, reinforcing the principle that applications under the I&B Code must be considered expeditiously once complete. The Court did not establish any new precedent but mandated adherence to the Supreme Court’s established legal framework. The direct effect is on the timely adjudication of the appellant’s insolvency petition, and the moratorium’s impact on attached properties will be determined subsequently by the Adjudicating Authority.
06.02.2019 The application of appellant under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code, for short) is pending for consideration before the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench at the pre-admission stage. In terms of the impugned order dated 7th January, 2019, the Adjudicating Authority appears to have issued notice to authority of Enforcement Directorate (ED) to ascertain the status in regard to the proceedings relating to attachments of the properties of the Corporate Debtor and the matter had been adjourned to 4th February, 2019. Learned counsel for the appellant submits that since the ED has not appeared before the Adjudicating Authority, the matter again stands adjourned to 25th February, 2019.
After hearing the learned counsel for the appellant, I am of the view that the appellant is concerned about the inordinate delay in consideration of his application under Section 7 of the I&B Code which is stated to have been filed on 7th June, 2018 and no order in regard to its admission or otherwise has been passed by the Adjudicating Authority though it is claimed by the appellant that the application is complete and conforms to all the requirements of law in terms of dictum of Honble Supreme Court in M/S. Innoventive Industries Ltd. v. Icici Bank & Anr. S - (2018) 1 SCC 407]. In the given circumstance, it would be appropriate to direct the Adjudicating Authority to consider the application filed by the appellant under Section 7 of the I&B Code on its merit and in terms of provisions of law as explained by the Honble Apex Court in Innoventive Industries Ltd. (Supra) without further loss of time.
The effect of moratorium, if the application is admitted, on the properties of the Corporate Debtor said to have been attached by the ED can be considered after consideration of the application and passing of an appropriate order thereon.
The Adjudicating Authority is accordingly directed to pass appropriate order on the application of the appellant under Section 7 of the I&B Code by 25th February, 2019.
The appeal is accordingly disposed off.
[ Justice Bansi Lal Bhat ] Member (Judicial) /ns/uk/ Company Appeal (AT) (Insolvency) No. 125 of 2019
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