ORBIS TRUSTEESHIP SERVICES PRIVATELIMITED v. NOBAL BUILDTECH PRIVATE LIMITED, National Company Law Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

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Case Number

Company Appeal(AT)(Ins) - 1071/2022

Disposition

remanded

Advocates

Raghav Chadha

Judges

Hon'ble Justice Rakesh Kumar Jain (Member(Judicial)) Hon'ble Mr. Naresh Salecha (Member (Technical))

Acts

SECTION 7 INSOLVENCY AND BANKRUPTCY CODE 2016

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Smart Summary

Factual and Procedural Background

This appeal arises from an order dated 02.06.2022 passed by the National Company Law Tribunal, New Delhi Bench, dismissing an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was filed by Orbis Trusteeship Service Pvt. Ltd. as Debenture Trustee on behalf of the Debenture Holders, seeking initiation of corporate insolvency resolution process against Nobal Buildtech Private Ltd. for a debt amounting to Rs. 255,07,26,925/- as on 02.02.2020. The Adjudicating Authority dismissed the application on the ground that it was not maintainable because the amount was disbursed by the Debenture Holders and not by the Appellant (Debenture Trustee) itself. The Appellant challenged this dismissal before the National Company Law Appellate Tribunal.

Legal Issues Presented

Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by a Debenture Trustee on behalf of the Financial Creditor (Debenture Holders) is maintainable?

Arguments of the Parties

Appellant's Arguments

The Appellant submitted that it is the Debenture Trustee acting on behalf of the Debenture Holders, who are the Financial Creditors.
Reference was made to a notification dated 27.02.2019 issued by the Ministry of Corporate Affairs which expressly permits a Trustee (including a Debenture Trustee) to file an application under Section 7 on behalf of the Financial Creditor.
The Appellant relied on Form-1 evidencing the identity of the Debenture Holders and the role of the Appellant as Trustee.

Respondent's Arguments

The Respondent conceded the existence of the notification dated 27.02.2019.
The Respondent's primary contention before the Adjudicating Authority was that the application was not maintainable as the debt amount was disbursed by the Debenture Holders and not by the Appellant.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court focused on the narrow issue of maintainability of the Section 7 application filed by the Debenture Trustee. It examined the notification dated 27.02.2019 issued by the Ministry of Corporate Affairs which explicitly authorizes trustees, including debenture trustees, to file insolvency applications on behalf of financial creditors. The Respondent conceded the existence of this notification, removing any dispute on this legal position. Consequently, the court held that the question was no longer res-integra (an issue not previously decided) and that the application by the Debenture Trustee is maintainable. Therefore, the impugned order dismissing the application on maintainability grounds was set aside and the matter was remanded to the Adjudicating Authority for consideration on merits.

Holding and Implications

The appeal is allowed, the impugned order is set aside, and the matter is remanded to the Adjudicating Authority for a decision on merits.

The direct consequence of this decision is that a Debenture Trustee is recognized as having the legal standing to file a Section 7 application on behalf of the Financial Creditors. The case will now proceed before the Tribunal for adjudication on substantive issues. No new precedent beyond the application of the Ministry of Corporate Affairs notification is established by this order.

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ORBIS TRUSTEESHIP SERVICES PRIVATELIMITED v. NOBAL BUILDTECH PRIVATE LIMITED

Company Appeal (AT) (Ins.) No. 1071 of 2022

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH,

NEW DELHI

Company Appeal (AT) (Insolvency) No. 1071 of 2022

IN THE MATTER OF:

Orbis Trusteeship Service Pvt. Ltd. …Appellant Versus

Nobal Buildtech Pvt. Ltd. …Respondent Present:

For Appellant : Sr. Advocate Mr. Krishnendu Datta, Mr. Vatsala Rai, Ms. Anindita R. Chowdhury & Mr. Sushrut Garg, Advocates.

For Respondent : Mr. Usman Khan & Mr. Rishi Awasthi, Advocates.

O R D E R

27.03.2023 This appeal is directed against the order dated 02.06.2022 passed by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi Bench) in (I.B.) 143 (ND)/2022 by which an application filed under Section 7 by the Appellant (Orbis Trusteeship Service Pvt. Ltd.) as a Debenture Trustee on behalf of the Debenture Holders, for the Resolution of a debt of Rs. 255,07,26,925/- as on 02.02.2020 against Nobal Buildtech Private Ltd. (Corporate Debtor) has been dismissed on the ground that the application filed at the instance of the Appellant was not maintainable as the amount was not disbursed by the Appellant but by the Debenture Holders.

2. Senior Counsel for the Appellant has drawn our attention to Form- 1 (available at Pg. 913, Volume-V) in which it is averred that Asia Pragati Strategic Investment Fund is the Debenture Holder, Nobal Buildtech Private

Limited is the Corporate Debtor and Kindle Infraheights Pvt. Ltd. had issued the debentures. The Appellant is the Debenture Trustee for the benefit of the Debenture Holders.

3. Since the issue involved in this case is in a very narrow compass that is as to whether the application under Section 7, preferred at the instance of the Appellant being the Debenture Trustee is maintainable or not, Counsel for the Appellant has drawn our attention to a notification dated 27.02.2019 issued by the Ministry of Corporate Affairs as per which the Trustee (including Debenture Trustee) can file an application on behalf of the Financial Creditor. The said notification is reproduced as under:-

"MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 27^th February, 2019

S.O. 1091(E)- In exercise of the powers conferred by sub- section (1) of section 7 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies following persons who may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority, on behalf of the financial creditor:-

(i) a guardian;

(ii) an executor or administrator of an estate of a financial creditor,

(iii) a trustee (including a debenture trustee); and

(v) a person duly authorised by the Board of Directors of a Company.

[F. No. 30/25/2018-Insolvency Section]

GYANESHWAR KUMAR SINGH, Jt. Secy."

4. Counsel for the Respondent has been fair enough to concede about the existence of the aforesaid notification.

5. Thus, in view of the aforesaid facts and circumstances, the issue is no more res-integra because of the notification dated 27.02.2019.

6. In view of the aforesaid facts and circumstances the present appeal is thus allowed. The 'impugned order' is set aside. The matter is remanded back to the 'Adjudicating Authority' to decide the case on merits. The parties are directed to appear before the 'Tribunal' on 1^st May, 2023.

7. It is needless to mention that the Tribunal shall to decide the matter between the parties expeditiously.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim/RR

ORBIS TRUSTEESHIP SERVICES PRIVATELIMITED v. NOBAL BUILDTECH PRIVATE LIMITED

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

ORBIS TRUSTEESHIP SERVICES PRIVATELIMITED v. NOBAL BUILDTECH PRIVATE LIMITED

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