The remedy for financial creditors in securing dues pending from corporate debtors is as per the provisions of Section 7 of the Insolvency and Bankruptcy Code. The process of insolvency can be said to have started upon admission of any Insolvency Application by the Adjudicating Authority. However, the formidable question arose when an appeal was filed by the corporate debtor against the application under Section 7 preferred by the Financial Creditor that was admitted, order of moratorium was passed and Interim Resolution Professional was duly appointed. In the matter of Radial Infratel Pvt Ltd Vs. Union Bank of India, the NCLAT dismissed the appeal stating that any such appeals by a Corporate Debtor is not maintainable in view of the judgment of the Hon’ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank and Ors (2018)1 SCC 407.
The Hon’ble Chairperson of the NCLAT, Justice S J Mukhopadhyaya placed reference to Para 11 of the judgment in Innoventive Industries Ltd which stated as follows:
“11. Having heard the learned counsel for both the parties, we find substance in the plea taken by Shri Salve that the present appeal at the behest of the erstwhile Directors of the appellant is not maintainable. Dr Singhvi stated that this is a technical point and he could move an application to amend the cause- title stating that the erstwhile Directors do not represent the Company, but are filing the appeal as persons aggrieved by the impugned order as their management right of the Company has been taken away and as they are otherwise affected as shareholders of the Company. According to us, once an insolvency professional is appointed to manage the Company, the erstwhile Directors who are no longer in management, obviously cannot maintain an appeal on behalf of the Company. In the present case, the Company is the sole appellant. This being the case, the present appeal is obviously not maintainable. However, we are not inclined to dismiss the appeal on this score alone. Having heard both the learned counsel at some length, and because this is the very first application that has been moved under the Code, we thought it necessary to deliver a detailed judgment so that all courts and tribunals may take notice of a paradigm shift in the law. Entrenched managements are no longer allowed to continue in management if they cannot pay their debts.”
Upon said reference to the judgment of the Apex Court, the appellant sought to substitute the ‘Corporate Debtor’ with a shareholder of the Corporate Debtor and to transpose ‘Radius Infratel Private Limited’ through ‘Resolution Professional’ as a Respondent. However, after no such application for substitution was moved by the appellant, the NCLAT dismissed the appeal as being not maintainable with the liberty to file appropriate application if not barred by limitation.
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