Issue Of Maintainability Of Application U/S 7 Of IBC Can Be Decided Separately By Adjudicating Authority: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that the issue of maintainability of application under section 7 of the code can either be decided separately or with other substantive issues. Brief Facts The present appeal has been filed by the corporate debtor against an order passed by the NCLT. The respondent filed an application under section 7 of the code seeking initiation of the insolvency process against the corporate debtor. The corporate debtor raised objections with respect to maintainability of the application which were agreed to be heard by the Adjudicating Authority. Both parties filed their written submissions. The Adjudicating Authority held the application to be maintainable. The appellant submitted that while deciding the issue of maintainability, the Adjudicating Authority unnecessarily went on to decide other issues on merits thereby precluding the appellant from raising them in further proceedings. The respondent argued that no error was committed by the Adjudicating Authority as sufficient opportunity of being heard was provided to both the parties. Observations: The tribunal observed that although the Adjudicating Authority is not obligated to decide the question of maintainability in a section 7 application separately, it may choose to decide such objections separately as done in the present case. The tribunal concluded that in the facts of the present case, justice would be served if both parties are allowed to present their arguments on merits therefore it was held that although the issue of maintainability stands resolved in favor of the applicant, other issues with respect to debt and default can be decided by the Adjudicating Authority on merits by providing opportunity to both the parties to lead their evidence. Accordingly, the present appeal was disposed of. Case Title: Pioneer Urban Land & Infrastructure Ltd. Versus Presidia Araya Residents Welfare Association Case Number: Company Appeal (AT) (Insolvency) No. 97 of 2025 Judgment Date: 20/01/2025 For Appellant : Mr. Nikhil Nayyar, Sr. Advocate with Mr. Rajat Khanna, Mr. Divyanshu Rai, Ms. Taruna and Mr. Kshitij Maheshwari, Advocates. For Respondent : Mr. Vivek Kumar, Mr. Akshay Srivastava and Mr. Jayant Upadhyay, Advocates. Click Here To Read/Download The Order

Issue Of Maintainability Of Application U/S 7 Of IBC Can Be Decided Separately By Adjudicating Authority: NCLAT

Mohd Malik Chauhan

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