The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in Mr. Rakshit Dhirajlal Doshi v IDBI Bank Limited, has held that an appeal challenging the order initiating CIRP becomes infructuous if the Committee of Creditors decided to liquidate the Corporate Debtor and accordingly an application for liquidation is filed.
Doshion Private Limited ("Corporate Debtor/Appellant") had obtained financial assistance amounting to Rs. 32.70 Crores from a Consortium of various banks and IDBI Bank Ltd. ("Financial Creditor/Respondent") was the lead bank in the Consortium.
The account of the Corporate Debtor was declared Non Performing Asset on 29.10.2015. On 19.12.2018, after 3 years of NPA classification, the Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor. The Adjudicating Authority vide an order dated 31.08.2021 had admitted the petition and initiated CIRP. The Corporate Debtor had filed an appeal before NCLAT against the order dated 31.08.2021.
Contentions Of Appellant
The Appellant argued that the petition was not maintainable as it had not been instituted by the Financial Creditor. The petition was instituted by Assistant General Manager (AGM) as an alleged Authorized Signatory of the Bank. However, no Board Resolution or letter of authority had been annexed along with the petition authorizing the AGM to initiate CIRP under Section 7 of IBC.
Contentions Of Respondent
The Financial Creditor/Bank submitted that the AGM was authorized by General Manager of IDBI Bank. The Adjudicating Authority had concluded that the AGM was competent to file the Petition.
Further, the Committee of Creditors had resolved to liquidate the Corporate Debtor. Accordingly, the Resolution Professional had filed application under Section 31 of IBC and the same is pending for consideration. As the CoC by applying its commercial wisdom, had already proposed liquidation of the Corporate Debtor Company, therefore, the appeal has become infructuous.
Decision Of NCLAT
The Bench observed that the appeal challenging the initiation of CIRP had become infructuous as the CoC had already decided to liquidate the Corporate Debtor. Also, an application was pending before the Adjudicating Authority for liquidation of the Corporate Debtor.
"After hearing the parties and going through the pleadings made on behalf of the parties, we agree with the reasons given by the Adjudicating Authority while passing the impugned order and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous."
The Bench affirmed the Order dated 31.08.2021 passed by the Adjudicating Authority and dismissed the appeal.
Case Title: Mr. Rakshit Dhirajlal Doshi v IDBI Bank Limited
Case No.: Company Appeal (AT) (Insolvency) No. 296 of 2022
Counsel For Appellant: Ms. Vaishnavi Viswanathan, Advocate.
Counsel For Respondent: Mr. Akshat Khare, Advocate.