NCLAT Delhi Upholds Dismissal Of Application Seeking Restraint On Oyo From Proceeding With IPO
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in Jagadish v Oyo Hotels & Homes Pvt. Ltd., has upheld the Adjudicating Authority’s order rejecting applications filed by Operational Creditor to direct Oyo not to proceed with its IPO and furnish its financial statements. The reliefs sought by the Operational Creditor have been regarded as premature, since CIRP has not yet been initiated against Oyo.
Oyo Hotels & Homes Pvt. Ltd. (“Corporate Debtor”) owns and operates a chain of hotels across India under the banner ‘OYO’. Recently, the Corporate Debtor announced Initial Public Offering (IPO) of its shares and the IPO is still under process.
Mr. Jagadish (“Operational Creditor”) filed a petition under Section 9 of the Insolvency and Bankruptcy Act, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. While the petition was pending admission, the Operational Creditor filed applications before the Adjudicating Authority seeking direction to the Corporate Debtor not to proceed with IPO and to furnish their latest financial statement. The Adjudicating Authority vide an order dated 11.05.2022 dismissed the applications. The Adjudicating Authority observed that that the Corporate Debtor was not yet admitted in CIRP, therefore the applications were premature as they sought prohibitory orders against the Corporate Debtor.
The Operational Creditor filed an appeal before NCLAT against the order dated 11.05.2022.
The Bench observed that the pending Section 9 petition is to be considered on its own merits. The Bench upheld the Adjudicating Authority’s order regarding the reliefs sought by Operational Creditor as premature. At the stage when Adjudicating Authority has not even heard the Section 9 petition for admission, the applications were rightly rejected. “We, however, observe that it is open for the Adjudicating Authority to ask for any documents from either of the parties, at any stage of the proceedings, if it so deem fit and proper.”
The Bench dismissed the appeal.
Case Title: Jagadish v Oyo Hotels & Homes Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1408 of 2022
Counsel For Appellants: Mr. T. S. Suresh, Mr. Saket Gogia and Mr. Man Singh, Advocates.
Counsel For Respondents: Mr. Harsh Kaushik and Ms. Adrija Mishra, Advocates.