The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), while adjudicating a petition filed in Vrundavan Residency Pvt. Ltd. v Mars Remedies Pvt. Ltd., has held that there cannot be simultaneous CIRP proceedings against the same Corporate Debtor. The Bench declined to initiate CIRP against a Corporate Debtor which was already admitted into CIRP, but the Supreme Court had stayed the CIRP proceedings during pendency of an appeal.
In 2019, BDH Industries Ltd. filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) bearing CP (IB) No 804/2019, seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Mars Remedies Pvt. Ltd. (“Corporate Debtor”).
During the pendency of CP (IB) No 804/2019, Vrundavan Residency Pvt. Ltd. (“Financial Creditor/Applicant”) also filed Section 7 petition bearing CP(IB) 300/2020, seeking initiation of CIRP against the same Corporate Debtor.
On 22.03.2021, the Adjudicating Authority rejected CP (IB) 300/2020 of the Financial Creditor for being barred by limitation. The Financial Creditor preferred an appeal before NCLAT against the Order dated 22.03.2021. The NCLAT vide an order dated 04.03.2022 remitted the matter to NCLT for fresh consideration. The Corporate Debtor then filed an appeal against the NCLAT order before the Supreme Court, which was dismissed as withdrawn on 01.08.2022.
On 07.09.2022, the Adjudicating Authority admitted the Corporate Debtor into CIRP in CP (IB) No 804/2019. Accordingly, the subsequent petition bearing CP (IB) 300/2020 was dismissed for being infructuous. The Adjudicating Authority directed the Financial Creditor to file its claim before the Interim Resolution Professional appointed in CP (IB) No 804/2019. Further liberty was granted to the Financial Creditor to restore petition bearing CP (IB) 300/2020, in case CP (IB) 804 of 2019 gets settled or the order of CIRP is set aside.
The matter went in appeal before the Supreme Court and vide order dated 26.09.2022 a stay was imposed on the Corporate Debtor’s CIRP initiated in CP(IB) 804/2019. On the basis of the stay, the Financial Creditor filed an application before Adjudicating Authority seeking restoration of CP (IB) No.300 of 2020 and initiation of CIRP against the Corporate Debtor.
The Bench observed that the Supreme Court merely granted stay in CIRP proceeding. The final outcome of the said appeal would be either setting aside of order initiating CIRP or continuance of CIRP proceedings in CP (IB) 804/2019.
“Since there cannot be two simultaneous CIRP proceedings against the same Corporate Debtor, hence the outcome of the proceedings before Hon’ble Supreme Court shall decide the fate of Corporate Debtor.”
The Bench held that simultaneous CIRP proceedings against the same Corporate Debtor cannot be initiated. It was observed that the Financial Creditor’s petition bearing CP (IB) 300/2020 could only be restored if CP (IB) 804/2019 gets settled or the order is set aside. As neither situation has transpired, the Bench gave the Financial Creditor the liberty to restore CP (IB) 300/2020, subject to the outcome of the appeal before Supreme Court in CP (IB) 804/2019.
The appeal was rejected.
Case Title: Vrundavan Residency Pvt. Ltd. v Mars Remedies Pvt Ltd.
Case No.: CP (IB) 300/NCLT/AHM/2020
Counsel For Applicant: Mr. Ravi Pahwa, Advocate.
Counsel For Respondent: Mr. Pavan Godiawala, Advocate.