Skip to main content

NCLT Has Inherent Power To Impose Moratorium Before Initiation Of Corporate Insolvency Resolution Process

In Company Appeal (AT) (Insolvency) No. 664 of 2019,  IN THE MATTER OF NUI Pulp and Paper Industries Pvt. Ltd. Vs. M/s. Roxcel Trading GMBH, an application under Section 9 of the Insolvency Code was filed by the respondent against which the Corporate Debtor had filed a caveat. The Corporate Debtor also claimed the existence of a dispute and the Adjudicating Authority allowed time to file affidavit by the Corporate Debtor and rejoinder by the respondent. However at that stage, the respondent having expressed apprehension of the Corporate Debtor intending to sell the assets of the ‘Corporate Debtor’ to defeat the purpose of the ‘I&B Code’ and cause wrongful losses to all the creditors including the ‘Operational Creditor’, passed an interim order under Rule 11 of the NCLT Rules, 2016, restraining the Corporate Debtor and its Directors from alienating, encumbering or creating any third party interest on the assets of the 1st Respondent Company till further orders. Against that order the Corporate Debtor  filed this appeal.

The Corporate Debtor argued that before admission of an application under Sections 7 or 9, the Adjudicating Authority has no jurisdiction to restrain the ‘Corporate Debtor’ and its Directors from alienating, encumbering or creating any third party interest on the assets of the ‘Corporate Debtor’. No such power can be exercised under Rule 11 of the National Company Law Tribunal Rules, 2016. According to the Corporate Debtor, inherent power can be exercised by the Adjudicating Authority (National Company Law Tribunal), if it comes to the notice on receipt of reply that the ‘Corporate Debtor’ somehow or other trying to get adjournment or to alienate the matter after filing of the application under Sections 7 or 9. No such ground having shown by the ‘Operational Creditor’ on the first day of issuance of notice or allowing the ‘Corporate Debtor’ to file reply. The Adjudicating Authority has no jurisdiction to pass interim order.

The Ld. NCLAT observed that against the apprehension of the Operational Creditor that the Corporate Debtor might if not restrained sale assets to defeat the purpose of the Insolvency application, the Corporate Debtor could give any such undertaking as according to them it will act taking into consideration the necessity of the ‘Corporate Debtor’ for its day-to-day functioning.

The Ld. NCLAT decided that Rule 11 of the National Company Law Tribunal Rules, 2016 which deals with ‘inherent powers’ of the National Company Law Tribunal, makes it clear that once an application under Sections 7 or 9 is filed by the Adjudicating Authority, it is not necessary for the Adjudicating Authority to await hearing of the parties for passing order of ‘Moratorium’ under Section 14 of the ‘I&B Code’. To ensure that one or other party may not abuse the process of the Tribunal or for meeting the ends of justice, it is always open to the Tribunal to pass appropriate interim order.



Comments

Post a Comment

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...
Post a Comment
Read more

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...
1 comment
Read more

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...
1 comment
Read more