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2022 Supreme(Raj) 465
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
SANDEEP MEHTA, KULDEEP MATHUR, JJ.
Vishnu Oil Mill Private Ltd. - Petitioner
Versus
Union of India, Through Secretary, Ministry of Corporate Affairs & Ors. - Respondents
D.B. Civil Writ Petition No. 2507 of 2022
Decided On : 25-07-2022
For the Petitioner: Mr. Hemant Kothari, Mr. Praveen Vyas.
For the Respondent: Mr. Mukesh Rajpurohit, ASG, Mr. Anuroop Singhi, Mr. Prasthant Tatia on behalf of Mr. Sheetal Kumbhat, Mr. Mahesh Thanvi.
Headnote:
Constitution of India, 1950 – Article 226 – Insolvency and Bankruptcy Code, 2016 – Section 7 – Petitioner Vishnu Oil Mill Pvt. Ltd. has approached this Court through this writ petition seeking to assail validity of Section 7 of Insolvency and Bankruptcy Code, 2016 and so also order passed by National Company Law Tribunal, Bench against petitioner – Held, Statute and amendment made therein makes it clear that same was formulated in such a manner so as to provide a means of efficacious redressal to smaller financial creditors and to give them an opportunity of availing speedy remedy under IBC rather than being relegated to other onerous proceedings for securing their money – Having considered the entirety of the facts and circumstances as available on record and after appreciating arguments advanced at bar, court are of firm view that statute i.e., Section 7 of IBC as amended vide Gazette Notification, admits no other interpretation except that a group of financial creditors can converge and join hands to touch financial limit stipulated under Section 7 so as to initiate a CIRP under IBC – Writ petition dismissed.
JUDGMENT :
Sandeep Mehta, J.
1. The petitioner Vishnu Oil Mill Pvt. Ltd. has approached this Court through this writ petition seeking to assail the validity of Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC') and so also the order dated 22.12.2021 passed by the National Company Law Tribunal, Jaipur Bench (hereinafter referred to as 'NCLT') against the petitioner. Section 7, the validity whereof assailed in the instant writ petition reads thus:-
Section.7 Initiation of corporate insolvency resolution process by financial creditor.
"7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.
(Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-section (6A) of section 21, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent of total number of such creditors in the same class, whichever is less;
Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less.
Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first and second provisos and has not been admitted by the Adjudicating authority before the commencement of the insolvency and bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first and second provisos within 30 days of the first commencement of the said Act failing which the application shall be deemed to be withdrawn before its admission.)
Explanation.—For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish—
(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional; and
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).
Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub section (5) within such time, it shall record its reasons in writing for the same.
(5) Where the Adjudicating Authority is satisfied that—
(a) a default has occurred and the application under subsection (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or
(b) default has not occurred or the application under subsection (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before
