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2024 Supreme(Online)(NCLAT) 647
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
RAJ RADHE FINANCE LIMITED – Appellant
Versus
Shree Shrinathji Spintex Pvt. Ltd. & Anr. – Respondent
1485/ND/2022 COMPANY APPEAL(AT)(INS)
An assignee under the Insolvency and Bankruptcy Code retains the right to seek restoration of a dismissed company petition, as they step into the shoes of the original petitioner.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 61 - Appeal against dismissal of restoration application - The Adjudicating Authority dismissed the application for restoration of the main company petition on grounds of non-prosecution, ruling that the Appellant, as an assignee, was not eligible to file for restoration. The court found that the assignment of debt was undisputed and that the Appellant had taken necessary steps to protect its interests, including filing for substitution and restoration. The court emphasized that denying the Appellant the opportunity to restore the petition was contrary to the principles of justice. (Paras 3, 14, 19)
Facts of the case:
The Appellant, having acquired a loan from Bank of Baroda assigned to it, sought to restore a company petition dismissed for non-prosecution. The Adjudicating Authority rejected the restoration application, stating the Appellant was not a party to the original petition.
Findings of Court:
The court held that the Appellant, as the assignee, had the right to pursue the restoration of the main company petition and that the dismissal was incorrect.
Issues: The main issues included whether the Appellant, as an assignee, could file for restoration and whether the Adjudicating Authority erred in dismissing the application.
Ratio Decidendi: The court ruled that the Appellant, having stepped into the shoes of the original petitioner, retained the right to seek restoration of the petition, and the dismissal was unjust.
Result: Appeal allowed.
[Per: Barun Mitra, Member (Technical)]
- The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (‘IBC’ in short) by the Appellant arises out of the Order dated 10.10.2022 (hereinafter referred to as ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Court-II) in I.A. No. 660 of 2020 in CP (IB) 574 of 2018. By the Impugned Order, the Adjudicating Authority rejected the said I.A. No. 660 of 2020 filed by Raj Radhe Finance Limited/Appellant to restore the CP(IB) No. 574 of 2018 which had been filed by Bank of Baroda, the original applicant and dismissed for non prosecution. Aggrieved by this impugned order, the present appeal has been preferred by the Appellant.
2. Coming to the factual matrix of the matter, we notice that the Bank of Baroda, the original petitioner, had given a loan to the Corporate Debtor. The Bank of Baroda-Present Respondent No.2 filed a Section 7 application vide Company Petition No.
574/2018 against Corporate Debtor-Present Respondent No. 1 before the Adjudicating Authority. Bank of Baroda had in the meantime assigned the loan to the Appellant which is a Non-Banking Finance Company vide an assignment agreement dated 30.09.2019. Bank of Baroda as the original petitioner filed a pursis on 26.06.2020 before the Adjudicating Authority bringing on record the assignment of the debt to the Appellant. The Appellant had filed I.A. No 779/2019 in the main company petition. The I.A. No. 779/2019 came up for hearing before the Adjudicating Authority on 03.08.2020 but was adjourned. Thereafter I.A. No. 779/2019 was taken up for hearing again by the Adjudicating Authority on 25.08.2020 on which date the main company petition was also heard. The main company petition was dismissed for non-prosecution. The I.A. No. 779/2019 was also dismissed as infructuous since the main company petition stood dismissed.
The Appellant had also filed another I.A. with the NCLT Registry seeking substitution of the Appellant in place of the Bank of Baroda in the main company petition which application was however numbered as I.A. No. 887/2020 after dismissal of the main company petition and remained unheard. After the main company petition was dismissed, the Appellant filed I.A. No. 660/2020 on 28.09.2020 seeking restoration of the main company petition. The restoration application has been rejected by the Adjudicating Authority vide impugned order dated 10.10.2022. Aggrieved by the impugned order, the present appeal has been preferred.
3. Making her submissions, the Learned Counsel for the Appellant stated that the loan of the Corporate Debtor along with underlying security had been assigned to the Appellant vide an assignment agreement entered into with the Bank of Baroda. It was submitted that this position in respect of debt assignment had been correctly appreciated by the Adjudicating Authority. Yet when the main company petition of Section 7 of IBC filed by the Bank of Baroda was dismissed by the Adjudicating Authority for non-prosecution, the Appellant in spite of being a valid assignee was deprived from seeking restoration of the main company petition on the ground that the name of the Appellant was not brought on record during the pendency of the main company petition and hence ineligible to file the restoration application. It was emphatically asserted that the Appellant was all along pursuing its interests in the right earnest having initially filed I.A. No 779/2019 in the main company petition and also filed a substitution application and cannot be blamed of negligence in enforcing their legal rights. It is also their case that they have the right to pursue their legal remedies under IBC and unless the restoration application is allowed their interests would be prejudicially affected. Assailing the impugned order, it was vehemently contended that the decision of the Adjudicating Authority is contrary to established principles of law. In sup
