The Delhi Bench of National Company Law Appellate Tribunal (NCLAT) held that Adjudicating Authority Need Not Record Any Finding Regarding ‘Default’ at the time of application by the creditor to initiate insolvency resolution process.
The appellants, Kanchan Nanubhai Desai Personal Guarantor, Nanubhai Nichhabhai Desai Personal Guarantor, and Tusharkumar Nanubhai Desai Personal Guarantor filed the appeals against judgment and order passed by the National Company Law Tribunal.
A Petition was filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 through the Resolution Professional (RP), Sudha Bhushan, against the three Appellants who are before us in these three Appeals. On the Application filed through the Resolution Professional, the Adjudicating Authority has passed the order directing the Resolution Professional to exercise the powers as enumerated under Section 99 of the ‘I&B Code’ read with the Rules made thereunder and submit the recommendations with reasons in writing for acceptance or rejection of Application within the stipulated time as envisaged under Section 99.
The Appellant contended that as per Section 97 of the ‘I&B Code’ even though Application was filed by the Resolution Professional, the Adjudicating Authority ought to have asked for confirmation of the Resolution Professional from the Board as required by Section 97 and at the stage when the report has not come from the Resolution Professional, there was no occasion to record any finding regarding default. He submits that the findings regarding the default were uncalled for and in view of the said finding, the Resolution Professional shall be handicapped to submit any negative report.
The coram headed by the Chairperson, Justice Ashok Bhushan Justice Jarat Kumar Jain and Dr. Alok Srivastava partly allowed the appeal against the order of the Adjudicating Authority, and directed that the observation regarding “default” be deleted from the judgment.
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