National Company Law Appellate Tribunal, New Delhi: While deciding an appeal filed by ZEEL against initiation of insolvency proceeding against them, a Division Bench comprising of Ashok Bhushan, J. and Barun Mitra (Technical Member) stayed the order passed by Adjudicating Authority directing the initiation of Corporate Insolvency Resolution Process (CIRP) for the Zee Entertainment Enterprise Ltd (ZEEL).
Factual Matrix
In the present matter, the respondent no. 1/Financial Creditor preferred an application under S. 7 IBC before the Adjudicating Authority seeking initiation of CIRP for the against the Corporate Debtor/ZEEL after Siti Networks Ltd., a subsidiary of ZEEL failed to fulfil its obligations under Debt Service Reverse Agreement (DSRA).
The Adjudicating Authority granted the opportunity to the appellant to file the reply but the same was not availed at that time. Meanwhile, the appellant filed an interim application seeking dismissal of S. 7 application. The Adjudicating Authority vide order dated 11-07-2022, granted time to the respondents/financial Creditor to file reply to the interim application within 2 weeks, failing which the opportunity would stand closed. The Adjudicating Authority vide order dated 02-01-2023 dismissed the interim application filed by the appellant.
The Adjudicating Authority vide order dated 22-02-2023, admitted S. 7 application filed by the respondent no. 1 and directed the initiation of CIRP against the Corporate Debtor/ZEEL. It is pertinent to note that, while hearing S. 7 application, the Adjudicating Authority mistakenly observed that the Corporate Debtor did not file any reply and its opportunity stood closed in view of order dated 11-07-2022.
Aggrieved by the impugned order passed by the Adjudicating Authority, the appellant/ Suspended Director of the Corporate Debtor preferred an appeal before the Tribunal challenging the same.
Contentions
The appellant contended that the Adjudicating Authority proceeded to admit S. 7 application without granting opportunity to the appellant to file a Reply or address arguments on said application. The appellant further contended that the Adjudicating Authority, in view of the Delhi High Court Order dated 25.02.2021 and subsequent orders passed therein, cannot admit S. 7 application without obtaining leave of the Delhi High Court.
Observation and Decision
The Tribunal observed that neither hearing was made on S. 7 application nor parties advanced their submissions, therefore no order could have been passed by the Adjudicating Authority.
The Tribunal observed that the Adjudicating Authority's order dated 11-07-2022 has forfeited the right of reply of the appellant as the same was wrongly interpreted and relied on by the Adjudicating Authority. The Tribunal opined that the said order never forfeited right to file reply of the Corporate Debtor but in fact granted time to the Financial Creditor to file a reply, therefore it cannot be treated as forfeiting the right of the corporate debtor to file a reply.
“…The said order has been read by the Adjudicating Authority as order forfeiting right of the Corporate Debtor to file a Reply and relying on the said Order, adjudicating authority proceeded to observe that corporate debtor did not chose to file a Reply and rather refuses to reply hence the Adjudicating Authority has no option and proceeded to admit the Section 7 Application.”
While issuing notice to the respondents and allowing time to file reply/affidavits, the Tribunal stayed the impugned order dated 22-02-2023 and directed the appellant to deposit a certain amount. The next hearing is listed on 29-03-2023.
[Punit Goenka v. Indusind Bank Ltd., Company Appeal (AT) (Insolvency) No. 232/2023, order dated 24-02-2023]
Advocates who appeared in this case :
Mr. Mukul Rohtagi, Sr. Advocate with Mr. Arun Kathpalia, Sr. Advocate, Mr. Abhijeet Sinha, Ms. Bindi Dair, Mr. Aditya Shukla, Mr. Aman Raj Gandhi, Mr. Nikhil Rohatgi, Ms. Heena Kochar, Mr. Vardaan Bajaj, Mr. Parth Bose, Mr. P. Tutija, Diksha Gupta, Counsel for the Appellant
Mr. Rajiv Nayyar, Sr. Advocate, Mr. Diwakar Maheshwari, Ms. Pratiksha Mishra, Mr. Vishnu Shriram, Mr. Karun Mehta, Counsel for the Respondent No. 1
Mr. Sanjev Kumar, Mr. Anshul Sehgal, Mr. Divyanshu Jain, Counsel for the Respondent No. 2
