NCLAT Dismisses IBBI Appeal Challenging NCLT's Order Rejecting Admission of GTL Infrastructure

NCLAT Dismisses IBBI Appeal Challenging NCLT's Order Rejecting Admission of GTL Infrastructure

The National Company Law Appellate Tribunal, (NCLAT), Principal bench dismissed the appeal filed by the Insolvency and Bankruptcy Board of India (IBBI), observing that the appellant has nothing to do with the litigation between two parties i.e., 'Financial Creditor' and 'Corporate Debtor.'

The IBBI which regulates insolvency proceedings, had challenged the order passed by National Company Law Tribunal, (NCLT), Mumbai bench which had rejected the admission of GTL Infrastructure for the debt resolution process. Aggrieved by the same, IBBI filed a petition before the National Company Law Appellate Tribunal (NCLAT).

The matter was heard by the division bench comprising of Justice Rakesh Kumar Jain (Judicial member) and Mr. Naresh Salecha (Technical member).

The background of the case is that the Respondent No. 2- Canara Bank had filed a Company Petition before the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against the Respondent No. 1- GTL Infrastructure Limited (Corporate Debtor) for the resolution of an amount of Rs. 646,38,06,271 as on 1st July, 2011.

The Corporate Debtors had also filed an Interlocutory Application (IA) on 21 February, 2022 seeking dismissal of the aforesaid petition on account of lack of authorization in favor of the authorized signatory of the Respondent No. 2. The aforesaid petition was dismissed vide the impugned order dated 18th November, 2022 and the IA was dismissed as infructuous.

The Adjudicating Authority had referred the judgement passed by the Hon'ble Supreme Court in Vidarbha Industries, wherein the Court had refused to admit Vidarbha Industries for Corporate Insolvency Resolution Process (CIRP) citing that the Anil Ambani-promoted power producer had won an award of Rs. 1,730 core but was unable to pay lenders since that award was challenged.

Further, the Adjudicating Authority orders revealed that, GTL Infra has claims from various telecommunication companies amounting to Rs. 14,700 crore, which would be sufficient to repay the lenders' debt. This includes a claim of Rs. 13,394 crore against Aircel entities, which itself is undergoing insolvency proceedings.

The Adjudicating Authority had ruled that, the ratio of the Vidarbha Industries is squarely applicable to the present case as the business of the Corporate Debtor is sustainable and it is a viable going concern under its current management and the overall financial health of the Corporate Debtor is not bad enough to be admitted under CIRP. Moreover, the adjudicated and un-adjudicated claims of the Corporate Debtor are far more than the debt claimed in the present petition. So, in view of Judgement of the Hon'ble Supreme Court in Vidarbha Industries Power Limited Vs. Axis Bank Limited, the Adjudicating Authority was of the opinion that the present petition should be dismissed.

In the present appeal the IBBI impleaded GTL Infrastructure Limited as Respondent and Canara Bank as Performa Respondent. It was averred in the appeal that the appellant is responsible for the enforcement of various rules and regulations concerning the corporate insolvency resolution and amongst others. Therefore, it stated that it was imperative for the appellant to file the instant appeal as the impugned order is based on an incorrect interpretation of the provisions of Insolvency and Bankruptcy Code, inter alia Section 7.

The bench from the perusal of the memorandum of appeal failed to find the cause of concern much less the grievance of the appellant for preferring the appeal especially when the appeals have already been filed by the aggrieved person.

The bench referred the order passed by the NCLAT in the case of Insolvency and Bankruptcy Board of India vs. Wig Associates Pvt. Ltd. and others. (2018), in which the Tribunal had recorded its displeasure while noticing the fact that the appeal has been filed by the board as an aggrieved person which was held to be not maintainable.

The bench observed, "in our considered opinion as well, the Appellant has nothing to do with the litigation between two parties i.e., 'Financial Creditor' and 'Corporate Debtor', in order to challenge the impugned order by which the petition filed by the Financial Creditor has been dismissed for whatever reasons."

Thus, the Appellate Tribunal was of the view that the appeal is totally misconceived and not maintainable and hence, the same was dismissed.