NCLAT Sets Aside proceedings Against Zee Learn
NCLAT Sets Aside proceedings Against Zee Learn
The National Company Law Appellate Tribunal, (NCLAT) set aside the order passed by the National Company Law Tribunal, Mumbai Bench (NCLT/Adjudicating Authority) allowing insolvency proceedings against the Essel group firm Zee Learn, held the fact that the NCLT itself had fixed the date of 21st February, 2023 on the application, before considering the said application it was not appropriate to deliver order under Section 7 Application of Insolvency and Bankruptcy Code, 2016 (IBC).
The two-members bench comprising of Justices Ashok Bhushan (Chairperson) Mr. Barun Mitra (Technical Member were hearing an appeal in the matter of Surender Singh vs. Yes Bank Ltd and another, filed against an order dated 10.02.2023 passed by the Adjudicating Authority by which order the Adjudicating Authority had admitted Section 7 Application filed by Yes Bank, the Respondent No. 1.
The appellant was extended various financial facilities by the Financial Creditor and on account of default committed by the Appellant, the Application was initiated alleging default of Rs. 4,689,990,947.45. The Adjudicating Authority heard the parties on 14.12.2022 and reserved the order. Subsequent to reserving of the order by the Adjudicating Authority, an Interlocutory Application was filed by the Corporate Debtor.
In the Interlocutory Application, the Corporate Debtor stated that final hearing in the Application took place on 14.12.2022 and the matter was reserved for orders. It is submitted that Yes Bank has already assigned the debt in favor of JC Flowers Asset Reconstruction Company. The Application came before the Adjudicating Authority on 19.01.2023 based on which the orders were passed.
Subsequent to the order dated 19.01.2023, the Adjudicating Authority by the Impugned order dated 10.02.2023, admitted the Section 7 Application.
The NCLAT noted that there was no dispute between the parties that Section 7 Application was heard on 14.12.2022 and order was reserved. After reserving of the order by the Adjudicating Authority, Interlocutory Application had been filed by the Corporate Debtor. In paragraph-3 of the Application the fact it was clearly mentioned that the order was reserved and hearing took place on 14.12.2022.
The bench stated that, "where Section 7 Application was filed by the Yes Bank where hearing took place before the Adjudicating Authority, the fact of assignment was brought under notice and prayer was made to dismiss Section 7 Application. Application was entertained by the Adjudicating Authority and notices were issued on 19.01.2023 fixing 21.12.2022 as the next date. We are of the view that the Adjudicating Authority, it having already issued notice on the application, granted time to the Financial Creditor to reply the Application, ought to have considered the Application. At this stage when the Application has not been considered, we are of the view that it is not necessary for us to express any opinion on the merits of the Application which may prejudice the parties before the Adjudicating Authority. The fact that the Adjudicating Authority itself has fixed the date 21.02.2022 on the application, before considering the said Application it was not be appropriate to deliver the order under Section 7 Application."
The NCLAT opined that, the Adjudicating Authority had issued Notices and prayer of the Financial Creditor to file Reply was acceded to, it was necessary to decide the said application. Hence, before the date fixed for consideration of the case, the Adjudicating Authority ought not to have admitted Section 7 Application.
In light of the above reasons, the NCLAT set aside the order dated 10th February, 2023 and let the Adjudicating Authority consider the Application and pass fresh order both on Interlocutory Application and Section 7 Application in accordance with law.
The appellate tribunal also made clear that it was not expressing any opinion on the merits of the Section 7 Application and it is open for the parties to raise submissions as permissible in law.
