NCLAT upheld the discretion of the Adjudicating Authority regarding the maintainability of proceedings and granting time for a reply under Section 54C of the IBC.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Member Mr. Barun Mitra reviewed an appeal and observed that the Adjudicating Authority has the discretion to grant time for filing a reply, even at the stage of Resolution Plan approval, and the issue of maintainability under Section 54C of the Insolvency and Bankruptcy Code can be considered at any stage of the proceedings.
The National Company Law Appellate Tribunal (NCLAT) heard the appeal filed by the Appellant against the order dated 09.10.2024, passed by the National Company Law Tribunal (NCLT), Mumbai Bench, Court-IV, in IA No.2207 (MB) 2024. The Appellant had initiated a Prepackaged Insolvency Resolution Process (PIRP), which was admitted on 01.02.2024. Subsequently, the process for approval of the Resolution Plan was undertaken. The Resolution Professional had served notice of the proposed plan to the Securities and Exchange Board of India (SEBI), which was directed to file an affidavit before the Adjudicating Authority. By the impugned order, SEBI was granted one week's time to file a reply upon receipt of the petition, and the matter was scheduled for further hearing on 25.10.2024.
The Appellant contended that since the proceedings had already been admitted under Section 54C of the Insolvency and Bankruptcy Code (IBC), the Adjudicating Authority should not have granted time to SEBI to file a reply at this stage, when the approval of the Resolution Plan was under consideration. However, the Respondent argued that the petition copy had not been served on the corporate debtor. Furthermore, it was submitted that the Hon'ble Supreme Court had passed an order on 15.10.2024 in a related matter, wherein the filing of the Section 54C petition had not been disclosed. This claim was, however, disputed by the Appellant.
The NCLAT, without delving into the issue of non-disclosure before the Supreme Court, observed that the Adjudicating Authority had only granted SEBI a week to file its reply, which had not yet been submitted. Upon the Respondent's request, the NCLAT granted an additional five days for SEBI to file its reply. The Tribunal refrained from expressing any opinion on the maintainability or non-maintainability of the proceedings under Section 54C of the IBC, leaving the matter to be decided by the Adjudicating Authority. It was clarified that the issue of maintainability could be addressed at any stage of the proceedings, including during the consideration of the Resolution Plan.
In view of the above, the NCLAT found no reason to entertain the appeal and accordingly disposed of it, granting SEBI five additional days to file its reply. The Adjudicating Authority was directed to proceed in accordance with the law without any prejudice to the parties' contentions.
Mr. Krishnendu Datta, Sr. Advocate with Dr. Swaroop George, Mr. Amir Arsiwala, Ms. Alina Merin and Mr. Mathew, Advocates represented the Appellant.
Mr. Neeraj Malhotra, Sr. Advocate with Mr. Dhaval Mehrotra, Ms. Aditi Desai and Mr. Nimish Kumar, Advocates appeared for Respondent No. 3/SEBI.
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