“Misconceived, Not Maintainable”: NCLAT Delhi Dismisses Appeal Filed By IBBI

Background Facts

Canara Bank (“Financial Creditor”) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the GTL Infrastructure Ltd. (“Corporate Debtor”), for the resolution of Rs. 646,38,06,271/- as on 01.07.2011.

The Adjudicating Authority dismissed the petition on 18.11.2022. It was observed that the Corporate Debtor is a viable going concern, as it has monthly revenues of Rs. 120 Crores (net of GST). Further, the Corporate Debtor repaid Rs. 16,915 Crores between 2011 to 2018, which depicts its reasonably healthy position to repay the debt. Reliance was placed on the Supreme Court judgment in Vidarbha Industries Power Limited Vs. Axis Bank Limited, and it was held that the Corporate Debtor’s current management and the overall financial health do not warrant its admission into CIRP.

The Financial Creditor filed two appeals before the NCLAT challenging the order of dismissal which are pending adjudication. The Insolvency and Bankruptcy Board of India (“IBBI”) which was not a party in the proceedings before NCLT, filed a third appeal before the NCLAT challenging the order dated 18.11.2022. The Corporate Debtor was impleaded as Respondent and the Financial Creditor has been made Performa Respondent.

IBBI argued that it is responsible for the enforcement of rules and regulations pertaining to corporate insolvency resolution. Therefore, it is imperative for IBBI to challenge the Order of dismissal as it is based upon an incorrect interpretation of Section 7 of IBC.

NCLAT Verdict

The Bench opined that the IBBI’s cause of concern behind filling of the appeal was not known, since the Financial Creditor had already filed two appeals for challenging the order of dismissal.

“However, from the perusal of the memorandum of appeal, we could not find the cause of concern much less the grievance of the Appellant for preferring the present appeal especially when the appeals have already been filed by the aggrieved person. In this regard, we may also refer to an order passed by this Tribunal in the case of Insolvency and Bankruptcy Board of India Vs. Wig Associates Pvt. Ltd. & Ors., 2018 SCC Online NCLAT 386, in which the Tribunal has 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.”

It was observed that the IBBI is not aggrieved by the Adjudicating Authority’s order and has nothing to do with the litigation between the Financial Creditor and Corporate Debtor.

“The appeal is thus totally misconceived and not maintainable and hence, the same is hereby dismissed. No costs.”

The Bench dismissed the appeal filed by IBBI for being misconceived and not maintainable.

Case Title: Insolvency & Bankruptcy Board of India v GTL Infrastructure & Ors.

Case No.: Company Appeal (AT) (Ins) No. 103 of 2023

Counsel For Appellant: Mr. Ashish Verma, Adv.

Counsel For Respondent: Mr. Ninad Laud, Mr. Atharv Gupta & Rashika Narain, Adv.

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