CIRP cannot be challenged other than the Creditors of the company :NCLAT

NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI Company Appeal(Insolvency) No. 6619 Arising out of Order dated 14th May 2019 passed by the Adjudicating AuthorityCuttack Bench Cuttack in TP No. 41 CTB 2019 CPNo. 352 KB 2018) IN THE MATTER OF: Srei Multiple Asset Investment Trust IDBI Bank Ltd. & Ors. ...Appellant ...Respondents For Appellant: Mr. Abhijeet Sinha Mr. Arijit Mazumdar Mr. Aditya Sukla Mr. Shambo Nandy Mr. Saikat Sarkar Mr. Devesh Ajmani and Ms. Akanksha Kaushik Advocates. For Respondents: Mr. Arun Kathpalia Senior Advocate with Ms. Misha Mr. Siddhant Kant Mr. Eklavya Dwivedi Ms. Bani Brar and Ms. Jasveen Kaur Advocates. J U D G M E N T SUDHANSU JYOTI MUKHOPADHAYA J. ‘IDBI Bank Limited’filed an application under Section 7 of the Insolvency and Bankruptcy Code 2016for initiation of the ‘Corporate Insolvency Resolution Process’ against ‘M s. Odisha Slurry Pipeline Infrastructure Limited’ alleging default in paying financial debt of Rs.471 59 37 171 Rupees Four Hundred Seventy One Crore Fifty Nine Lakh Thirty Seven 2 Thousand One Hundred and Seventy One only) which has been ‘M s. SREI Infrastructure Finance Limited’ filed an intervention petition to oppose the prayer. However it was not entertained by the Adjudicating Authority Cuttack Bench Cuttack. At that stage ‘M s. SREI Infrastructure Finance Limited’ moved before this Appellate Tribunal in Appeal No. 126 2019 wherein this Appellate Tribunal held that ‘M s. SREI Infrastructure Finance Limited’ has no right to intervene at the stage of admission. However allowed ‘M s. SREI Infrastructure Finance Limited’ to file written submissions not more than three pages before the Adjudicating Authority with direction to the Adjudicating Authority to consider the same. Before the Adjudicating Authority ‘M s. SREI Infrastructure Finance Limited’ opposed the application only on the ground that they also gave loan of Rs.136.50 Crore to the ‘Corporate Debtor’ on the basis of the Business Transfer Agreement. However such submission was not accepted by the Adjudicating Authority. Learned counsel for the Appellant contended that the claim of the ‘IDBI Bank Limited’ was considered by the ‘Resolution Professional’ in the ‘Corporate Insolvency Resolution Process’ which was initiated against ‘Essar Steel India Limited’ and was pending before the Adjudicating Company Appeal(Insolvency) No. 6619 3 Authority. Therefore according to learned counsel for the Appellant for the same claim amount the ‘IDBI Bank Limited’ cannot file application under Section 7 against ‘M s. Odisha Slurry Pipeline Infrastructure Limited’ (Insolvency) No. 6619 The Appellant has enclosed a copy of ‘Business Transfer Agreement’ between ‘Essar Steel India Limited’ and ‘Odisha Slurry Pipeline Infrastructure Limited’ dated 27th February 2015. From the said ‘Business Transfer Agreement’ it is clear that ‘Odisha Slurry Pipeline Infrastructure Limited’ was treated as integral part for functioning of ‘Essar Steel India Limited’. However the Agreement shows that the two entities i.e. ‘Essar Steel India Limited’ and ‘Odisha Slurry Pipeline Infrastructure Limited’ remained separate entities under the Companies Act therefore separate application under Section 7 was maintainable against ‘Odisha Slurry Pipeline Infrastructure Limited’ has been shown. The Adjudicating Authority has also noticed that the loan was taken by the ‘Corporate Debtor’ was not refunded and the ‘Corporate Debtor’ defaulted to pay the debt which is not in dispute. 11. The ‘Loan Agreement’ dated 24th September 2015 which was reached between ‘Odisha Slurry Pipeline Infrastructure Limited’ ‘Corporate Debtor’) and ‘IDBI Bank Limited’ also show that a sum of Rs. 400 Crores was borrowed by the ‘Corporate Debtor’ from ‘Financial Company Appeal(Insolvency) No. 6619 5 Creditor’. The terms of repayment have been shown therein. Admittedly the ‘Corporate Debtor’ has failed to pay the debt. 12. This apart curiously the Promoters Directors of the ‘Odisha Slurry Pipeline Infrastructure Limited’ who are aggrieved parties have not preferred any appeal under Section 61 of the ‘I&B Code’. One of the ‘Financial Creditors’ namely— ‘SREI Multiple Asset Investment Trust’ has challenged the order of admission under Section 7 who cannot be held to be an aggrieved person. 13. As no case has been made out by the Appellant the appeal is dismissed. No costs. Chairperson NEW DELHI 25th September 2019 Company Appeal(Insolvency) No. 6619 Justice A.I.S. Cheema) Member(Technical) 

Summary: Financial creditors of a corporate debtor would not come under the definition of aggrieved person so as to enable them to challenge an application of admission of Corporate Insolvency Resolution Process. The judgement passed by the NCLAT New Delhi (principle bench), in its decision in   Srei Multiple Asset Investment Trust vs. IDBI Bank Ltd. &amp; Ors. (Company Appeal (AT) (Insolvency) No. 666 of 2019)   by Hon’ble Shri  Justice S.J. Mukhopadhaya The facts of the case were such that – Financial Creditor/IDBI Bank Limited had filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016  for initiation of the ‘Corporate Insolvency Resolution Process against ‘M/s. Odisha Slurry Pipeline Infrastructure Ltd./Corporate Debtor alleging a default in paying the financial debt. M/s. SREI Infrastructure Finance Limited documented a mediation appeal to go against the supplication. Nonetheless, it was not engaged by the Adjudicating Authority (NCLT). Ld. counsel for the Appellant fought that the case of the Financial Creditor was considered by the ‘Goal Professional’ in the ‘CIRP’ which was started against ‘Essar Steel India Limited’ and was forthcoming before the Adjudicating Authority. In this way, as per learned direction for the Appellant, for a similar case sum, the Financial Creditor can’t record an application under Section 7 against Corporate Debtor. Adjudicating Authority dismissed such accommodation without any record on the side of such request as was taken by ‘M/s. SREI Infrastructure Finance Limited’ (not the current Appellant). The Adjudicating Authority conceded the application under Section 7 by reviled request dated fourteenth May 2019 which is under challenge. Appellant has accepted a comparative supplication as was taken by ‘M/s. SREI Infrastructure Finance Limited’ before the Adjudicating Authority. In any case, as we find that ‘IDBI Bank Limited’ had likewise conceded credit to the Corporate Debtor, we hold that the application under Section 7 recorded by the ‘IDBI Bank Limited’ has been properly conceded. Comparable supplication was taken by the ‘Corporate Debtor’ that the ‘IDBI Bank’ had recorded its case before the ‘Goal Professional’ of ‘Essar Steel India Limited. Notwithstanding, from the record and the judgment passed in ‘Essar Steel India Limited’, we track down that no such case was made by ‘IDBI Bank Limited’ in regard to the case sum as demonstrated against Corporate Debtor. The application under Section 7 has likewise been encased by the Appellant, wherein the subtleties of the advance taken by the Corporate Debtor have appeared. The Adjudicating Authority has additionally seen that the advance was taken by the ‘Corporate Debtor was not discounted and the ‘Corporate Debtor’ defaulted to pay the obligation, which isn’t in question.