The Adjudicating Authority/National Company Law Tribunal (NCLT) is statutorily bound to pass an order of admission or rejection in an insolvency plea within 14 days of its filing, the National Company Law Appellate Tribunal (NCLAT) has ruled, stating that no final hearing was postulated at pre-admission stage.
A Three-member bench of Justice Bansi Lal Bhat, Acting Chairperson; Dr. Ashok Kumar Mishra, Member (Technical) and Dr. Alok Srivastava, Member (Technical) passed the order.
The issue raised was with respect to the postponement of order on admission in the application filed by appellant under Section 7 of the Insolvency & Bankruptcy Code (IBC) before the Kolkata Bench of NCLT.
According to the appellant, the NCLT overlooked the mandate of section 7(4) IBC by granting umpteen opportunities to the Respondent/Corporate Debtor to file its response.
The NCLAT was informed that the application under Section 7 was filed in December 2019 and it has now fixed for the matter “for final hearing” on February 18.
The NCLAT opined that fixing of the matter before NCLT for final hearing was on "a wrong premise" as no final hearing was postulated at the pre-admission stage.
It stated that at the pre-admission stage, hearing with limited notice to the Corporate Debtor was provided to only derive satisfaction in regard to the existence of debt, the occurrence of default and completeness of the application.
"It appears that the matter is now fixed for 18th February 2021 “for final hearing” which appears to be based on a wrong premise as pre-admission hearing with limited notice to the Corporate Debtor is only to derive satisfaction in regard to the existence of debt, occurrence of default and completeness of the application. On being satisfied, the Adjudicating Authority is required to pass an order of admission. Therefore, it can safely be stated that no final hearing was postulated at pre-admission stage," the order said.
Expecting the NCLT/Adjudicating Authority to address the issue at the pre-admission stage and pass an order without granting any adjournment, the NCLAT remarked,
"The Adjudicating Authority will be well advised to be alive to the phraseology/ terminology to be employed at different stages of the CIRP proceedings and not give impression of a final hearing at the pre-admission stage."
The appeal was accordingly disposed of.
Advocates Raghav Chadha, Abhimanyu Chopra, Parag Maini appeared for the Appellant.