Corporate debtor can’t be allowed to alter financial status while application was pending u/s 10

Case details: Prithivraj Spinning Mill (P.) Ltd. v. Indian Overseas Bank, Coimbatore - [2021] 129 taxmann.com 384 (NCLT- Chennai )

Judiciary and Counsel Details

• • R. Sucharitha, Judicial Member and B. Anil Kumar, Technical Member
  • A.S. Sathish Kumar PCS for the Appellant.
  • PCS, for the Appellant.

Facts of the Case

In the given case, the Applicant/corporate debtor filed an application under section 10 of the code to initiate Corporate Insolvency Resolution Process (CIRP) in relation to it. However, the pending said application applicant filed an interim application stating that name of the applicant had been changed and the Ministry of Corporate Affairs had approved a change of name by issuing a fresh certificate of incorporation.

In the said application, it was prayed to amend Form-VI which was filed by the applicant to give the effect of change of name and change of registered office. However, the application was not accompanied by amended Form-VI which is mandatory, and an amended copy of Form-VI was not filed to date.

In addition, the change in name of the corporate debtor and its registered office address, pending disposal of section 10 application by the applicant would lead to an irresistible conclusion that the application had been filed by Applicant Company with a malicious intention to defraud creditors.

NCLT Held

Since creditors would not be able to identify Applicant Company in its new avatar once the public announcement had been made in newspapers. The name of the company as mentioned in the application was not in existence on a date, hence, the Adjudicating Authority could not pass an order of CIRP, and thus, an instant application was to be dismissed.

List of Cases Referred to

• • Marappan v. IOB [Company Appeal (AT) (Insolvency) No.1030-1031 of 2020, dated 3-12-2020] (para 13).