NCLAT Nullifies AA’s Order for Incomplete Addressing of Objections in CIRP Admission, Finding it Cryptic & Unsustainable

Case Details: Rupesh Anand v. Anup Tripathi - [2023] 151 taxmann.com 128 (NCLAT-Chennai)

Judiciary and Counsel Details

• • Justice M. Venugopal, Judicial Member & Naresh Salecha, Technical Member
  • Ricab Chand, Adv. for the Appellant.
  • Piyush Singh, Adv. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor initiated a real estate project for the construction of flats. The financial creditors i.e. respondents applied for some flats in the said project and entered into a construction agreement with the corporate debtor.

Since, the corporate debtor could not deliver possession of the flats, the respondents demanded a refund of the entire principal amount along with interest but the corporate debtor failed to return the same.

Then, the respondents filed an application u/s 7 of the IBC against the corporate debtor and the same was admitted by the Adjudicating Authority (NCLT) vide the impugned order. Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The appellant i.e. suspended director of the corporate debtor contended that the NCLT in the impugned order, noted part of the objections filed by the corporate debtor however, it did not consider the said objections and came to the conclusion that the said application was complete.

The NCLAT observed that section 7 requires that an application should be complete in all respects and in case of defects, the NCLT should provide an opportunity to the applicant for rectifying those defects before accepting or rejecting it.

NCLAT Held

The NCLAT held that since, in the instant case, the NCLT had recorded objections of the appellant regarding defects in the application, however in the finding, had not discussed those issues, such findings were cryptic, bereft of any qualitative or quantitative discussion and the same were unsustainable. Therefore, the impugned order was to be set aside to secure the ends of justice.

List of Cases Reviewed

• • Anup Tripathi v. Nandhini Hotels (P.) Ltd. [2023] 151 taxmann.com 127 (NCLT – Beng.) (para 24) reversed [See Annex].
  • Surendra Trading Co. v. Juggilal Kamlapat Jute Mills. Co. Ltd. [2017] 85 taxmann.com 372/144 SCL 198 (SC) (para 24) followed.

List of Cases Referred to

• • Manish Kumar v. Union of India [2021] 123 taxmann.com 343 (SC) (para 18)
  • A.K.K. Nambiar v. Union of India [1969] 3 SCC 864 (para 24)
  • Surendra Trading Co. v. Juggilal Kamlapat Jute Mills. Co. Ltd. [2017] 85 taxmann.com 372/144 SCL 198 (SC) (para 24)
  • Ravi Yashwant Bhoir v. District Collector [2012] 4 SCC 407 (para 24).