Case Note & Summary
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, delivered a judgment in Company Appeal (AT) (CH) (Ins) No.47/2025, arising from an order of the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench) in IA No.165/2025 in CP(IB) No.601/10/HDB/2018. The appeal was filed by Mr. K.S. Chowdry against the order dated 07.01.2025, which dismissed his application seeking intervention in the CIRP proceedings of the Corporate Debtor, M/s. Ravi Cranes and Movers Limited. The Corporate Debtor was a corporate guarantor for M/s. RCM Infrastructure Limited (principal borrower). The CIRP of the principal borrower was initiated on 03.01.2019, and liquidation was ordered on 07.02.2022, which was later stayed and set aside by NCLAT on 22.11.2024, with a direction to extend CIRP by 30 days. Meanwhile, the CIRP of the Corporate Debtor (guarantor) had reached the stage of Section 33(2) of the Insolvency and Bankruptcy Code, 2016, and the Resolution Professional had filed an application for liquidation. The appellant, claiming to be a director of the principal borrower, filed an intervention application to stall the liquidation. The Adjudicating Authority dismissed the intervention application, leading to the appeal. The NCLAT framed the issue whether pendency of an intervention application can impede the liquidation proceeding under Section 33(2). The appellant argued that the liquidation of the guarantor should await the outcome of the principal borrower's CIRP. The respondent, the Liquidator, contended that the intervention application was a delaying tactic. The NCLAT held that the pendency of an intervention application does not create any impediment for the liquidation proceeding under Section 33(2), as liquidation is a statutory consequence of the failure of CIRP. The appeal was dismissed, and the order of the Adjudicating Authority was upheld.
Headnote
A) Insolvency and Bankruptcy Code - Liquidation - Section 33(2) - Impediment by Intervention Application - The issue was whether pendency of an interlocutory application seeking intervention in CIRP proceedings can impede the filing of a liquidation application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The court held that the pendency of an intervention application does not create any impediment for the proceeding under Section 33(2) as liquidation is a statutory consequence of failure of CIRP. (Paras 1-10) B) Insolvency and Bankruptcy Code - Corporate Guarantor - Liquidation - Section 33(2) - The Corporate Debtor was a corporate guarantor for the principal borrower. The court noted that the CIRP of the principal borrower had been extended and the liquidation of the corporate guarantor could not be stalled by an intervention application. (Paras 2-10)
Issue of Consideration
When the proceedings of CIRP have reached the stage of Section 33(2) of the I & B Code, 2016, whether at all a pendency of an Interlocutory Application, seeking to be permitted to intervene in the proceedings, could create an impediment for the proceeding filed under Section 33(2) of the I & B Code, 2016.
Final Decision
The appeal is dismissed. The order of the Adjudicating Authority dated 07.01.2025 dismissing IA No.165/2025 is upheld. The pendency of the intervention application does not create any impediment for the proceeding under Section 33(2) of the I & B Code, 2016.
Law Points
- Liquidation under Section 33(2) of IBC
- 2016 is a statutory consequence of failure of CIRP
- pendency of an interlocutory application for intervention does not create an impediment to liquidation proceedings
- intervention application cannot be used to stall liquidation
