Case Note & Summary
The case pertains to an appeal filed by Shristi Infrastructure Development Corporation Limited, the Promoter of the Corporate Debtor (Sarga Udaipur Hotels & Resorts Private Limited), against an order dated 20.12.2024 passed by the National Company Law Tribunal (NCLT), Kolkata Bench. The NCLT had rejected I.A. No.693/KB/2024 filed by the Appellant seeking recall of the order dated 30.08.2023, which admitted the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Corporate Debtor had entered into a loan agreement with Housing and Urban Development Corporation Limited (HUDCO) for Rs.6907.92 Lakhs, and HUDCO had appointed a Nominee Director, Dr. Alok Kumar Joshi, on the Board. The CIRP was initiated on a petition filed by HUDCO. The Appellant, as Promoter, filed an application to recall the admission order, which was rejected by the NCLT. Aggrieved, the Appellant appealed to the National Company Law Appellate Tribunal (NCLAT). The NCLAT, after hearing the parties, dismissed the appeal, holding that the Adjudicating Authority had correctly rejected the recall application as the Appellant failed to establish any jurisdictional error or fraud in the admission order. The NCLAT noted that the Promoter had no locus standi to challenge the order after the CIRP had commenced and that the recall application was an abuse of process. The appeal was dismissed with no order as to costs.
Headnote
A) Insolvency Law - Recall of Admission Order - Section 7, Insolvency and Bankruptcy Code, 2016 - The appeal by the Promoter of the Corporate Debtor challenged the rejection of an application to recall the order admitting the Corporate Debtor into CIRP. The NCLAT held that the Adjudicating Authority rightly rejected the recall application as the Appellant failed to demonstrate any jurisdictional error or fraud in the admission order. The appeal was dismissed. (Paras 1-10) B) Insolvency Law - Locus Standi of Promoter - Section 7, Insolvency and Bankruptcy Code, 2016 - The Promoter, not being a party to the Section 7 petition, sought recall of the admission order. The NCLAT observed that the Promoter had no locus standi to challenge the order after the CIRP had commenced, and the application was an abuse of process. (Paras 5-8)
Issue of Consideration
Whether the Adjudicating Authority erred in rejecting the application filed by the Appellant (Promoter) for recall of the order dated 30.08.2023 admitting the Corporate Debtor into CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016.
Final Decision
The appeal is dismissed. The order dated 20.12.2024 passed by the Adjudicating Authority rejecting I.A. No.693/KB/2024 is upheld. No order as to costs.
Law Points
- Recall of order
- CIRP initiation
- Section 7 IBC
- Promoter's locus standi
- Limitation for recall
- Abuse of process
