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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2023 (5) TMI AT This

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2023 (5) TMI 900 - AT - Insolvency and Bankruptcy


Legal Judgment Summary

Issues Involved:
1. Necessity of issuing notice to creditors in a Section 10 Application.
2. Requirement to decide objections alleging fraudulent and malicious intent before admitting a Section 10 Application.
3. Applicability of moratorium on assets leased to the Corporate Applicant after lease termination.
4. Entitlement of lessors to claim possession and export aircrafts post-lease termination.

Issue 1: Notice to Creditors in Section 10 Application
The statutory scheme under the Insolvency and Bankruptcy Code (IBC) does not mandate issuing notice to creditors before admitting a Section 10 Application. The Tribunal noted that the Code and related rules do not require creditors to be heard at the pre-admission stage, and the Adjudicating Authority has discretion to decide on a case-to-case basis. The Tribunal concluded that the absence of notice or opportunity to creditors does not violate principles of natural justice, especially when objectors were heard.

Issue 2: Objections Alleging Fraudulent and Malicious Intent
The Tribunal emphasized that if objections alleging fraudulent and malicious intent are raised, the Adjudicating Authority can consider them even after admitting a Section 10 Application. The Tribunal cited precedents where it was held that Section 65 Applications (alleging fraudulent intent) can be decided post-admission. The Tribunal found no sufficient material before the Adjudicating Authority to conclude that the Section 10 Application was fraudulent or malicious. However, it granted liberty to the appellants to file a Section 65 Application with appropriate pleadings and materials.

Issue 3: Applicability of Moratorium on Leased Assets
The Tribunal did not decide on the applicability of the moratorium under Section 14(1)(d) on assets leased to the Corporate Applicant, as the issue was not considered by the Adjudicating Authority. The Tribunal granted liberty to the appellants and the Interim Resolution Professional (IRP) to make appropriate applications before the Adjudicating Authority under Section 60(5) of the Code for a decision on this matter.

Issue 4: Entitlement to Claim Possession and Export Aircrafts
The Tribunal deferred the decision on whether lessors are entitled to claim possession and export aircrafts post-lease termination, as this issue was also not considered by the Adjudicating Authority. The Tribunal granted liberty to the parties to make appropriate applications under Section 60(5) for the Adjudicating Authority to decide.

Conclusion:
1. The order admitting the Section 10 Application is upheld.
2. Appellants can file a Section 65 Application, and the Adjudicating Authority should consider it without being influenced by this order.
3. Appellants and IRP may apply to the Adjudicating Authority regarding the applicability of the moratorium on leased assets.
4. Appellants and IRP may also apply under Section 60(5) concerning possession and other claims related to the aircrafts.

Costs:
Parties shall bear their own costs.

 

 

 

 

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