2021 (4) TMI 223 - AT - Insolvency and Bankruptcy

Sanction of scheme of Merger and amalgamation - Seeking direction of the Tribunal for convening and holding separate meetings of certain class of creditors of the Company - whether the Tribunal while exercising the jurisdiction under Section 230 of the Act can pass directions against the RBI? - Applicability of 07th Jun 2019 circular of RBI - HELD THAT - At this stage if we express any opinion in regard to the submissions of Ld. Counsels for the parties it will affect the merits of the Appeal. However we are of the view that if the operation of the aforesaid direction is stayed it will not prejudice to the proceedings pending before the Tribunal. Therefore we deem it appropriate to pass ad-interim order. In Para 34 of the impugned order following direction is stayed till pendency of this Appeal - all governmental or regulatory authorities shall be estopped from taking any coercive steps including reporting in any form and/or changing the account status of the Company Application allowed.

Summary

Issues:
1. Condonation of delay in filing an appeal.
2. Application for ad-interim stay against a direction issued by the Tribunal.

Condonation of Delay:
The Appellant filed an Application for condonation of delay and an Application for ad-interim stay under Rule 11 of NCLAT Rules, 2016. The Appellant contended that due to the Covid-19 Pandemic, the prescribed period of limitation was extended by the Supreme Court, making the Appeal within limitation. The Appellate Tribunal, under Section 421(3) of the Act, can condone a delay of up to 45 days if satisfied with sufficient cause. The Respondent opposed, citing a Supreme Court judgment that only extended the period of limitation, not the period for condoning delay. The Tribunal examined the issue of Limitation and found the Appeal within limitation due to the extended period granted by the Supreme Court.

Ad-interim Stay Application:
The Respondent, a financial institution, sought direction from the Tribunal for creditor meetings under Section 230 of the Act. The Tribunal issued a direction preventing regulatory authorities from taking coercive steps against the Company. The Appellant, a statutory body, challenged this direction, claiming it impeded its regulatory functions under the Banking Regulations Act, 1949. The Appellant argued that the Tribunal exceeded its jurisdiction and violated RBI's master circular on prudential norms. The Appellant referred to past judgments supporting its stance. The Respondent contended that the circular did not apply to the parties involved and that the direction was not prejudicial. The Tribunal stayed the direction to prevent prejudice during the Appeal, considering it appropriate to pass an ad-interim order.

By analyzing the issues of condonation of delay and the ad-interim stay application, the Tribunal addressed the concerns raised by both parties and made decisions based on legal provisions and past judgments. The Appellant's delay in filing the Appeal was condoned, considering the extended limitation period due to the pandemic. The Tribunal also granted an ad-interim stay on the direction preventing regulatory authorities from taking coercive steps, ensuring fairness and preventing prejudice during the ongoing proceedings.