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2023 (3) TMI 22 - AT - Insolvency and BankruptcyCIRP admitted - locus of shareholder of the Corporate Debtor in Section 7 application filed by the Financial Creditor - Fraudulent and malicious initiation of proceedings under Section 7 of the I & B Code, 2016 - Both the Appellants and the Respondents have alleged that they have become Shareholder / Financial Creditors respectively for a paltry sum of few crores and trying to grab the Corporate Debtor whose investment in form of shares in other companies have been valued more than Rs. 1000 crores - both the Appellants and the Respondents have alleged each other that they are acting on behalf of the Ex-Promoter Mr. Vijay Mallya is group companies and trying to take over the company at the behest of Ex-Promoter. Whether the Respondent No. 2 (Corporate Debtor) is a Non- Banking Financial Company (NBFC) having assets of more than Rs. 500 crores and therefore exempted from the Corporate Insolvency Resolution Process ordered by the Adjudicating Authority? - Appellants are related parties of the suspended management as claimed by the Respondents or not - Respondents are related parties of the suspended management of the Corporate Debtor or not. Whether the Adjudicating Authority committed an error in admitting the CIRP of the Corporate Debtor - Whether, the shareholder of the Corporate Debtor has any locus in Section 7 application filed by the Financial Creditor? - HELD THAT:- In the present case, undisputedly, the 1st Respondent became Financial Creditor since the assignment was created with all requisite formalities and the Corporate Debtor has not denied the financial transaction. In such case, the Adjudicating Authority is supposed to admit Section 7 Application - It is the case of Appellant that Section 7 Application was filed by the Financial Creditor in collusion with the Corporate Debtor. After reading Section 61(1) of the I & B Code, 2016, it becomes clear that any person aggrieved by the order of the Adjudicating Authority may prefer an appeal to National Company Law Appellate Tribunal. It infers that the Appellants even as shareholders cannot be aggrieved merely by the admission of the Corporate Debtor into Corporate Insolvency Resolution Process. Such objection may render the object of I & B Code, 2016 illusory since any shareholder of any Corporate Debtor against which Insolvency proceedings have been initiated can then seek to maintain a derivative action and sabotage a valid Corporate Insolvency Resolution Process initiated by the Adjudicating Authority - prima-facie there is no specific law which allows any shareholder of the Corporate Debtor to challenge the admission of Corporate Insolvency Resolution Process of the Corporate Debtor, once the debt due and default is established by the Adjudicating Authority, in an application made by the Financial Creditor filed under Section 7 of the I & B Code, 2016 before the Adjudicating Authority. Having considered all the averments made by the Appellants as well as the Respondents, including various Written Submissions made available to this Appellate Tribunal and after careful consideration of various judicial pronouncements of the Hon’ble Supreme Court of India as well as this Appellate Tribunal, comes to concrete conclusion without any hesitation that in the present Appeals, the Appellants do not have any Locus, and therefore the present Appeals, are not maintainable. This Appellate Tribunal, therefore, does not find any Error / Legal Infirmity, in the impugned order, on this issue. Appeal dismissed.
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