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Chharia Holdings Pvt. Ltd. Versus Brys International Pvt. Ltd. & Ors.

2017 (10) TMI 569 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Corporate Insolvency Resolution Process - Whether it is mandatory for a 'Financial Creditor' to propose the name of 'Interim Resolution Professional' in an application under section 7 of the 'I&B Code'? - Held that:- While we uphold the decision of the Adjudicating Authority that proposal of name of 'Interim Resolution Professional' in terms of clause (b) of sub-section (3) of Section 7 is mandatory, but in the facts and circumstances of the case, as the name of 'Interim Resolution Professiona .....

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receipt of such notice. - Company Appeal (AT) (Insol.) No. 126 of 2017 - Dated:- 30-8-2017 - Mr. S.J. Mukhopadhaya And Mr. Balvinder Singh, JJ. For The Appellant : Mr. Pawan Sharma and Ms. Arpita Yadav, Advocates ORDER The appellant who claimed to be 'Financial Creditor' filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I & B Code ) for initiation of 'Corporate Insolvency Resolution Process' against the Respondents-A .....

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dation of an Insolvency professional, in the case of an operational creditor, there is no such provision in the case of a financial creditor. The instant application has been filed under section 7 of IBC as a financial creditor. The applicant financial creditor has not proposed the name of any insolvency professional and thus, has not fulfilled the requirement as in sub-section 3 (b) of section 7 of the Code, which reads as follows: - 'The financial creditor shall, along with the application .....

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ame of the 'Interim Resolution Professional' and referred to Part-Ill of the application filed under section 7 in format to suggest that name of one Mr. Vivek Raheja, R/o CU-49, Pitampura, Delhi- 110088 with e-mail address vivekvpgs.in and Registration No. IBBI / IPA-0 1 / IP-00006 / 2016-17 along with consent letter of the 'Interim Resolution Professional' in Annexure A-4 attached thereto. It is also submitted that non-furnishing the name of proposed 'Interim Resolution Prof .....

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valid? 4. Before deciding the first two questions, it is desirable to notice the relevant facts as pleaded by the parties. 5. Appellant has pleaded and not disputed by respondents that the appellant preferred an application under section 7 in Form-1 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. In the said Form-1, the appellant has proposed the name of 'Interim Resolution Professional', as apparent from the record and noticed in the preceding parag .....

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tice the relevant provisions. 7. As per clause (b) of Sub-section (3) of Section 7 the 'Financial Creditor' required to furnish name of the resolution professional proposed to act as an 'Interim Resolution Professional', the relevant portion of which reads as follows: - 7. Initiation of corporate insolvency resolution process by financial creditor. - (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporat .....

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he financial creditor shall, along with the application furnish- (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of .....

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days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under subsection (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fe .....

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yment of an unpaid operational debt by the corporate debtor; and (d) such other information as may be specified. (4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional. xxx xxx xxx 9. From the aforesaid provision, it is clear that the 'Operational Creditor' may provide the name of an 'Interim Resolution Professional' and in a particular case, the 'O .....

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an application for initiating corporate insolvency resolution process with the Adjudicating Authority. (2) The application under sub-section (1) shall be filed in such form, containing such particulars and in such manner and accompanied with such fee as may be prescribed. (3) The corporate applicant shall, along with the application furnish the information relating to- (a) its books of account and such other documents relating to such period as may be specified; and (b) the resolution professio .....

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e Adjudicating Authority. xxx xxx xxx 11. On bare reading of the provisions aforesaid, it is clear that subsection (3)(b) of Section 7 and sub-section (3)(b) of Section 10, are mandatory and the 'Financial Creditor' and the 'Corporate Applicant' are required to furnish the name of 'Interim Resolution Professional', failing which application being defective may be rejected. 12. On the other hand on bare perusal of sub-section (4) of Section 9, it is clear that for the ' .....

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ional. -(1) The Adjudicating Authority shall appoint an interim resolution professional within fourteen days from the insolvency commencement date. (2) Where the application for corporate insolvency resolution process is made by a financial creditor or the corporate debtor, as the case may be, the resolution professional, as proposed respectively in the application under section 7 or section 10, shall be appointed as the interim resolution professional, if no disciplinary proceedings are pending .....

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e appointed as the interim resolution professional, if no disciplinary proceedings are pending against him. (4) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (3), recommend the name of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending. (5) The term of the interim resolution professional shall not exceed thirty days from date of his appointment. 14. From sub-section (2) o .....

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ational Creditor' as per subsection (4) of Section 9, then only such person is to be appointed, if no disciplinary proceedings are pending, on the other hand, if no name of 'Interim Resolution Professional' is proposed by an 'Operational Creditor', the Adjudicating Authority is required to make reference to the Board for recommendation of an 'Interim Resolution Professional' under subsection (1) read with sub-section 3(a) of Section 16 who may act as an 'Insolvenc .....

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