Damji Ramji Shah vs Edelweiss Asset Reconstruction ...
- CitationCompany Appeal (AT) (Insolvency) No.402 of 2023
Ratio decidendi
The rule this decision rests on
An assignee of a financial debt, where the trust deed under which it holds the financial assets expressly empowers it to take all actions necessary to realise those assets, including initiating legal proceedings, has the authority to file an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, in respect of the assigned debt. Where debt and default are proved in a Section 7 application, the initiation of that application is not vitiated by any defect in the applicant's authority or jurisdiction to file it, provided the applicant holds the debt by valid assignment. A corporate debtor's pending or proposed settlement with the financial creditor does not bar the Adjudicating Authority from admitting or continuing a Section 7 application; the remedy is for the corporate debtor to file an application under Section 12A, which the Adjudicating Authority is to decide in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.402 of 2023 IN THE MATTER OF: Damji Ramji Shah ...Appellant Versus Edelweiss Asset Reconstruction Company Ltd. & Anr. ...Respondents Present: For Appellant: Mr. Pradeep Rai, Sr. Advocate, Mr. Krishnendu Datta, Sr. Advocate, Mr. Kumar Anurag Singh, Mr. Shwetank Singh, Mr. amarendra Kumar and Mr. Zain A. Khan, Advocates. For Respondents: Mr. Kartik Nagarkatti, Advocate for R-1.
ORDER
10.04.2023: Heard Learned Counsel for the Appellant.
This appeal has been filed against the order dated 17.03.2023 by which
order Adjudicating Authority has admitted Section 7 application filed by the
Respondent No. 1 'Edelweiss Asset Reconstruction Company Ltd'.
3. Learned Counsel for the Appellant submits that the Applicant who has
initiated Section 7 application has no authority or jurisdiction to initiate Section
7 application.
4. The Adjudicating Authority by the impugned order has considered all the
submissions raised and had found that 'debt and default' proved.
5. Learned Counsel for the Respondent has referred to the Trust Deed dated
25.03.2019 wherein Clause (l), the following was clearly stated: -
Company Appeal (AT) (Insolvency) No.402 of 2023 1 "(l) to take all actions that may be
necessary to realise the Financial Assets that
form part of the Trust Fund, including
initiating legal proceedings, enforcing any
Security Interest, changing the management
of any Borrower and exercising any other
rights that it may be entitled to whether under
law, contract or otherwise."
6. Debt and default having been proved in Section 7 application, we don't
find any error in the initiation of Section 7 application. The Applicant being
an assignee had every right to initiate the Section 7 application.
7. Learned Counsel for the Appellant lastly submits that steps are being
taken for settlement with the Financial Creditor. In the event, if the settlement
is arrived at, it is always open for the Appellant to file Section 12A application
which may be decided by the Adjudicating Authority in accordance with law.
With these observations, we dismiss the appeal.
[Justice Ashok Bhushan] Chairperson
[Mr. Barun Mitra] Member (Technical)
ss/nn
Company Appeal (AT) (Insolvency) No.402 of 2023 2
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