Deegee Cotsyn Pvt. Ltd vs Phoenix Arc Pvt. Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) (Insolvency) No. 480 of 2019 IN THE MATTER OF: Deegee Cotsyn Pvt. Ltd. .....Appellant Vs. Phoenix ARC Pvt. Ltd. ......Respondent Present : For Respondents: Mr. Suresh Dutt Dobhal, Ms. Sonakshi Dhiman, Advocates

03.05.2019 - The Respondent Phoenix ARC Pvt. Ltd. has filed an application

against Deegee Cotsyn Pvt. Ltd. ('Corporate Debtor'). The same having been

admitted by order dated 26th February, 2019 by the Adjudicating Authority

(National Company Law Tribunal), Mumbai Bench, Mumbai, the appeal has been

preferred by 'Corporate Debtor'.

Learned counsel for Appellant submits that the Respondent is an assign

in terms of the provisions of SARFAESI Act, 2002. They have also taken steps

under SARFAESI Act, 2002. However, we are not inclined to entertain this

appeal on the following grounds:-

(i) The appeal is not maintainable at the instance of

'Corporate Debtor' in terms of the decision of Hon'ble

(ii) Supreme Court in "Innoventive Industries Ltd. Vs.

ICICI Bank (2018) 1 SCC 407] - ....contd.

"11. Having heard the learned counsel for both the

parties, we find substance in the plea taken by Shri

Salve that the present appeal at the behest of the

erstwhile Directors of the appellant is not

maintainable. Dr Singhvi stated that this is a

technical point and he could move an application to

amend the cause-title stating that the erstwhile

Directors do not represent the Company, but are

filing the appeal as persons aggrieved by the

impugned order as their management right of the

Company has been taken away and as they are

otherwise affected as shareholders of the Company.

According to us, once an insolvency professional is

appointed to manage the Company, the erstwhile

Directors who are no longer in management,

obviously cannot maintain an appeal on behalf of

the Company. In the present case, the Company is

the sole appellant. This being the case, the present

appeal is obviously not maintainable. However, we

are not inclined to dismiss the appeal on this score

alone. Having heard both the learned counsel at

some length, and because this is the very first

Company Appeal (AT) (Insolvency) No. 480 of 2019 application that has been moved under the Code, we

thought it necessary to deliver a detailed judgment

so that all courts and tribunals may take notice of a

paradigm shift in the law. Entrenched

managements are no longer allowed to continue in

management if they cannot pay their debts;

(iii) A person may be assignee under the SARFAESI Act,

2002. On that ground the application u/s 7 cannot

be rejected; and

(iv) The action, if any, taken under SARFAESI Act, 2002

will not proceed in view of the order passed, in view

of provisions of Moratorium passed under I&B Code.

For the aforesaid reasons, we dismiss the appeal. No costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice A. I. S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

ss/gc

Company Appeal (AT) (Insolvency) No. 480 of 2019