Shadab Khan vs Nisus Finance And Investment Manager & ...

Shabad Khan ....Appellant

Versus

M/s. Nisus Finance and Investment Manager & Ors. .....Respondents

Present:

For Appellant: Mr. Ramji Srinivasan, Senior Advocate with Dr. Farrukh Khan, Mr. Changez Khan, Mr. Azam Khan, Ms. Shantala Sankrit, Mr. Shikhar Singh and Mr. Ateendra Saumya Singh, Advocates.

For Respondents: Mr. Abhijeet Sinha, Mr. Shikhil Suri, Ms. Shilpa Saini and Ms. Nikita Thapar, Advocates for R-1 & 2.

Mr. Krishnendu Datta, Ms. Shweta Saini, Advocates with Mr. Jitender Arora, IRP for R-3.

Mr. Ritesh Agrawal and Mr. Teejas Bhatia, Advocates for Intervenor.

Mr. Amit Chaubey and Mr. Anubhav Anand Pandey, Advocates for Intervenor. 2

BANSI LAL BHAT, J.

Joint application of Respondent Nos. 1 & 2 ('Financial Creditors')

under Section 7 of the Insolvency and Bankruptcy Code, 2016

(hereinafter referred to as "I&B Code") seeking initiation of 'Corporate

Insolvency Resolution Process' against Respondent No.3- 'M/s.

Earthcon Universal Infratech Pvt. Ltd.' ('Corporate Debtor') came to be

admitted at the hands of the Adjudicating Authority (National Company

Law Tribunal), Division Bench, Delhi, Bench-III, in terms of the

impugned order dated 8th January, 2020 with consequential orders in

the nature of slapping of Moratorium on the assets of the 'Corporate

Debtor' and appointment of 'Interim Resolution Professional'. Appellant,

shareholder of the 'Corporate Debtor' has assailed the impugned order

of admission through the medium of instant appeal on several grounds

which shall be adverted to as the narration proceeds.

2. The genesis of issues raised in this appeal may be traced to

Debenture Trust Deed ("DTD" for short) dated 13th June, 2017 entered

among 'Earthcon Infracon Pvt. Ltd.' (the issuer/ mortgager), 'Beacon

Trusteeship Limited' (Trustee/ Respondent No.2), 'Earthcon

Constructions Pvt. Ltd.' (Obligor-1), 'Mr. Shadab Khan' (Obligor-2/

Personal Guarantor-1), 'Earthcon Universal Infratech Pvt. Ltd.' (Obligor-

3/ 'Corporate Debtor'), 'Mr. Susheel Kumar Sharma' (Obligor-4/

Company Appeal (AT) (Insolvency) No. 82 of 2020 3

Personal Guarantor-2), 'Mr. Pramod Choudhary' (Obligor-5/ Personal

Guarantor-3) and 'Nisus Finance and Investment Management LLP'

(Facility Agent/ 'Financial Creditor') and subsequently amended on 20th

December, 2017 and 24th December, 2018. The 'Corporate Debtor'

executed the necessary documents in favour of the Debenture Trustee

individually as also along with the issuer company and other Obligors

which include 'Deed of Corporate Guarantee', 'Deed of Hypothecation'

and 'Mortgage Deeds' etc. The 'Financial Creditors' disbursed first

tranche of payment of Rs.13.15 Crores from 30th June, 2017 to 6th

September, 2017 which was followed by allotment of debentures to the

'Financial Creditors' by the issuer company on 19th July, 2017. 1st

'Financial Creditor' sent letter dated 2nd April, 2019 to the issuer

company intimating about default in respect of instalment amounting to

Rs.13,12,50,000/- for the Non-Convertible Debentures (NCDs) issued

which was payable on 31st March, 2019. This was followed by exchange

of several letters between the 'Financial Creditors' and issuer company.

Further action was taken on the part of 'Financial Creditors' vide letters

dated 24th April, 2019 and 6th May, 2019. However, the issuer company,

in its reply dated 14th May, 2019, sought extension of time on the

ground that the default has occurred due to economic conditions only.

The 'Financial Creditors' also marked the copies of letters/ demand

notices to the 'Corporate Debtor' and other Obligors who issued cheques

in favour of the Debenture Trustee. However, the cheques bounced and

were dishonoured with remark 'Funds Insufficient'. The Corporate

Company Appeal (AT) (Insolvency) No. 82 of 2020 4

Debtor, in its reply raised several pleas before the Adjudicating

Authority. It was pleaded that there was delay in disbursement of funds

on the part of 'Financial Creditors' severely impacting cash flow

management and entailing the consequence of irreparable loss to the

'Corporate Debtor'. It was further pleaded that 1st 'Financial Creditor'

and the 'Corporate Debtor' orally agreed to induct Mr. Amit Goenka as

Nominee Director of the 'Corporate Debtor' and the 1st 'Financial

Creditors' had agreed to infuse funds in the Company's project for early

completion. It was pleaded that Mr. Amit Goenka had furnished a

purported sanction letter but 1st 'Financial Creditor' failed to perform its

part. The 'Corporate Debtor' further pleaded that its liability was only

limited to collateral in the form of 200 units/ flats owned by the issuer

company which albeit developed by the 'Corporate Debtor'. The

'Corporate Debtor' further pleaded that it had invoked the arbitration

clause in pursuance to the clause 51 of the Debenture Trust Deed and

a notice in this regard was sent to 'Financial Creditors' on 24th June,

2019. The 'Corporate Debtor' also questioned the status of 'Financial

Creditors' pleading that they are not covered under the definition of

'Financial Creditors' besides failing to establish existence of debt. It was

lastly pleaded that alternate remedy was available to 'Financial

Creditors' under other statutes.

3. The Adjudicating Authority overruled the objection of the

'Corporate Debtor' in regard to redemption of debentures by observing

Company Appeal (AT) (Insolvency) No. 82 of 2020 5

that while in fact the 'Corporate Debtor' had sought time for repayment,

it had changed its stand by questioning the very status of the 'Financial

Creditors'. It also noticed that in terms of the amended Debenture Trust

Deed, the issuer company and the 'Corporate Debtor' were under legal

obligation to repay the 1st instalment by 31st March, 2019. As regards

liability of 'Corporate Debtor', it observed that the 'Corporate Debtor'

had never offered the possession of 200 units/ flats to the 'Financial

Creditors' though it had contended that its liability was limited only to

the extent of 200 units/ flats. On consideration of Debenture Trust

Deed in its amended form, the Adjudicating Authority was of the view

that in the event of failure of the issuer company to comply with the

conditions of the aforesaid Deed and the Terms Sheet(s), the 'Corporate

Debtor' is under legal obligation to make payment to the 'Financial

Creditors'. Dealing with the plea of 'Corporate Debtor' that the

'Financial Creditors' have already initiated 'Corporate Insolvency

Resolution Process' against the issuer company i.e. 'Earthcon Infracon

Pvt. Ltd.' in regard to the same claim, it found that the 'Corporate

Insolvency Resolution Process' initiated by 'Financial Creditors' against

the issuer company had been stayed by the Hon'ble Apex Court on 30th

September, 2019 and in view of the same, there was no legal bar to

initiate 'Corporate Insolvency Resolution Process' against the 'Corporate

Debtor' who is an Obligor in terms of the aforesaid Debenture Trust

Deed. All contentions raised on behalf of the 'Corporate Debtor' were

Company Appeal (AT) (Insolvency) No. 82 of 2020 6

accordingly repelled culminating in passing of the impugned order of

admission of application under Section 7 of the 'I&B Code'.

4. It is contended by the Appellant that the 'Financial Creditors'

have granted financial facility of Rs.52,50,00,000/- to 'Earthcon

Infracon Private Limited' (EIPL) who is the 'principal borrower'

undergoing Corporate Insolvency Resolution Process in terms of the

order dated 23rd August, 2019 passed by the Adjudicating Authority in

Company Petition No. IB-1601/ND/2019 titled 'M/s. Emperos

Infrastructure Pvt. Ltd. v. M/s. Earthcon Infracon Pvt. Ltd'. It is

further contended that subsequently 'Committee of Creditors' was

constituted and Respondent No.2 - 'Beacon Trusteeship Limited' has

filed its claim of Rs.60,90,62,274/- before the 'Interim Resolution

Professional' and by virtue of the said claim, Respondent No.2 has

become sole 'Financial Creditor' in the Committee of Creditors of EIPL.

It is further submitted that Respondent No.2 preferred an appeal before

this Appellate Tribunal against order of admission of Company Petition

No. IB-1601/ND/2019. The said appeal came to be dismissed vide order

dated 6th September, 2019. Subsequently, Respondents- 'Financial

Creditors' preferred an appeal before the Hon'ble Apex Court which set

aside the order passed by this Appellate Tribunal and directed the

'Financial Creditors' to approach the Adjudicating Authority regarding

any apprehension of collusion between the parties in Company Petition

No. IB-1601/ND/2019. However, the Hon'ble Apex Court did not set

Company Appeal (AT) (Insolvency) No. 82 of 2020 7

aside order dated 23rd August, 2019 passed by the Adjudicating

Authority. It is further submitted that since the order of the

Adjudicating Authority admitting EIPL to 'Corporate Insolvency

Resolution Process' has not been set aside and the 'Financial Creditors'

have been granted four weeks' time from the date of order dated 18th

February, 2020, the 'Financial Creditors' could not trigger 'Corporate

Insolvency Resolution Process' against the 'Corporate Debtor' for the

same and identical claims. Reliance has been placed on the judgment of

this Appellate Tribunal rendered in "Dr. Vishnu Kumar Agarwal v.

M/s. Piramal Enterprises Ltd.- Company Appeal (AT) (Insolvency)

No. 346 of 2018" decided on 8th January, 2019. It is, therefore,

contended that the case of the Appellant is squarely covered by the ratio

of this Appellate Tribunal in "Dr. Vishnu Kumar Agarwal" (Supra) in

terms whereof two 'Corporate Insolvency Resolution Processes'

proceedings could not be triggered unless it is a joint venture company

which is not the case in the instant matter. It is further submitted that

the aforesaid judgment rendered in Dr. Vishnu Kumar's case (Supra)

not having been stayed or quashed by the Hon'ble Apex Court, is the

law of land as of now. It is further submitted that Respondent Nos. 2 &

3 have filed separate application under Section 7 against another

Corporate Guarantor namely-- 'Earthcon Constructions Pvt. Ltd.'

(ECPL) bearing Case No. CP (IB)- 1883(ND)/2019 which has been

dismissed by the Adjudicating Authority in the light of Judgment

rendered in Dr. Vishnu Kumar's case. It is submitted that the claim

Company Appeal (AT) (Insolvency) No. 82 of 2020 8

filed by the 'Financial Creditors' in all such applications is identical, as

such the 'Financial Creditors' cannot be allowed to initiate and trigger

three simultaneous 'Corporate Insolvency Resolution Processes' for one

set of claim. Lastly, it is submitted that the interest of the 'Financial

Creditors' is fully secured in form of 205 flats by virtue of two Mortgage

Deeds and an Escrow Management exists as an alternate mechanism to

secure interest of the 'Financial Creditors'.

5. Per contra, it is submitted on behalf of 'Financial Creditors' that

the law laid down in Dr. Vishnu Kumar's case by this Appellate

Tribunal does not apply because the 'Corporate Debtor' is a primary

obligor in respect of the disbursement of amount directly made to it by

Respondent No.1 and the aforesaid case places embargo upon the same

person to trigger the Code simultaneously against the 'principal

borrower' and the 'corporate guarantor'. It is contended that in the

instant case, there is no principal borrower, as EIPL is only an assignee

of the 'Corporate Debtor' and in any event, the Respondent No.1 has not

triggered the Code against EIPL. It is further submitted that even this

embargo would not apply to companies engaged in the Real Estate

Sector. Moreover, the proceedings against EIPL are stayed by an order

of the Hon'ble Apex Court dated 30th September, 2019 and further

continued by order dated 18th February, 2020. It is further submitted

that in any case such embargo is not an absolute bar against initiation

Company Appeal (AT) (Insolvency) No. 82 of 2020 9

of 'Corporate Insolvency Resolution Process' against two 'Corporate

Debtors'.

6. 'Interim Resolution Professional' representing the 'Corporate

Debtor' filed written submissions giving breakup of the claims received

by it from different 'Financial Creditors':

a. Punjab and Sind Bank's claim for Rs.51,45,57,717.44/-

b.Nissus Finance and Investment Managers LLP claim for

Rs.72,59,20,489/-

c. Home Buyers/ allottees claims for Rs.37,82,66,982.79/-

7. Heard learned counsel for the parties and perused the record.

8. The issue raised by the Appellant as a shareholder of the

'Corporate Debtor' is that the Respondent Nos.1 and 2 being 'Financial

Creditors' could not be allowed to initiate and trigger three

simultaneous 'Corporate Insolvency Resolution Processes' for one set of

claim. Reliance has been placed on the judgment rendered by this

Appellate Tribunal in Dr. Vishnu Kumar Agarwal's case (Supra), which

is still occupying the field as the same has not been set aside by the

Hon'ble Apex Court. In order to understand the ratio of aforesaid

judgment in the peculiar facts and circumstances of the instant case, it

would be appropriate to refer to para 32 of the said judgment which is

reproduced hereunder:

Company Appeal (AT) (Insolvency) No. 82 of 2020 10

"32. There is no bar in the 'I&B Code' for filing

simultaneously two applications under Section 7

against the 'Principal Borrower' as well as the

'Corporate Guarantor(s)' or against both the

'Guarantors'. However, once for same set of claim

application under Section 7 filed by the 'Financial

Creditor' is admitted against one of the 'Corporate

Debtor' ('Principal Borrower' or 'Corporate

Guarantor(s)'), second application by the same

'Financial Creditor' for same set of claim and

default cannot be admitted against the other

'Corporate Debtor' (the 'Corporate Guarantor(s)' or

the 'Principal Borrower'). Further, though there is

a provision to file joint application under Section 7

by the 'Financial Creditors', no application can be

filed by the 'Financial Creditor' against two or

more 'Corporate Debtors' on the ground of joint

liability ('Principal Borrower' and one 'Corporate

Guarantor', or 'Principal Borrower' or two

'Corporate Guarantors' or one 'Corporate

Guarantor' and other 'Corporate Guarantor'), till it

is shown that the 'Corporate Debtors' combinedly

are joint venture company."

Company Appeal (AT) (Insolvency) No. 82 of 2020 11

9. It is not in dispute that the aforesaid judgment in Dr. Vishnu

Kumar Agarwal's case rendered by this Appellate Tribunal has neither

been stayed nor set aside by the Hon'ble Apex Court and it holds the

field till date. The proposition of law is unmistakably, unambiguously

and lucidly clear that where a 'Financial Creditor', whether singly or

jointly with other 'Financial Creditors' seeks initiation of 'Corporate

Insolvency Resolution Process' against the 'principal borrower' or one or

the other 'corporate guarantors' in respect of a claim, it cannot file

second application for the same set of claim against the other

'Corporate Debtor', be it the principal borrower or one or other

Corporate Guarantor. The proposition of law occupying the field in

terms of the aforesaid judgment further extends to a situation where the

'Financial Creditor' seeks initiation of 'Corporate Insolvency Resolution

Process' against the principal borrower and the corporate guarantor(s)

jointly which is not permissible unless the 'Corporate Debtor'

combinedly constitute a joint venture company. It is manifestly clear

that triggering of 'Corporate Insolvency Resolution Process' by a

'Financial Creditor' simultaneously against the principal borrower and

the corporate guarantors for same set of claim is impermissible.

10. In the case in hand Respondent No.2 filed CP (IB) No. 1348 of

2019 under Section 7 of the 'I&B Code' against the Respondent No.3-

'Corporate Debtor' who happens to be one of the corporate guarantors

of principal borrower. It also appears that the Respondent No.2 filed an

Company Appeal (AT) (Insolvency) No. 82 of 2020 12

application under Section 7 against 'Earthcon Constructions Pvt. Ltd.'

who happened to be the 'corporate guarantor' of the principal borrower

in the Debenture Trust Deed executed inter se the principal borrower

and Respondent No.2. The 'Operational Creditor'- 'M/s. Emperos

Infrastructure Pvt. Ltd.' filed proceeding under Section 9 of the

Arbitration & Conciliation Act, 1996. The Adjudicating Authority

admitted application filed by the 'Financial Creditors' vide order dated

28th August, 2019. In appeal the order of admission came to be upheld

by this Appellate Tribunal and the appeal was dismissed. The matter

was taken to Hon'ble Apex Court in Civil Appeal No(s). 7641/2019 by

the Respondent No.2. The Hon'ble Apex Court, vide order dated 18th

February, 2020 set aside the order passed by this Appellate Tribunal

keeping in view the fact that application under Section 65 of the 'I&B

Code' alleging that the order of admission was passed on the basis of

admission made by the principal borrower who was alleged to be in

collusion with the Respondent No.2, relegated the matter before the

Adjudicating Authority where the Respondent No.2 may seek remedy.

The Hon'ble Apex Court observed that the plea of collusion could not

have been raised for the first time in appeal before this Appellate

Tribunal or before the Hon'ble Apex Court. It further observed that in a

case where objections in the nature of situations contemplated under

Section 65 of the 'I&B Code' are raised or application is filed before the

Adjudicating Authority alleging fraudulent and malicious initiation of

proceedings, it has to be dealt with in accordance with law. The interim

Company Appeal (AT) (Insolvency) No. 82 of 2020 13

protection granted by the Apex Court vide order dated 30th September,

2019 was directed to continue to operate for a period of four weeks

w.e.f. 18th February, 2020. It is manifestly clear that the Apex Court did

not entertain the plea of collusion in appeal and relegated the 'Financial

Creditor' to remedy before the Adjudicating Authority. It is also clear

that the Hon'ble Apex Court emphasised the need for dealing with the

allegation of collusion, if raised before the Adjudicating Authority. The

effect of this Judgment is that in the given circumstances of the case

where an application under Section 65 was made, the Adjudicating

Authority could not have ignored or overlooked the same regard being

had to the fact that the order of admission was passed by the

Adjudicating Authority on the basis of admission of the principal

borrower.

11. The DTD dated 13th June, 2017 subsequently amended on 20th

December, 2017 and 24th December, 2018 was executed inter se the

principal borrower, '2nd Financial Creditor' and five obligors being the

Appellant, 'Corporate Debtor', 'Earthcon Constructions Pvt. Ltd.' and

some more individual as personal guarantors besides '1st Financial

Creditor' as facility agent. The principal borrower as also the 'Corporate

Debtor' were engaged in Real Estate business. While the Principal

Borrower was desires of buying, 'Corporate Debtor' wanted to sell the

units. Principal borrower wanted to raise funds for acquisition of units

from the 'Corporate Debtor' and to secure its object, it raised funds upto

Company Appeal (AT) (Insolvency) No. 82 of 2020 14

Rs.30 Cr. through the issue and allotment of upto 3,000 secured

transferable redeemable and non-convertible debentures carrying face

value of Rupees One Lakh per each debenture in one or more tranche

as per instructions of '1st Financial Creditor'. A registered legal mortgage

was created by the principal borrower and the 'Corporate Debtor' on the

assets detailed in the DTD as security. The 'Corporate Debtor'

undertook to pay all secured obligations on redemption dates if

principal borrower fails to pay. The 'Financial Creditors' issued demand

notices to the principal borrower as a default occurred due to non-

payment in accordance with the arrangement agreed upon. Copies

thereof were marked to the 'Corporate Debtor' and other guarantors

who issued cheques in favour of debenture trustees which bounced for

insufficiency of funds in their accounts.

12. The case set up by the 'Corporate Debtor' is that its liability is

only limited to the collateral in the form of 200 units/ flats owned by

the principal borrower and developed by the 'Corporate Debtor'. It

claims to have invoked the arbitration clause in DTD with notice served

on 'Financial Creditors' on 24th June, 2019. Taking note of the fact that

the 'Corporate Debtor' had communicated to the 'Financial Creditors'

seeking time for repayment and also having regard to the amendment

introduced in the DTD re-scheduling the repayment schedule, the

Adjudicating Authority was of the view that the principal borrower and

the 'Corporate Debtor' were under legal obligation to repay the first

Company Appeal (AT) (Insolvency) No. 82 of 2020 15

instalment by 31st March, 2019. It also rejected the plea taken by the

'Corporate Debtor' regarding its limited liability as the 'Corporate

Debtor' never offered the possession of 200 flats to the 'Financial

Creditors'. Thus, it found the 'Corporate Debtor' under legal obligation

to make payment to the 'Financial Creditors'. As regards application of

ratio laid down by this Appellate Tribunal in Dr. Vishnu Agarwal's case

Adjudicating Authority observed that the 'Financial Creditors' have

initiated 'Corporate Insolvency Resolution Process' against the principal

borrower which has been stayed by the Hon'ble Apex Court vide order

dated 30th September, 2019 in Civil Appeal No. 7641/2019, therefore,

there was no legal bar on the 'Financial Creditor' to initiate 'Corporate

Insolvency Resolution Process' against the 'Corporate Debtor' who was

an obligor in terms of the DTD and other documents. Thus, the defence

raised by the 'Corporate Debtor' was rejected and being satisfied that

there was default in repayment of financial debt, the Adjudicating

Authority passed impugned order admitting the application filed by the

'Financial Creditors' under Section 7 of the 'I&B Code'.

13. Wading through the record including the written submissions

filed by the parties and copies of order passed in appeal, we find that

the Hon'ble Apex Court by virtue of order dated 18th February, 2020

disposed of Civil Appeal No. 7641/2019 setting aside the impugned

order passed by this Appellate Tribunal in terms whereof appeal

preferred against admission of application under Section 7 filed by '2nd

Company Appeal (AT) (Insolvency) No. 82 of 2020 16

Financial Creditor' against the principal borrower came to be dismissed.

Since the application was admitted on the basis of admission made by

the principal borrower as revealed in order dated 23rd August, 2019

passed by the Adjudicating Authority, the Hon'ble Apex Court taking

note of the objection raised in regard to fraudulent and malicious

initiation of 'Corporate Insolvency Resolution Process' proceeding

relegated the 2nd Financial Creditor to the remedy before the

Adjudicating Authority. Meanwhile interim protection granted vide order

dated 30th September, 2019 was directed to continue to operate for four

weeks' w.e.f 18th February, 2020. Respondent Nos. 1 and 2 have filed

additional written submissions supported by a copy of the order dated

17th March, 2020 passed by the Adjudicating Authority which reveals

that the application as directed by the Hon'ble Apex Court has been

filed and the Adjudicating Authority has directed that the interim

protection granted by the Hon'ble Apex Court shall continue till further

order. Presently the matter is pending consideration before the

Adjudication Authority.

14. Having regard to the above noted developments, be it seen that

the fate of instant appeal is essentially linked with the fate of

application under Section 65 of the 'I&B Code' preferred by the

'Financial Creditors' before the Adjudicating Authority, as a sequel to

the disposal of Civil Appeal No. 7641 of 2019 by the Hon'ble Apex

Court, which is pending consideration. Since the order passed by this

Company Appeal (AT) (Insolvency) No. 82 of 2020 17

Appellate Tribunal in appeal arising out of triggering of 'Corporate

Insolvency Resolution Process' initiated at the instance of an

'Operational Creditor' against the principal borrower has been set aside

by the Hon'ble Apex Court and the dismissal of appeal by this Appellate

Tribunal against the order of admission dated 28th August, 2019 stands

quashed by the Hon'ble Apex Court, interim protection granted in terms

of order dated 30th September, 2019 which had been extended by the

Hon'ble Apex Court in terms of order dated 18th February, 2020 while

dismissing the appeal and the Adjudicating Authority having extended

the interim protection till further orders while being ceased of

application under Section 65 of the 'I&B Code', in essence the matter

qua the principal borrower stands remanded back to the Adjudicating

Authority to go into the allegation of the Corporate Insolvency

Resolution Process having been initiated fraudulently and with

malicious intent not for the purpose of resolution in the context of there

being a collusion between the principal borrower and the operational

creditor. It is abundantly clear that the interim protection granted by

the Hon'ble Apex Court and further adopted and extended by the

Adjudicating Authority is in regard to the admission of the application

under Section 9 of the 'I&B Code' allegedly filed by the 'Operational

Creditor' in collusion with the principal borrower. It is so because the

order passed by this Appellate Tribunal in appeal upholding the

impugned order of admission has been set aside by the Hon'ble Apex

Court. No conclusion other than the one can be drawn that the order of

Company Appeal (AT) (Insolvency) No. 82 of 2020 18

admission in application under section 9 filed by the 'Operational

Creditor' against the principal borrower is under eclipse though not

quashed. We emphasise this aspect of the matter as it has a direct

bearing on the maintainability of the instant appeal. Depending upon

the outcome of inquiry in proceedings arising out of application filed by

the 'Financial Creditors' under Section 65 of the 'I&B Code', the

impugned order may or may not survive. The proposition of law laid

down in Dr. Vishnu Kumar Agarwal's case occupying the field and not

having been disturbed in appeal till date, has to be followed by the

Adjudicating Authority scrupulously. The dictum of law in para 32 of

the judgment is loud and clear and the course available thereunder has

to be followed depending on the outcome of application under Section

65. Disposal of appeal in any manner at this juncture when application

under Section 65 of the 'I&B Code' is sub-judice in terms of the order of

Hon'ble Apex Court, would amount to circumventing the order of

Hon'ble Apex Court referred hereinabove and adversely impacting the

outcome of the sub-judice application.

15. In the context of the factual and legal background to which we

have adverted to hereinabove, we deem it prudent to dispose of the

appeal by directing the Adjudicating Authority to have a fresh look at

the order of admission of application of the 'Financial Creditors' under

Section 7 of the 'I&B Code' against the 'Corporate Guarantor'-EUIPL

(which has been impugned in this appeal) only after application under

Company Appeal (AT) (Insolvency) No. 82 of 2020 19 Section 65 of the 'I&B Code' filed by the 'Financial Creditors' is disposed

of. We opt for such course being adopted only as the ratio of judgment

rendered in Dr. Vishnu Kumar Agarwal's case will come into play only

at that stage. Meanwhile, further proceedings in IB-1348/ND/2019

under Section 7 of the 'I&B Code' before the Adjudicating Authority

shall remain stayed.

The Appeal is disposed off in afore-stated terms. No order as to

costs.

[Justice Bansi Lal Bhat] Member (Judicial)

[Justice Venugopal M.] Member (Judicial)

[V.P. Singh] Member (Technical)

NEW DELHI 29th May, 2020

AR

Company Appeal (AT) (Insolvency) No. 82 of 2020 20

29.05.2020

P.S.: After the judgment was pronounced learned counsel for the

Respondent prayed for stay of the judgment to enable the Respondent

to pursue remedy before the Hon'ble Apex Court.

Keeping in view the lockdown restrictions, we deem it fit to allow

the prayer and accordingly stay the operation of this judgment for a

period of two weeks from today.

[Justice Bansi Lal Bhat] Member (Judicial)

[Justice Venugopal M.] Member (Judicial)

[V.P. Singh] Member (Technical)

AM

Company Appeal (AT) (Insolvency) No. 82 of 2020