NCLAT | Nobody except Financial Creditor has right to claim hearing at stage of admission of application under Section 7 I&B Code

National Company Law Appellate Tribunal: The Bench of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) disposed of an appeal filed by the workers/employees of Tantia Constructions Ltd. (Corporate Debtor).

The appellants were the workers/employees of the Corporate Debtor. State Bank of India (Financial Creditor) had filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of the corporate insolvency resolution process. Appellants moved an application for intervention to bring to NCLT’s notice that winding up proceedings had already been initiated against Corporate Debtor under Sections 433(e) and 434 of the Companies Act and therefore application under Section 7 was not maintainable. NCLT held that appellants had no locus standi. This order was challenged in the present appeal.

The Appellate Tribunal agreed with NCLT that at the stage of filing of an application under Section 7, no person has a right to claim for hearing except the Corporate Debtor.  However, it was observed that NCLT should keep in mind the provisions of Section 11 according to which application under Section 7 or 9 is not maintainable if winding up proceedings had been initiated against the Corporate debtor. In such background, the appellants were not allowed to oppose or support the application at the stage of admission. However, NCLT was directed to decide the matter taking into consideration the fact of winding up proceedings brought to its notice by the appellants. [Deb Kumar Majumder v. State Bank of India, 2019 SCC OnLine NCLAT 26, dated 14-01-2019]

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