The Chennai bench of the NCLAT ruled that an application under section 19(2) of the Insolvency and Bankruptcy Code (IBC) is maintainable once the Corporate Insolvency Resolution Process (CIRP) is admitted. The Tribunal clarified that section 60(5) does not supersede the provisions of section 19(2) read with section 14, which are vital for the effective conduct of CIRP proceedings.
M/s. Villmar Agro Polymers Pvt. Ltd. (Corporate Debtor) was admitted to CIRP on 12th April 2023. The Appellant, a suspended director, claimed to have learned of the proceedings only on 21st April 2023. The Appellant filed an application with the NCLT seeking to set aside the ex-parte order dated 12th April 2023, arguing that they were not given an opportunity to be heard and requesting the order be recalled.
The IRP filed an application under section 19(2), asking for the suspended directors to hand over the corporate debtor’s assets, records, and books to facilitate the CIRP. The NCLT allowed this request in its order dated 17th November 2023, which the Appellant challenged.
The NCLAT dismissed the appeal, noting that the CIRP had commenced, and the moratorium was in effect. The Tribunal upheld the application under section 19(2), affirming that it was necessary for the effective conduct of the proceedings. It also observed that section 60(5) does not override the provisions of section 19(2) and section 14. Furthermore, the Tribunal found no merit in the Appellant’s application, as the Corporate Debtor had representation during the proceedings, even though the counsel failed to file the vakalathnama or counter affidavit. The appeal was dismissed, and the ex-parte order was upheld.
M/s. Vilmar Agro Polymers Pvt. Ltd vs. SPC FAB Private Limited Saraswathi Nilayam & Anr.
Company Appeal (AT) (CH) (Ins) No. 55/2024
Comments