The NCLAT, Principal Bench, New Delhi ruled that IBC proceedings are proceedings, which insist on timeline for completion of the proceedings. Timeline is an important and cardinal principle in IBC process. When an Application under Section 9 proceeded for more than a year, without there being any valid reason, the Appellant, cannot claim as a matter of right that it ought to have been permitted to file a fresh petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).

Brief Facts:

The present 2 appeals have been filed against the order of the NCLT in 2 section 9 of the IBC applications.

The NCLT allowed the Appellant to withdraw the petition subject to cost of Rs. 50,000.

Brief Background:

Appellant claiming an Operational Debt which was due and in default by the Corporate Debtor filed an Application under Section 9 of the IBC.

The Appellant sought permission to withdraw the Application, NCLT allowed but imposed cost.

Contentions of the Appellant:

It was contended that NCLT ought to have granted liberty to the Appellant to file a fresh Application. Refusal to grant liberty to file, curtails the statutory right of the Appellant.

Observations of the Tribunal:

It was observed that NCLT held that in the withdrawal pursish, the Appellant did not mention any reason for withdrawal as well for liberty to file fresh petition. Since no reason was given and withdrawal was sought at belated stage, no liberty to file application again could be granted. Thus, liberty to file fresh Application was refused.

The NCLAT held that as per Code of Civil Procedure, the permission to file fresh suit can be granted only when the Court is satisfied that there are sufficient ground for allowing the plaintiff to institute a fresh suit. The submission that it is automatic and the Court was obliged to grant permission to file fresh suit, could not be accepted.

It was ruled that IBC proceedings are proceedings, which insist on timeline for completion of the proceedings. Timeline is an important and cardinal principle in IBC process. When an Application under Section 9 proceeded for more than a year, without there being any valid reason, the Appellant, cannot claim as a matter of right that it ought to have been permitted to file a fresh petition under Section 9.

The decision of the Tribunal:

Based on the findings above, the appeal was dismissed accordingly.  

Case Title: Florex Tiles v.  M/s. Greenstone Granite Pvt. Ltd. along with connected matter

Case No.: Company Appeal (AT) (Insolvency) No.1487 of 2024 along with connected matter

Coram: Justice Ashok Bhushan, Mr. Barun Mitra, Mr. Arun Baroka (Technical Members)

Advocates for Appellant: Advs. Atul Sharma, Mr. Shivanshu Kumar, Ms. Aditi

Sharma

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