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The National Company Law Appellate Tribunal (NCLT) on September 25th in a recent ruling held that the National Company Law Tribunal (NCLT) has the power for grant of ad interim relief according to Section 11 of the National Company Law Tribunal Rules 2016. Section 11 deals with the inherent power of the National Company Law Tribunal (NCLT) to pass orders according to the interests of justice.
NUI Pulp and Paper Industries Pvt Ltd v Roxel Trading GmbH
The operational creditor in the instant case was Roxell Trading GmbH. The Corporate Debtor in the present case was NUI Pulp and Paper Industries Pvt Ltd. The operational creditor filed for insolvency proceedings against the corporate debtor in the present case. Insolvency proceedings is governed by Section 9 of the Insolvency and Bankruptcy Code 2016 (IBC).
The Operational creditor submitted that the main intention of Corporate Debtor is to abuse the due process of law by delaying the payment of unpaid invoices. The Corporate debtor sought for more time for filing of counter application and held that the invoices were the subject matter of a on-going dispute.
The National Company Law Tribunal (NCLT)held that "However, the apprehension of the Applicant can be taken note of till the time either the Application is admitted or rejected, the assets and accounts of the Company need to be maintained on date except withdrawal of the legitimate expenses required for carrying on the day to day expenses. Therefore, this Authority in exercise of the powers conferred under Rule 11 of the NCLT rules, 2016, restrains the Corporate Debtor and its Directors from alienating, encumbering or creating any third party interest on the assets of the 1st Respondent Company till further orders "
The National Company Law Tribunal (NCLT) thus restrained the corporate debtor form alienatimg, encumbering or creating any third party interest on the assets of the operational creditor.
The corporate debtor appealed to the National Company Law Apellate Tribunal (NCLAT) questioning the jurisdiction and the power of the National Company Law Tribunal (NCLT). This submission was rejected by the National Company Law Apellate Tribunal (NCLAT) after a intrepretation of the Insolvency and Bankruptcy Code 2016 (IBC 2016) and a perusal of the National Company Law Tribunal Rules 2016.
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