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SC Stays the Proceedings of CIRP on Behalf of an Operational Creditor Until Further Orders
The Supreme Court in an order has stayed the proceedings of Corporate Insolvency Resolution Process against a Corporate Debtor on behalf of an operating creditor making futuristic claims.
A notice had been issued by a three- Judge bench comprising of Justices Krishna Murari, BR Gavai and Arun Mishra to the Insolvency Resolution Professional of Era Infra Engineering Limited and has bidden the CIRP proceedings against the Company. In its order, the Apex Court said that,
“There shall be stay of CIRP proceedings until further orders. List the matter in the month of September, 2020,”
A civil appeal had been filed by NTPC Ltd., Simhadri Project against an order of the NCLAT. Its appeal against the order of NCLT vindicating the order of the Resolution Professional, disapproving claim of the Appellant was set aside. The Appellant had contended that the decision of the NCLT rejecting its plea on the ground that the same would evolve in the future, was against the definition of ‘claim’ as provided in Section 3(6) of the Insolvency and Bankruptcy Code, 2016.
The Appellant had submitted, “From the reading of the definition of claim, it is clear that 'claim' means a right to payment even when such right is unmatured and disputed. Therefore, finding of the NCLAT that maturity of claims arising in future neither being asserted nor made out is unsustainable in law”
It had further argued that a Resolution Professional is not permitted under law to reject the claims of the Appellant as only administrative powers had been authorized to a Resolution Professional in contrary to quasi-judicial powers.
It was said that, “The Adjudicating Authority failed to appreciate that the impugned order passed will come in the way of the Appellant in the arbitration proceedings pending between the Appellant and the Corporate Debtor. It is submitted that the arbitrator will get prejudice with the decision of the Adjudicating Authority rejecting the claims of the Appellant.”
Solicitor General Tushar Mehta, briefed by Advocates Nikhil Kandpal, Anish Gupta, Adarsh Tripathi argued the matter on behalf of NTPC.
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