Proceedings pending doesn’t preclude financial creditor to proceed u/s. 7 of IBC

Sunil Kumar Sharma Vs ICICI Bank Limited (NCLAT Delhi)

NCLAT Delhi held that the pendency of proceedings before the NCLT for approval of the scheme of arrangement does in no manner either shall suspend the default committed by the Corporate Debtor or preclude the Financial Creditor to proceed with Section 7 application.

Facts- Present Appeals have been filed by a Suspended Director of the Corporate Debtor, challenging the Orders dated 03.06.2024 passed by Adjudicating Authority. By the Impugned Order dated 03.06.2024, the Adjudicating Authority has admitted Section 7 Application filed by the ICICI Bank Limited by commencing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Jaiprakash Associates Limited (JAL).

Conclusion- Held that application by Financial Creditor has to be filed in Form-1. Part V of Form-1 refers to financial debt documents, records and evidence of default. Thus, Financial Creditor is fully entitled to file documents, records and evidence of default. When direction has been issued by the RBI which is a regulator of banking companies directing for initiation of the CIRP against the Corporate Debtor, the said direction cannot be disregarded or ignored while determining application under Section 7 filed by the Financial Creditor against the Corporate Debtor. We, thus, are of the view that the direction issued under Section 33AA of the Banking Regulations Act by the RBI are relevant for determining default by Corporate Debtor within the meaning of Section 3(12).