Hari Om Dixit Vs Ajit Srivastava & Ors (NCLAT Delhi)
NCLAT Delhi held that application filed prior to Insolvency and Bankruptcy Code (Amendment) Act, 2020 need to be modified failing which the application shall be deemed to be withdrawn before its admission. Thus, application u/s. 7 has to be treated to be deemed to be withdrawn.
Facts- Company Appeal has been filed by the suspended Director of the Corporate Debtor (“CD”) – M/s Gayatri Hospitality and Realcon Ltd., challenging the order dated 04.03.2024 passed by National Company Law Tribunal (“NCLT”), New Delhi Principal Bench allowing IA No.4163(PB)/2021, IA No.3422(PB)/2022 and IA No.3534(PB)/2022 for impleadment as Applicants and admitting Section 7 application filed by the creditors in a class, i.e., Respondent Nos.1 to 106 in the Appeal. Aggrieved by the order admitting Section 7 application, this Appeal has been filed.
Conclusion- The third Proviso to Section 7, sub-section (1) provided for a timeline for amending the application. The third Proviso uses the expression “shall be modified to comply with the requirements of the first and second provisos as the case may be within thirty days of the commencement of the said Act, failing which the application shall be deemed to be withdrawn before admission”. There are two parts of the above Proviso. Firstly, the application, which was filed prior to amendment has to be mandatorily modified to comply with the first and second Proviso and secondly, it is further provided that failing which the application shall be deemed to be withdrawn before its admission. Thus, in event the application is not modified within the time prescribed, underlying deeming fiction shall come into play and application shall be treated to be withdrawn. The above statutory provision makes it clear that in event the Applicant, fails to comply with the second Proviso to modify the application within thirty days from the date of amendment, deeming provision of law shall come into play and the application shall be deemed to have been withdrawn. The consequences provided by above legislative intent, cannot be defeated by any act of the parties. The legislature did not require any order of the Court for withdrawal of the application and application shall be deemed to be withdrawn.
