Suzlon Synthetics Ltd. Vs Stressed Asset Stabilization Fund (NCLAT Delhi)
Summary: The NCLAT Delhi dismissed an appeal filed by Suzlon Synthetics Limited against the admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Stressed Asset Stabilization Fund against IC Textiles Limited. The appellant claimed to be a secured financial creditor and pari passu charge holder whose financial interests would be prejudiced if SASF’s claim were accepted at the amount stated in the Section 7 application.
The appellant contended that SASF had entered into a one-time settlement with the corporate debtor and had received substantial payments under that settlement. According to the appellant, only Rs.88.75 lakh remained payable, whereas SASF had claimed a substantially higher amount. It was argued that admission of the corporate debtor into the Corporate Insolvency Resolution Process on the basis of such a claim would disproportionately increase SASF’s voting share and correspondingly reduce the position of the other financial creditors. The appellant further alleged that the insolvency proceedings had been initiated as a recovery mechanism.
SASF questioned the appellant’s locus standi and submitted that the admission order was directed against the corporate debtor. It argued that the appellant would have an opportunity to submit its claim before the Interim Resolution Professional, who would scrutinise and determine the claims of all creditors in accordance with the Code and the applicable regulations. SASF also maintained that its Section 7 application was within limitation.
