NCLAT: Financial Creditor and the Corporate Debtor alone are the necessary party in CIRP proceedings
The National Company Law Appellate Tribunal (NCLAT) has ruled that in an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code), the Financial Creditor and the Corporate Debtor alone are the necessary party and the Adjudicating Authority is, at the pre-admission stage, only required to satisfy itself that there is a financial debt in respect whereof the Corporate Debtor has committed a default warranting triggering of Corporate Insolvency Resolution Process (CIRP).
In this case, Mr. Vekas Kumar Garg who is the Resolution Professional of two companies viz., Ninex Developers Limited (NDL) and Redtopaz Real Estate Pvt. Ltd. (RREPL) facing CIRP before the National Company Law Tribunal (NCLT/Adjudicating Authority) sought impleadment as a necessary party before Adjudicating Authority. However, his application for impleadment was rejected on the ground that he was not necessary party to the proceedings.
Aggrieved by the order of the Adjudicating Authority, the appellant moved the NCLAT.
The NCLAT observed that the ground projected by the Appellant in his capacity as Resolution Professional for seeking impleadment in pending consideration before the Adjudicating Authority does not warrant impleadment of Appellant as party Respondent.
The Tribunal further held that Adjudicating Authority is required to satisfy itself in regard to there being a financial debt and default thereof on the part of the Corporate Debtor besides the application being complete as mandated under Section 7(5) of the I&B Code and then pass an order of admission or rejection on merit as mandated under section 7(4) within 14 days. No third party intervention is contemplated at that stage.