BCL Homes Vs Canara Banks & Ors.

Fact of the case:

Corporate Debtor (CD) had made an application under section 10 of IBC, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) which was rejected by the NCLT taking into consideration the allegations made by the home buyers and others observing that CD had disposed huge chunk of land in the past few months before filing of this petition after coming into force the provisions of the code and only immovable property which is mortgaged with the Bank as security has been left. CD submitted that the application under Section 10 of IBC was complete and no finding has been given that the said application is defective or incomplete.

Question of Law?

• • Whether NCLT is justified in rejecting the application of CD?

NCLAT Decision

• The IBC, 2016 or Rules or Regulations do not stipulate to provide details of the lands sold or assets transferred prior to the filing of application under Section 10.
• Non-disclosure of any fact, unrelated to Section 10 and Form 6 cannot be termed to be suppression of facts or to hold that the Corporate Applicant has not come with clean hand except the application where the ‘Corporate Applicant’ has not disclosed disqualification, if any, under Section 11.
• If all information’s are provided by an applicant as required under Section 10 and Form 6 and if the Corporate Applicant is otherwise not ineligible under Section 11, the Adjudicating Authority is bound to admit the application and cannot reject the application on any other ground.
• Case was remitted back to NCLT for fresh hearing and if the application is otherwise complete, it will admit the application

(Court: NCLAT, New Delhi dated 8.03.2018)