The NCLT, Kochi Bench expounded that for a Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) application to be disposed of, impleadment of an Independent Chartered Accountant is not necessary. Regarding, the impleadment of the shareholder of the Corporate Debtor, it was ruled that neither he is a necessary party nor a proper party. Therefore, even the shareholder is not required to be impleaded as a party.

IA (IBC) No. 81/KOB/2023

Brief Facts:

The present Application has been filed by the Corporate Debtor to implead Respondent No.2 who is an Independent Charter Accountant as an additional Respondent in the main petition.

IA (IBC) No. 82/KOB/2023

The present Application has been filed by the shareholder of Respondent No.2 to implead him as an additional Respondent in the main petition.

Brief Background:

The two applications have been filed to implead a third party as an additional respondent in the main Section 7 IBC application.

Since a similar question is involved in both applications, a common order has been passed.

Observations of the Tribunal:

It was noted that the Section 7 proceedings are summary in nature. The elements that a financial creditor needs to satisfy are Financial Debt and Default. There is no provision in the IBC to implead a third party in a Section 7 proceeding.

The main issue for adjudication was whether a third party is a necessary or a proper party in the case of Section 7 IBC.

The Tribunal first opined that without a necessary party is one without which the proceeding itself is liable to be dismissed. A proper party is one in which the presence is not mandatory, such a party can be examined as a witness to effectively adjudicate on a case.

It was further ruled that a Petitioner cannot be forced to fight against a person against whom no relief is claimed.

It was observed that the only ground on which the impleadment of an Independent Chartered Accountant was being sought was to ensure that the Corporate Debtor does not get liquidated and remains a solvency company.

The Bench expounded that for a Section 7 application to be disposed of, impleadment of an Independent Chartered Accountant is not necessary. Regarding, the impleadment of the shareholder of the Corporate Debtor, it was ruled that neither he is a necessary party nor a proper party.

The decision of the Tribunal:

Therefore, based on the aforementioned examinations, the Tribunal accordingly dismissed both applications.

Case Title: Jatayupura Tourism Pvt. Ltd. v. Dhanlaxmi Bank Ltd. & Anr.; P.J. Mathews v. Dhanlaxmi Bank Ltd. & Anr

Coram: Shri P. Mohan Raj (Judicial Member), Shri Satya Ranjan Prasad (Technical Member)

Case No.: IA (IBC) No. 81 and 82/ KOB/2023 in CP(IB) No. 6/KOB/2023

Advocates for Applicant: Advs. Mr. Sankar P. Panicker, Mr. Bijay P. Pulipra

Advocates for Respondents: Advs. Mr. C.C. Karunakaran, Mr. Shawn Jeff Christopher

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