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Judgment
O R D E R
16.08.2024 : Heard Counsel for the Appellant as well as the Respondent.
This Appeal has been filed against an Order dated 11.06.2024, by the Appellant who has filed I.A. No. 506/2023, praying to be substituted in place of the Yes Bank, the Financial Creditor who has filed Section 7 Application which has been directed to be listed at the time of hearing of Section 7 Application.
Adjudicating Authority in Paragraph 20 of the Impugned Order has made the following observations:
“20.Taking into consideration the fact that the Bank itself holds the prima facie view that fraud, criminal breach of trust, and misappropriation of funds have been committed by the Principal Borrower, which is a subsidiary of the Corporate Debtor, and the fact that the Petitioner has yet to establish whether the present debt is a financial debt because of round-tripping of funds of which Yes Bank was fully aware, we cannot conclusively decide at this stage whether the debt in question is a financial debt or not and also whether the disbursal was made or not, as it prima facie appears that the amount transferred was reverted back into the account of Yes Bank. The transactions in question also raise doubts in our mind about the conduct of Yes Bank. Therefore, it will be appropriate to adjudicate the present application of assignment (IA 506/2023) at the time of deciding the main Company Petition. Also, since the transactions in question involve serious allegations of fraud and misappropriation of funds which could have a direct bearing on the section 7 matter and could involve Yes Bank itself, it is necessary that Yes Bank itself should be represented in the main matter and not an assignee.”
Learned Counsel for the Appellant submits that the Appellant has no issue with the allegations between Yes Bank and the Principal Borrower. However, there being no challenge to the Assignment, the Applicant ought to have been substituted in place of Yes Bank.
The Adjudicating Authority by Impugned Order has directed that I.A. 506/2023 be listed along with the main matter for arguments on 10.07.2024.
The import of Order clearly is that I.A. has not been rejected and it should be heard at the time of hearing of Section 7 Application. We are of the view that interest of the Applicant are fully protected by the Order.
Application I.A. 506/2023 being pending and which has been directed to be heard along with the Section 7 Application, the Applicant has opportunity to make his submission at the time of hearing, there is no reason to entertain this Appeal.
We have clarified that the Application I.A. 506/2023 having been permitted to be considered at the time of hearing of Section 7 Application. We are of the view that Applicant shall also be heard at the time of hearing of Section 7 Application.
The Appeal is disposed of accordingly.