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Judgment
(Hybrid Mode)
Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial):
These two Company Appeals are listed under the head of defective cases. After having gone through the records and in particular the report, as given by the Registry i.e., dated 09.03.2026, in fact, there is no defect at all. Hence, we proceed to consider the Appeal at the admission stage.
These two Company Appeals are accompanied with an independent Condone Delay Application, being IA No.402/2026 and IA No.404/2026, as respectively, preferred by the Appellant seeking condonation of 15 days of delay, that has chanced in preferring the Company Appeal. Apparently, the impugned order which has been passed, i.e., being that of 06.01.2026, the same was made available to the Appellant on 09.02.2026, and the Company Appeals since having been filed before the Registry of this Tribunal on 20.02.2026, the same has been marked as to be delayed by 15 days. The reason for the delay is almost happens to be the same in both these Company Appeals.
After going through the Condone Delay Application, the ground, which has been taken by the Appellant in para 2 VIII & IX and para XI. Having gone through the reasons therein and being satisfied with the same, besides that, since the number of days of delay would be falling within the condonable period as contemplated under the proviso to Sub-Section (2) of Section 61 of the I & B Code, 2016. The delay would stand condoned, accordingly the Condone Delay Applications would stand allowed. Accordingly, Condone Delay Application being IA No.402/2026 as preferred in Comp App (AT) (CH) (Ins) No.133/2026 and Condone Delay Application being IA No.404/2026 as preferred in Comp App (AT) (CH) (Ins) No.134/2026 would stand allowed.
Heard the Learned Counsel for the Appellants. In the instant Company Appeals, they are circumscribed on a very limited conspicuous when the Appellant puts a challenge to the impugned order dated 06.01.2026 (of like date in both the Company Appeals), whereby the Learned Tribunal, at the stage of considering the application preferred under Section 95 of the I & B Code, 2016, as against the personal guarantors i.e., the Appellants herein, had appointed the Resolution Professional and consequentially the Resolution Professional had been directed to submit its report under Section 99 of the I & B Code, 2016, in lieu of remunerations mentioned therein, wherein the Petitioners were directed to file the proof of the same by way of an affidavit and the consequential a renumeration has been fixed for the services to be rendered by Resolution Professional for the purposes of conducting the inspection and submission of the report. As the consequence of the order, which has been passed by the Learned Tribunal happens to be falling within the restricted limits of Section 99 of the I & B Code.
The question that arises for consideration in the Company Appeals, are as to whether at this stage of the proceedings, where the Resolution Professional has been appointed and is being called upon to submit a report, whether a Company Appeal could be preferred by the Appellant, particularly when the proceedings under Section 95 of the I & B Code, 2016, have not reach at the stage of Section 100 of the I & B Code, 2016, and till the proceedings under Section 95 of the code reaches the stage of Section 100 of the I & B Code, 2016. In fact, there happens to be no merit adjudication or involvement of consideration of any controversy on merits or of rights of the parties, and that has been observed and settled by the Hon’ble Apex Court in Writ Petition (Civil) No.1281 of 2021, Dilip B Jiwrajka Vs Union of India & Ors., and particularly if we read para 72, which is to be read in context of the conclusion drawn in para 86 of the said Judgment, which is extracted hereunder: -
“72.We are of the view that the submission that an adjudicatory role should be interposed at the stage of Section 97(5) cannot be accepted. The power which is conferred on the adjudicating authority at the stage of filing of an application is to appoint a resolution professional. The appointment of a resolution professional is for the purpose of a facilitative exercise which is contemplated by Section 99 which, as we have noted, eventually ends in a report either recommending the acceptance or rejection of the application. Bearing in mind the statutory scheme, it would be impermissible for this Court to allow for the adjudicatory intervention of the adjudicating authority in adjudicating what is described as a jurisdictional question at the stage of Section 97(5)
86.We summarise the conclusion of this judgment below:
(i)No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;
(ii)The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;
(iii)The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining ‘jurisdictional facts’ at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;
(iv)The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;
(v)There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;
(vi)No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;
(vii)The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application;
(viii)The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and (ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution.”
The Hon’ble Apex Court in the matters of Dilip B Jiwrajka (supra) has observed that up to the stage of the proceedings under Section 99 of the I & B Code, 2016, since there is no judicial adjudication of any of the rights of the parties, because it is only a ministerial work of collecting the records, data in the shape of the report to be submitted by the Resolution Professional, to justify the initiation of the proceeding under Section 95 of the I & B Code, 2016. The Corporate Debtor, in itself at that stage, has got no independent right as such to enable the Corporate Debtor to put a challenge to those orders because neither there is any infringement of the legal right nor the act compliant of issuing directions to the Resolution Professional to proceed to collect the report as contemplated under Section 99 of the I & B Code, 2016, requires prior adherence of Principles of Natural Justice as argued, because up to the stage in between the stages under Sections 95-100 of the I & B Code, 2016, there is no deprivation of any opportunity of the personal guarantors, which could have all necessitate them to participate in the process of examination of the application by the Resolution Professional as no judicial determination takes place.
In that eventuality, under the given set of circumstances, where the impugned order has been passed under Section 99 of the I & B Code, 2016, and the Resolution Professional has been appointed, who is directed to submit the report and the report is yet to submit, the proceedings in the shape of the two Company Petitions, being CP(IB) No.209/95/HDB/2025 in the matter of Medipally Pratap Reddy and CP(IB) No.210/95/HDB/2025 in the matter of Medipally Satish Kumar Reddy, is at a stage, where the Resolution Professional is yet to submit its report to justify the initiation of proceedings under Section 95 of the I & B Code, 2016, after crossing the stage of Section 100 of the I & B Code, 2016, where the Learned Adjudicating Authority then only decides whether to accept or reject the application. In these eventualities, the proceedings in the present Company Appeal, at this stage, would not be maintainable and deserve dismissal.
However, at this stage, the Learned Counsel for the Appellant intends to carve out an exception that since there had been earlier proceedings that were held under Section 95 of the I & B Code, 2016, and that have attained finality. The instant proceedings would be in the shape of the subsequent proceedings, and that would not be maintainable. Be that as it may, if at all, the earlier institution of any proceedings has got any bearing, the Appellant would be provided with an adequate opportunity at the stage after submission of the report by the Resolution Professional under Section 99 of the I & B Code, 2016. At this stage, the institution of the earlier proceedings under Section 95 of the I & B Code, 2016, will have no bearing to sustain in the present Company Appeal.
The argument extended by the Learned Counsel for the Appellant with regards to the imposition of the interim-moratorium, in fact, is only a precaution which is taken by a legislature to restrain dissipation of assets of personal guarantor, upon filing of an application under Section 95 of the I & B Code, 2016, is preferred, so as to protect the subject matter of the proceedings under Section 95 of the I & B Code, 2016. The legal implication of the interim-moratorium upon filing of an application under Section 95 of the I & B Code, 2016, does not give leverage to the personal guarantors to initiate the Company Appeals as against the orders passed under Section 99 of the I & B Code, 2016. More particularly, when the principal proceedings are yet to take birth by the institution of the same after acceptance or rejection of the report by the Learned Adjudicating Authority.
Hence, the Company Appeals happens to be premature as no Company Appeal would lie against the order passed under Section 99 of the I & B Code, 2016, in the light of the Judgment of Dilip B Jiwrajka. Hence, the Company Appeals lacks merit, and the same is accordingly dismissed. All pending Interlocutory Applications would stand closed.