The Hon’ble High Court of Calcutta in Univalue Projects Pvt. Ltd Vs. Union of India (W.P. No. 5595(w) of 2020) struck down order of NCLT mandating filing of default record from Information Utility along with a plea u/s 7 of Insolvency and Bankruptcy Code, 2016.
The court while examining the powers of NCLT and NCLAT expounded that “while both NCLT and NCLAT have been conferred with the powers to regulate their own procedure, such use of its power is circumscribed and subjected to inter alia, the principles of natural justice as well as the provisions of CA, 2013 or the IBC,2016, inclusive of any rules/regulations made under IBC,2016 by the regulatory body, IBBI”
The Hon’ble court while analyzing the scope of S. 7(3)(a) of IBC observed that the section uses the term “Or” which is disjunctive in nature and indicated that the conditions separated by it are to be read in the alternative. The hon’ble further expounded that “the three categories of evidence that ca be provided are as follows (a) record of the default recorded with the information utility; (b) such other record; (c) evidence of default as may be specified. The disjunctive use of the above makes it clear that either of the three may be provided by the financial creditor to the adjudicating authority”. Further, the court held that the three different categories of documents are available to a financial creditor to prove proof of default by a corporate debtor.
The court noted in view of provisions of IBC and Hon’ble Supreme courts observations in Swiss Ribbons case that apart from the financial information of the information utility, there are eight classes of documents that could be considered to be sources that evidence a “financial debt”