# In the matter of Axis Bank Vs. Lotus Three Developments Ltd. & Ors. CA (AT) No. 246-2018

> NCLAT judgment dated 2018-07-31. Citation: TCN-2018-NCLAT-00176. Axis Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLAT
- **Order date:** 31 Jul 2018
- **Citation:** TCN-2018-NCLAT-00176
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/axis-bank-vs-lotus-three-developments-ltd-ors-ca-a9395304

## Summary

### Background

Axis Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for the initiation of corporate insolvency resolution process against Lotus Three Developments Limited. An impleadment application was filed by Respondent Nos. 1 and 2 to be included as party-respondents. The Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench, ordered to implead these respondents as party-respondents. The appellant challenged this order before the NCLAT.

## Facts

Axis Bank Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Lotus Three Developments Ltd. Respondent Nos. 1 and 2 filed an impleadment application seeking to be included as party-respondents. The Adjudicating Authority allowed the impleadment application. The appellant, Axis Bank Ltd., challenged the order of the Adjudicating Authority before the National Company Law Appellate Tribunal (NCLAT). The respondents were shareholders and personal guarantors of the Corporate Debtor. The key fact is whether shareholders and personal guarantors are necessary parties at the stage of admission or rejection of an application under Section 7 of the I&B Code.

## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was correct in allowing the impleadment application filed by the …

**Ratio:** The Adjudicating Authority is only to satisfy that the default has occurred and that the

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**Reasoning:** The NCLAT reasoned that the primary focus of the Adjudicating Authority at the admission

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**Interpretation:** Section 7 of the I&B Code outlines the procedure for initiating the CIRP by

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**Application:** In this case, the NCLAT found that the Adjudicating Authority erred in allowing

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…
- **Appellants:** Axis Ban…
- **Respondents:** Lotus Three…
- **Advocates:** Animesh…; Karan K…; +2 more

## Timeline

- **2018-04-25 — Impugned…**: The Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench, ordered to…
- **2018-07-31 — Appeal F…**: The appellant – Axis Bank Limited filed an application under Section 7 of the Insolvency…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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