# In the matter of Middleton Hotels Private Limited C.A. (IB) No. 1482-KB-2019 in C.P. (IB) 1278-KB-2019

> NCLT judgment dated 2020-02-18. Citation: TCN-2020-NCLT-01914. The case involves an application filed under Section 65 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 18 Feb 2020
- **Citation:** TCN-2020-NCLT-01914
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/middleton-hotels-private-limited-ca-ib-no-1482-kb-2019-in-cp-ib-1278-kb-2019-1a2a77a4

## Summary

### Background

The case involves an application filed under Section 65 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 11 of the Insolvency and Bankruptcy Code Rules, 2016, seeking the recall of an order admitting the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP). The applicant alleged that the initial petition was filed fraudulently with malicious intent, and that the order was obtained through collusion between the Financial Creditor and the Corporate Debtor. The applicants claimed they were deprived of their shares in the Corporate Debtor, which were held as security for a loan given to Shanti Kumar Surana and Prabha Surana. The applicants had also filed a suit in the High Court at Calcutta regarding the transfer of shares. The Financial

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## Facts

Middleton Solitaire Hotel India Private Limited (Financial Creditor) filed an application under Section 7 of the IBC against Middleton Hotels Private Limited (Corporate Debtor) for failing to repay a debt of Rs. 50 lakhs. The NCLT admitted the Corporate Debtor into CIRP, imposing a moratorium under Section 14 of the IBC. The applicants, who had lent Rs. 30 crores to Shanti Kumar Surana and Prabha Surana (who held 100% shares in the Corporate Debtor), sought to recall the CIRP order, alleging fraud and collusion. The applicants claimed that the Suranas promised to transfer the Corporate Debtor to them in order to liquidate their dues, but failed to do so. The Financial Creditor was incorporated shortly before extending the loan to the Corporate Debtor and had a low

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## Issues and analysis

### Issue 1: Whether the order for CIRP can be set aside within the scope of Section 65 of IBC 2016 or under the …

**Ratio:** The Tribunal has inherent powers to recall its earlier order if it is found that such

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**Reasoning:** The Tribunal reasoned that it has the power to make orders necessary for meeting the ends

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**Interpretation:** The inherent power of the Tribunal is interpreted as a tool to prevent abuse of

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**Application:** In this case, the Tribunal found that the CIRP order was obtained fraudulently

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Manju Bhu…
- **Respondents:** M/s Middleton…

## Timeline

- **2019-10-31 — Order for…**: Order passed by the Authority…
- **2020-02-03 — Date of H…**: Hearing on the application…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 65 — Fraudulent or malicious initiation of proceedings](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-65)

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