Landmark Judgments by the Hon’ble NCLAT 16th to 31st Oct, 2021
- Arvind Bali vs. Union of India & Anr. (DOJ: 21.10.2021)
In the instant case, Appellants contended that the NCLT, Mumbai Bench directed Freezing of Assets and Bank Accounts of the Appellants without providing them opportunity of hearing and as the order of NCLT is per se illegal. The Hon’ble NCLAT, granted liberty to the Appellants to raise all pleas before NCLT and directed the NCLT to go for fresh determination with respect to Appellants only and pass a new order in a fair, just, dispassionate manner on merits and by adhering to the principles of natural justice. The Hon’ble NCLAT further observed the fresh order of NCLT should be in the manner known to law and in accordance with law, uninfluenced and untrammelled with any of the observations of the NCLAT.
- Jumbo Paper Products vs. Hansraj Agrofresh Pvt. Ltd. (DOJ: 25.10.2021)
In the instant case, the Operational Creditor (Appellant) had filed application under section 9 of Code, on 13.9.2020 as the debt in default was from 27.5.2018 till 23.6.2018. The Appellant stated the notification S.O 1205(E) dated 24.3.2020 issued by the Ministry of Corporate Affairs applies prospectively, hence the application is not below the threshold limit stipulated in the said notification. The Hon’ble NCLAT held that said notification makes it unambiguously clear that the threshold limit to be considered for section 9 Application will be Rs. 1 crore. This threshold limit will be applicable for application filed u/s 7 or 9 of IBC on or after 24.3.3020 even if debt is of a date earlier than 24.3.2020.
Relying on the ratio of its judgement of Madhusudan Tantia Vs. Amit Choraria & Anr., the Hon’ble NCLAT held that threshold limit of the debt will be Rs. 1 lakh only if the issuance of demand notice and filing of section 9 Application, both are prior to date of notification i.e., 24.03.2020. Accordingly, the appeal was dismissed.
- Ravindranathan vs. Sundaram BNP Paribas (DOJ: 25.10.2021)
In the instant case, the Hon’ble NCLAT reaffirmed that there is no impediment for an ‘Applicant’ to prefer an Application under section 7 of the IBC when already the proceedings under SARFAESI Act, 2002 are pending. For maintaining an application u/s 7 of the Code, an applicant is to establish the existence of a debt, which is due from the Corporate Debtor. The ingredients of Code will have an overriding effect in respect of the SARFAESI Act, 2002, by means of Section 238 of the Code. Further, the ‘Financial Creditor’ is always open to take all possible steps that are available to him / it to recover the money lent to the borrower. Consequently, the Appeal was dismissed as devoid of merits.
- Committee of Creditors of Meenakshi Energy Ltd. vs. Consortium of Prudent ARC Limited & Vizag & Anr. (DOJ: 25.10.2021)
In the instant case, the RP and the CoC members preferred an Appeal, whereby the NCLT denied to give any further RFR extension beyond 330 days and let a new PRA submit its Resolution Plan.
The Hon’ble NCLAT reiterated that NCLT is to adhere to the procedural and statutory requirements of the Code and heavily placed reliance on the ratio of judgment of Hon’ble Supreme Court in The Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta and Ors. The Hon’ble NCLAT held that CoC is to consider the Resolution Plan(s) submitted to it only before the due date and plan of new PRA cannot be considered as timely resolution of stressed assets is a prime factor in the successful working of the Code. The Hon’ble NCLAT further upheld the findings of NCLT and set aside only those observations against the CoC and the RP which were in detriment to their interest and in aberration of justice.
- MRA Associates(India) vs. Red Fort Capital Advisors Private Limited (DOJ: 25.10.2021)
In the instant case, NCLT dismissed the Review Application filed by the Appellant, thereby holding there is no provision for review of order under the Code. The power of Appeal, Revision and the Review are the creation of legislature that is the statutory powers that cannot be exercised by the Court/Tribunal unless and until it is provided under the Act/Code.
This Hon’ble NCLAT has been pleased to uphold the findings of NCLT and held that Rule 11 of the NCLT Rules, 2016, deals with inherent powers and Court/Tribunal has no jurisdiction to review its order unless authorised by the Statue. Further, Section 420(2) of Companies Act, 2013 only comes to effect if there is any mistake apparent on the record. In view of same the Hon’ble NCLAT reiterated that the ‘Power of Review’ is not an inherent power and is required to be conferred either specifically or necessary by implication. Accordingly, the appeal was dismissed.
- Agarwal Coal Corporation Pvt Ltd vs. Sun Paper Mill Ltd. & Anr. (DOJ: 25.10.2021)
In the instant case, the Appellant sought for recalling of judgement passed by NCLAT dated 16.10.2019. The Hon’ble NCLAT held that ‘recalling’ of judgment is impermissible in law and it was open for the Appellant to approach the Hon’ble Supreme Court of India as against the judgement of NCLAT. Further, the Hon’ble NCLAT relying on the ratio of judgement of Hon’ble Supreme Court in Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji held there is no express provision for ‘Review’ under the NCLAT Rules, 2016, and the Appellant cannot fall back upon Rule 11 of the NCLAT Rules, 2016 which provides for inherent powers’. The Rule 11 of NCLAT Rules, 2016 is not a substantive Rule which showers any power or jurisdiction upon the Tribunal thus, the Tribunal has no power to perform an act which is prohibited by Law. Consequently, the Appeal was dismissed as devoid of merits.
- M/s. Oriental Coal Corporation vs. M/s. Decore Exxoils Pvt. Ltd. (DOJ: 26.10.2021)
In the instant case, the Hon’ble NCLAT relying on the ratio judgment of the Hon’ble Supreme Court in Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr. held that ‘Limitation’ is a mixed question of law and facts and in absence of any communication in last three years from the date of default, the Application u/s 9 IBC is barred by Limitation. Further, relying on the ratio of judgment of the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd., Hon’ble NCLAT held that documentary evidences showing supply of goods and/or services as substandard and deficient in quality amounts to ‘Pre-Existing Dispute’, prior to the issuance of the Notice under Section 8. Accordingly, the appeal was dismissed.
- Asset Reconstruction Company India Limited vs. Mangesh Vitthal Kekre & Anr. (DOJ: 26.10.2021)
In the instant case, Appeal was filed on 29.01.2020 alongwith application for condonation of 52 days delay against the order of NCLT dated 22.10.2019. The Hon’ble NCLAT based on the settled position law as laid down by Hon’ble Supreme Court in the case of V Nagarajan vs. SKS Ispat Powers Limited and National Spot Exchange Limited vs. Anil Kohli, Resolution Professional For Dunar Foods Limited, observed that Section 61 (1) and (2) of the Code, consciously omit the requirement of Limitation being computed from when the order is made available to the aggrieved party. And it is not open to a person aggrieved by an order under the Code to await the receipt of the free certified copy under Section 421 (3) of the Companies Act 2013 read with Rule 50 of the NCLT to prevent Limitation from running. The litigant has to file its Appeal within 30 days, which can be extended up to a period of 15 days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of the legislation that has an impact on the economic health of a nation.
Accordingly, the Hon’ble NCLAT held that present Appeal was filed 98 days after passing of the impugned order, i.e. with a delay of 68 is beyond 30 days prescribed under Section 61 (2) of the Code thus, suffers from delay beyond the condonable period of 15 days under the proviso of Section 61 (2) of the Code and as such not maintainable as barred by Limitation hence is liable to be dismissed.
- Gundeep Gurdeep Singh Sood & Anr. Vs. Corporation Bank & Anr. (DOJ: 29.10.2021)
In the instant case, the Appellant is the ex-director of Corporate Debtor, whose account was declared as NPA on 30.06.2014. The Appellant submitted that the application under Section 7 of the IBC filed by Respondent No. 1 on 14.02.2019 was much after delay of 3 years and is thus hit by limitation. The Hon’ble NCLAT replying on the ratio of the Hon’ble Supreme Court in the judgment of Asset Reconstruction Company (India) Limited Vs. Bishal Jaiswal & Anr. held that the Respondent filed financial statements for period 2015-16, 2016-17 and balance sheet in the Annual Report 2017-2018 and One Time Settlement dated 04.01.2020, all duly signed by the Appellants thus, amounting to acknowledgment of debt. Accordingly, the Hon’ble NCLAT upheld the order of NCLT and dismissed the Appeal.