Court nullifies NCLT order for procedural non-compliance under IBC, directs fresh hearing.

The court quashed the NCLT's order dated 22nd October 2019, declaring it a nullity due to non-compliance with procedural rules mandating the pronouncement of orders. The court directed a fresh hearing of the financial creditor's application under Section 7 of the IBC, emphasizing adherence to procedural rules to uphold the sanctity of judicial proceedings.

---

---

Issues Involved:
1. Legality and validity of the NCLT order dated 22nd October 2019.
2. Compliance with procedural rules, particularly Rules 150 and 152 of the NCLT Rules, 2016.
3. Maintainability of the writ petition under Article 226 of the Constitution of India.
4. Pronouncement and communication of judicial orders by the NCLT.

Detailed Analysis:

1. Legality and Validity of the NCLT Order Dated 22nd October 2019:
The petitioner challenged the order passed by the NCLT on 22nd October 2019, arguing that it was non est and had no force in law. The petitioner alleged that the order was not pronounced in open court and was not listed in the cause list for pronouncement on the said date. The order was communicated to the petitioner only on 8th November 2019, which was after the judicial member had demitted office. The court found that there was no evidence of the order being pronounced, making the order a nullity.

2. Compliance with Procedural Rules, Particularly Rules 150 and 152 of the NCLT Rules, 2016:
The court emphasized the importance of compliance with procedural rules, particularly Rules 150 and 152 of the NCLT Rules, 2016, which mandate the pronouncement of orders. Rule 150(1) states that the tribunal shall make and pronounce an order either at once or as soon as practicable but not later than thirty days from the final hearing. Rule 151 allows any member of the bench to pronounce the order on behalf of the bench. The court found that the NCLT did not comply with these rules, as there was no record of the order being pronounced.

3. Maintainability of the Writ Petition Under Article 226 of the Constitution of India:
The respondents argued that the writ petition was not maintainable as the petitioner had an alternate and equally efficacious remedy of appeal to the NCLAT. The court, however, held that the writ petition was maintainable as it raised serious issues concerning the legality and validity of the NCLT's order and the sanctity of judicial proceedings. The court noted that the principles laid down in various Supreme Court judgments allow for the issuance of a writ of certiorari to quash orders passed in violation of procedural rules and principles of natural justice.

4. Pronouncement and Communication of Judicial Orders by the NCLT:
The court highlighted the importance of pronouncing judicial orders in open court to ensure transparency and fairness in judicial proceedings. The court referred to the judgments of the Supreme Court in Surendra Singh and Ors. vs. State of Uttar Pradesh and State of Uttar Pradesh vs. Lakshmi Ice Factory and Ors., which emphasize that pronouncement of orders is a judicial act that must be performed in a judicial way. The court found that the NCLT's failure to pronounce the order in open court and communicate it to the parties in a timely manner violated the principles of natural justice and procedural fairness.

Conclusion:
The court quashed the NCLT's order dated 22nd October 2019, declaring it a nullity due to non-compliance with the procedural rules mandating pronouncement of orders. The court directed that the application made by the financial creditor under Section 7 of the IBC be heard afresh on merits and in accordance with law. The court also emphasized the need for tribunals to adhere to procedural rules to maintain the sanctity and credibility of judicial proceedings.

---