2020 (6) TMI 333 - Tri - Insolvency and Bankruptcy

Tribunal lacks power to review order, dismisses application based on pecuniary limit.

The Tribunal dismissed the Applicant/Corporate Debtor's Application, ruling that it lacked the power to recall or review its order dated 05.05.2020. The ... Maintainability of petition - initiation of CIRP - power of Tribunal to review or recall order - main contention which is projected by the Respondent/ Operational Creditor in its Counter is that this Tribunal does not have power either to recall or review the Order which was passed on merits - HELD THAT:- By virtue of the exercise of power under Section 434 of the said Act, even though the Petitioners who had filed winding up Petitions and whose cases are to be transferred in accordance with the said provision as well as Notification by the Central Government thereunder, are still left with a forum, namely NCLT to proceed with their claim and while delegating the power to the Central Government, the Legislature had seen to that, those Petitioners thereunder have not been left high and dry, which will be the case in the present instance, if the argument of the Applicant is taken at face value that the Notification dated 24.03.2020 is to be applied retrospectively and to be given a retroactive effect. Since this Tribunal being a creature of statute, does not have the power of judicial review in relation to scrutiny of enactments or even the Rules and Regulations framed thereunder including the Notification as the present one issued by the Central Government dated 24.03.2020, this Tribunal confines itself only to a careful reading of the Notification and the provisions under which it has been issued, and find that the provision under which the Notification had been issued do not expressly confer any power on the delegate to issue the Notification making it retrospective in its operation nor any necessary intendment can also be gathered therefrom, however, laudable as sought to be given colour off by the Applicant/ Corporate Debtor. Thus, it is not necessary for this Tribunal to exercise itself upon the nature of right which had accrued i.e., 'vested' or 'conditional' in the absence of any express power granted which can be gathered from the statute itself, namely I&B Code, 2016 to the delegate to make the Notification dated 24.03.2020 to be applied retrospectively. Pecuniary limit which is required to be applied in relation to the main C.P. - HELD THAT:- The list of dates clearly brings out the fact that the main C.P. was heard and reserved for Orders on 04.03.2020 when the pecuniary limit to entertain the Petition was ₹ 1 lakh, even though on the date of pronouncement of the Order pecuniary limit had been enhanced to Rs.l Crore. Enhancement of pecuniary limits in order to entertain Suits by Civil Courts by virtue of the power granted to the State has been exercised from time to time by the Executive keeping in mind the existing state of affairs prevalent in the State including economical. In the absence of any power of recall or review available to this Tribunal and in the case on hand, I find it does not fall within the confines of Section 420 of the Companies Act, 2013 nor Rule 11 of NCLT Rules, 2016, and as the recourse, if at all for the party aggrieved, namely the Applicant/ Corporate Debtor, should have been to approach the Appellate Tribunal under Section 61 of I&B Code, 2016, if so advised and not this Tribunal by way of this Application and this Tribunal is hence constrained to dismiss this Application - Further, the Notification issued by the Central Government through the Ministry of Corporate Affairs dated 24.03.2020 bearing S.O 1205(E), in view of the detailed discussions in relation to the issue of its Applicability, can be considered only as prospective, (i.e.) applicable from 24.03.2020. The law which was prevalent on the date when the main CP in IBA/ 1031/2019 was filed, proceeded with and when the matter was finally heard and reserved thereafter on 04.03.2020, is required to be disposed of by this Tribunal considering only the pecuniary limits of ₹ 1 Lakh for maintaining a Petition under Section 9 of I&B Code, 2016 by an Operational Creditor, and in the circumstances, this Tribunal at the time of pronouncement hence was not lacking in pecuniary jurisdiction. Application dismissed. Issues Involved:1. Applicability of the Notification dated 24.03.2020 regarding the increase in the threshold limit for filing a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Power of the Tribunal to recall or review its own order.3. Jurisdictional validity of the order dated 05.05.2020 in light of the Notification dated 24.03.2020.4. Retrospective versus prospective applicability of the Notification dated 24.03.2020.Issue-wise Detailed Analysis:1. Applicability of the Notification dated 24.03.2020:The Applicant/Corporate Debtor sought to recall the order passed on 05.05.2020, arguing that the Notification dated 24.03.2020, which increased the minimum threshold limit from Rs. 1 Lakh to Rs. 1 Crore, should apply retrospectively. The Respondent/Operational Creditor contended that the Notification should be applied prospectively and that the Tribunal had no power to recall or review its order based on this Notification.2. Power of the Tribunal to Recall or Review its Own Order:The Respondent/Operational Creditor argued that the Tribunal lacked the power to recall or review its order under Section 420 of the Companies Act, 2013, or Rule 11 of the NCLT Rules, 2016. The Tribunal agreed, stating that unless specifically provided by the statute, it does not possess the power to review or recall its own final orders. The Tribunal cited several judgments to support this position, including Swiss Ribbons Pvt. Ltd. & Anr. v. Union Of India & Ors. and NUI Pulp and Paper Industries (P) Ltd v. Roxel Trading GHBH.3. Jurisdictional Validity of the Order Dated 05.05.2020:The Tribunal noted that it had jurisdiction over the matter as the pecuniary limit at the time of filing the petition was Rs. 1 Lakh. The Tribunal emphasized that the Notification dated 24.03.2020 did not specify a retrospective effect, and therefore, could not be applied to cases filed before its issuance. The Tribunal referenced the judgment in M/s. Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors. to support its jurisdictional stance.4. Retrospective Versus Prospective Applicability of the Notification:The Tribunal examined whether the Notification could be applied retrospectively. It concluded that the Notification dated 24.03.2020 should be considered prospective, as the Central Government did not have the express power to issue a retrospective Notification. The Tribunal cited several judgments, including Dr. Indramani Pyarelal Gupta v. W.R. Nath and Bakul Cashew Co. vs. State Tax Officer Quilon, to support the principle that delegated legislation cannot have retrospective effect unless expressly provided.Conclusion:The Tribunal dismissed the Application filed by the Applicant/Corporate Debtor, stating that it lacked the power to recall or review its order dated 05.05.2020. The Notification dated 24.03.2020 was deemed to apply prospectively, and the Tribunal had jurisdiction to pass the order based on the pecuniary limit of Rs. 1 Lakh, which was in effect at the time of filing the petition. The Application was dismissed without costs.