2020 (9) TMI 597 - Tri - Insolvency and Bankruptcy

Tribunal rulings on withdrawal, forgery, and jurisdictional limits stress procedural justice and merit-based litigation

The Tribunal dismissed IA Nos. 41 and 42 of 2020, allowing withdrawal without liberty to refile. IA Nos. 51 and 52 of 2020 were disposed of, permitting ... Restoration of company petition - withdrawal of application as not pressed - refusal of liberty to file fresh identical application - allegations of forgery and perjury to be pursued before criminal forum - tribunal not competent to order criminal prosecution - relegation to earlier stage of hearingWithdrawal of application as not pressed - refusal of liberty to file fresh identical application - IA Nos. 41 & 42 of 2020 dismissed as not pressed and no liberty granted to file a fresh application for the same prayer. - HELD THAT: - The Financial Creditor filed IA Nos. 41 & 42 of 2020 for restoration but subsequently sought withdrawal by memo. The Tribunal held that a party has the prerogative to withdraw an application voluntarily and that the memo of withdrawal could not be objected to by the Corporate Debtor. However, having voluntarily withdrawn the application, the Applicant could not be permitted to reagitate the identical prayer by filing a fresh application; grant of liberty to file another application for the same relief was refused. The Tribunal distinguished the act of permitting withdrawal from allowing re filing of the selfsame claim and thus dismissed IA Nos. 41 & 42 as not pressed while denying liberty to file another application for the same prayer. [Paras 6]IA Nos. 41 & 42 of 2020 dismissed as not pressed; no liberty to file another application for the same prayer.Tribunal not competent to order criminal prosecution - allegations of forgery and perjury to be pursued before criminal forum - Allegations of forgery and perjury in IA Nos. 51 and 52 of 2020 are not adjudicated by the Tribunal and the parties are directed to approach the appropriate criminal forum; the Tribunal will not order prosecution. - HELD THAT: - The Corporate Debtor alleged falsification of signatures and perjury in relation to the verifying affidavits and sought criminal consequences and cross examination. The Tribunal observed that questions of forgery and perjury fall within the exclusive domain of criminal courts and that it would be inappropriate and beyond the Tribunal's jurisdiction to order criminal prosecution or to decide those allegations. Accordingly, IA Nos. 51 and 52 were disposed of with the observation that the Respondent may pursue the allegations before the competent authority; such adjudication or investigation would remain uninfluenced by the Tribunal's orders. [Paras 6, 11]IA Nos. 51 & 52 disposed of with direction to approach appropriate criminal forum; Tribunal refrains from ordering prosecution or adjudicating those allegations.Relegation to earlier stage of hearing - restoration of company petition - The present Company Petition is restored to file and relegated to the stage of hearing as on 11.02.2020; listed for further hearing. - HELD THAT: - The Tribunal found that the disposal order dated 13.02.2020 was contingent upon admission in a separate petition which was subsequently withdrawn, thereby removing the basis for disposing the present petition. Emphasising the primacy of adjudication on merits and that procedure should not foreclose substantive rights, the Tribunal concluded that the Financial Creditor should not be left without remedy. Consequently, the Company Petition was restored to file and placed back to the stage of hearing as of 11.02.2020, with further listing for hearing on the notified date. [Paras 11]Company Petition restored to file and relegated to the stage of hearing as on 11.02.2020; posted for further hearing.Materials in IA No. 62 as evidence and criminal appraisal - IA No. 62 of 2020 (forensic report/evidence) dismissed as infructuous; materials are to be appraised only in criminal proceedings. - HELD THAT: - The Tribunal observed that materials placed in IA No. 62 are evidentiary in nature and their appraisal falls within the scope of a criminal trial. Acceptance or appraisal of such material in the present proceedings would be irrelevant and redundant. Therefore IA No. 62 was dismissed as infructuous, and any investigation or trial based on those materials remains open to the appropriate authorities without being influenced by the Tribunal's order. [Paras 11]IA No. 62 of 2020 dismissed as infructuous; evidentiary materials reserved for criminal appraisal.Final Conclusion: The Tribunal dismissed IA Nos. 41 & 42 as not pressed and denied liberty to refile the same prayer; disposed IA Nos. 51 & 52 with direction to pursue forgery/perjury allegations before the competent criminal forum; dismissed IA No. 62 as infructuous; and restored the Company Petition to file, relegating it to the stage of hearing as on 11.02.2020 for further adjudication. Issues Involved:1. Withdrawal and restoration of Company Petition.2. Allegations of forgery and perjury.3. Jurisdictional limits of the Tribunal.4. Procedural justice and substantial justice.Detailed Analysis:1. Withdrawal and Restoration of Company Petition:The judgment addressed the procedural history of the Company Petition filed by the Financial Creditor (FC) under Section 7 of the Insolvency and Bankruptcy Code (the Code) against the Corporate Debtor (CD). The Company Petition was initially disposed of based on the admission of another Company Petition filed by an Operational Creditor (OC) and the subsequent withdrawal of the same after an out-of-court settlement. The FC filed applications (IA Nos. 41 and 42 of 2020) seeking the restoration of the Company Petition and the interim order. The Tribunal allowed the withdrawal of these applications but did not grant liberty to file another application for the same prayer. The Tribunal emphasized that the Company Petition should be restored to file and heard on merits, underscoring the principle that litigations should be adjudicated on merits rather than terminated by default.2. Allegations of Forgery and Perjury:The CD raised allegations of forgery and perjury regarding the signatures on the verifying affidavits in IA Nos. 41 and 42 of 2020. The CD filed applications (IA Nos. 51 and 52 of 2020) alleging forgery and sought criminal proceedings against the FC. The Tribunal refrained from commenting on the merits of these allegations, stating that such matters fall within the jurisdiction of a competent Criminal Court. The Tribunal allowed the CD to pursue these allegations before the appropriate forum, maintaining that the allegations of forgery and perjury would not be affected by the orders passed in the current proceedings.3. Jurisdictional Limits of the Tribunal:The Tribunal clarified its jurisdictional limits, stating that it could not order criminal prosecution or cross-examination related to allegations of forgery and perjury. Such matters are outside the realm of the Tribunal's jurisdiction and fall within the domain of the Criminal Court. The Tribunal emphasized that it would not venture into areas not conferred upon it by law, ensuring that the criminal adjudication system remains unaffected by its orders.4. Procedural Justice and Substantial Justice:The Tribunal highlighted the importance of procedural justice as a means to achieve substantial justice. It cited precedents emphasizing that litigation should be adjudicated on merits and not terminated by procedural defaults. The Tribunal noted that procedural rules are intended to aid the cause of justice and not to hamper it. The judgment stressed that the FC should not be left without a remedy due to procedural technicalities and that the Company Petition should be restored and heard on merits to ensure justice.Conclusion:The Tribunal dismissed IA Nos. 41 and 42 of 2020 as not pressed and allowed the withdrawal without granting liberty to file another application for the same prayer. IA Nos. 51 and 52 of 2020 were disposed of, allowing the CD to approach the appropriate forum for redressal of forgery and perjury allegations. IA No. 62 of 2020 was dismissed as infructuous. The Company Petition was restored to file and scheduled for a hearing on 06.07.2020. The Tribunal ensured that the allegations of forgery and perjury would not influence any criminal investigation or proceedings.