Adjudicating Authority's Jurisdiction Overstepped, Order Set Aside, Case Remanded for Fair Review

The Tribunal found that the Adjudicating Authority exceeded its jurisdiction by reviewing its own order, leading to the impugned order dated 11.06.2021 being set aside. The case was remanded for the Adjudicating Authority to reconsider the matter, ensuring procedural fairness by allowing both parties to be heard. The appeal was allowed, and related interim applications were closed.

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Issues Involved:
1. Review of Order by Adjudicating Authority.
2. Appointment of Liquidator.
3. Pendency of Applications.
4. Jurisdiction and Power of Review.
5. Procedural Fairness and Opportunity to be Heard.

Detailed Analysis:

1. Review of Order by Adjudicating Authority:
The primary issue is whether the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench II) exceeded its authority by reviewing its own order dated 04.07.2019. The Appellants argued that the Adjudicating Authority had no power to review its previous order, as it is not conferred by the Insolvency and Bankruptcy Code (IBC) or the Companies Act, 2013. The Tribunal noted that Section 420(2) of the Companies Act allows rectification of orders only for mistakes apparent from the record and does not provide for a review. The Tribunal cited precedents, including the Supreme Court's decision in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, which held that the power of review must be explicitly conferred by law.

2. Appointment of Liquidator:
The Adjudicating Authority had initially passed an order for liquidation on 14.06.2019 but deferred the appointment of a liquidator. The Tribunal observed that under Section 34 of the IBC, the Resolution Professional (RP) could act as the liquidator unless replaced. The RP had given consent to act as the liquidator, and no decision was taken by the Committee of Creditors (CoC) to replace him. The Tribunal found that the liquidation order was validly passed due to the absence of a resolution plan and the expiry of the CIRP period.

3. Pendency of Applications:
The Appellants contended that the Adjudicating Authority failed to consider the pending applications, CA 607/2019 and CA 731/2019, which were crucial for deciding the liquidation. The Tribunal noted that the Adjudicating Authority had deferred the liquidation proceedings until the disposal of these applications. The Tribunal emphasized that procedural fairness required the pending applications to be addressed before proceeding with liquidation.

4. Jurisdiction and Power of Review:
The Tribunal underscored that the Adjudicating Authority had no jurisdiction to review its own orders beyond rectifying apparent mistakes. The impugned order dated 11.06.2021 was found to be beyond the jurisdiction of the Adjudicating Authority as it effectively reviewed and altered the previous order dated 04.07.2019, which had deferred the liquidation.

5. Procedural Fairness and Opportunity to be Heard:
The Tribunal highlighted that the Appellants were not given an opportunity to be heard regarding the liquidation order passed on 14.06.2019. The lack of notice and hearing rendered the order ex parte, giving the Appellants the right to seek its recall under Rule 49(2) of the NCLT Rules, 2016. The Tribunal found that the Adjudicating Authority failed to appreciate this procedural lapse and did not provide adequate opportunity for the Appellants to present their case.

Conclusion:
The Tribunal concluded that the Adjudicating Authority had overstepped its jurisdiction by reviewing its own order. The impugned order dated 11.06.2021 was set aside, and the case was remanded to the Adjudicating Authority to restore IA No.2034/2021 and pass fresh orders on merits, ensuring both parties are heard. The appeal was allowed, and the related interim applications were closed.

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