2022 (6) TMI 926 - HC - Insolvency and Bankruptcy

High Court Dismisses Petition, Emphasizes IBC's Appellate Process

The High Court held that the Civil Revision Petition under Article 227 was not maintainable as the petitioner, a Corporate Debtor, failed to exhaust the ... Maintainability of the Civil Revision Petition under Article 227 of the Constitution - petitioner has got remedy before the National Company Law Appellate Tribunal - HELD THAT:- On a perusal of the recent judgments of the Apex Court, it is clear that when an appeal remedy is provided under the Act, the aggrieved party should exhaust the said remedy by filing an appeal before the Appellate Forum and the Writ Petition/Civil Revision Petition filed by them under Articles 226/227 of the Constitution is not maintainable. When the petitioner can raise all the grounds available to them under law before the Appellate Forum, the filing of the Civil Revision Petition under Article 227 cannot be entertained. Reliance can be placed in the case of M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA & OTHERS [2019 (12) TMI 188 - SUPREME COURT] where it was held that Though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act, 1957 and the rules issued thereunder, especially when the disputes revolve around decisions of statutory or quasijudicial authorities, which can be corrected only by way of judicial review of administrative action. Hence, the High Court was justified in entertaining the writ petition and we see no reason to interfere with the decision of the High Court. The Civil Revision Petition filed under Article 227 of the Constitution challenging the order passed by the National Company Law Tribunal is not maintainable - the Civil Revision Petition is dismissed as not maintainable. Issues Involved:1. Maintainability of the Civil Revision Petition under Article 227 of the Constitution.2. Availability and necessity of exhausting alternative statutory remedies.3. Jurisdiction of the High Court under Articles 226 and 227 of the Constitution.Detailed Analysis:1. Maintainability of the Civil Revision Petition under Article 227 of the Constitution:The petitioner, a Corporate Debtor, challenged the order passed by the National Company Law Tribunal (NCLT) under Article 227 of the Constitution of India. The Court raised a query regarding the maintainability of this petition under Article 227, given that Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016 provides an appellate remedy before the National Company Law Appellate Tribunal (NCLAT).2. Availability and Necessity of Exhausting Alternative Statutory Remedies:The Court referred to several precedents to emphasize that the IBC, 2016 is a comprehensive code providing a three-tier mechanism: NCLT as the adjudicating authority, NCLAT as the appellate authority, and the Supreme Court as the final authority. The judgments cited include:- Embassy Property Developments Private Limited Vs. State of Karnataka: The Supreme Court held that the IBC is an exhaustive code and that High Courts should not interfere under Articles 226/227 when a statutory alternative remedy is available.- Sulochana Gupta Vs. RBG Enterprises Private Limited: The Kerala High Court reiterated that writ petitions under Article 226 are not maintainable when an alternative remedy is available, especially in disputes between private parties.- Hero Exports Vs. K. Vasudevan, Resolution Professional and others: The Madras High Court held that the inherent powers of the NCLT cannot be invoked to recall a resolution plan, and that such matters should be addressed through the appellate mechanism provided under the IBC.3. Jurisdiction of the High Court under Articles 226 and 227 of the Constitution:The Court discussed the scope and limitations of the High Court's jurisdiction under Articles 226 and 227. It noted that while Article 226 allows for issuing directions, orders, or writs for enforcement of fundamental rights or for any other purpose, Article 227 provides for superintendence over all courts and tribunals within the territorial jurisdiction of the High Court. However, this jurisdiction is not to be exercised when an effective alternative remedy is available.The Court also referred to the judgment in Kalpraj Dharamshi & anr. v. Kotak Investment Advisors Ltd. And anr., where the Supreme Court acknowledged that while the High Court could exercise jurisdiction under Article 226 in cases of procedural breaches by NCLT, the existence of an alternative remedy should generally deter such intervention.Conclusion:The Court concluded that the Civil Revision Petition under Article 227 of the Constitution is not maintainable when an alternative remedy is provided under the IBC. The petitioner should have exhausted the appellate remedy before NCLAT as stipulated by Section 61 of the IBC. The Court dismissed the Civil Revision Petition as not maintainable, emphasizing the necessity of adhering to the statutory appellate process.