High Court dismisses writ petition challenging NCLT order citing lack of jurisdiction.

The High Court dismissed the writ petition challenging the NCLT order directing payment to respondents, citing lack of jurisdiction to entertain the application. The Court emphasized the importance of adhering to the IBC's time-bound resolution process and the availability of the appeal remedy under Section 61 of the IBC, which the petitioners failed to utilize within the prescribed period. The Court held that the writ petition was not maintainable as a substitute for the appeal process, directing the petitioners to pursue remedies under the IBC and closing the pending applications without costs.

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Issues Involved:

1. Legality and validity of the order dated 27.11.2019 passed by the National Company Law Tribunal (NCLT).
2. Jurisdiction of the NCLT under the Insolvency and Bankruptcy Code (IBC).
3. Availability of alternative remedy and its impact on the writ petition.
4. Timeliness of the appeal under Section 61 of IBC.

Detailed Analysis:

1. Legality and Validity of the NCLT Order:

The writ petition was filed under Article 226 of the Constitution of India challenging the legality and validity of the NCLT order dated 27.11.2019, which directed the petitioners to pay Rs.23,91,37,582/- to respondent Nos.2 and 3. The NCLT had initiated the corporate insolvency resolution process against the corporate debtor (respondent No.3) and appointed respondent No.2 as the Interim Resolution Professional. The Resolution Professional filed an Interlocutory Application seeking directions for the petitioners to release pending payments for electricity supplied, amounting to Rs.23,91,37,582/-. The petitioners contended that they were only liable to pay Rs.7.45 crores and argued that the NCLT lacked jurisdiction to entertain the application.

2. Jurisdiction of the NCLT under IBC:

The NCLT, after considering the rival pleadings and submissions, held that the Resolution Professional had the mandate to manage the affairs of the corporate debtor and was entitled to exercise all powers and perform all duties as vested under the IBC. The Tribunal directed that payments be made as per the mutually agreed terms pending final approval by the Andhra Pradesh Electricity Regulatory Commission (APERC) to avoid adversely affecting the insolvency resolution process of the corporate debtor. The Tribunal emphasized that the objective of the IBC is to provide a specific law for the reorganization and insolvency resolution of corporate persons in a time-bound manner, maximizing the value of assets and promoting entrepreneurship.

3. Availability of Alternative Remedy and its Impact on the Writ Petition:

The High Court, upon hearing the arguments, observed that the petitioners needed to satisfy the Court about the entertainability of the writ petition in light of the object of the IBC and the provision of appeal under Section 61 of IBC. The petitioners argued that the availability of an alternative remedy is no bar for entertaining petitions under Article 226, citing judicial review as a basic feature of the Constitution. They relied on several Supreme Court decisions, including L. Chandra Kumar vs. Union of India and Whirlpool Corporation vs. Registrar of Trade Marks, to support their contention. However, the Court noted that the impugned order did not fall within the exceptions where writ jurisdiction could be exercised despite the availability of an alternative remedy.

4. Timeliness of the Appeal under Section 61 of IBC:

The respondents argued that the order impugned was appealable under Section 61 of IBC, but the period for filing an appeal (30 days, extendable by another 15 days) had long expired. They contended that the writ petition could not be entertained as a substitute for an appeal after the limitation period had lapsed. The Court agreed, stating that the failure to file an appeal within the prescribed time could not be a ground to entertain the writ petition under Article 226. The Court emphasized that the statutory period for redressal of grievances should not be disregarded, and the writ petitioners should work out their remedies in terms of the IBC.

Conclusion:

The High Court dismissed the writ petition, holding that the petitioners should have availed the alternative remedy of appeal under Section 61 of IBC within the prescribed limitation period. The Court concluded that it was not inclined to entertain the writ petition and directed the petitioners to work out their remedies under the IBC. The miscellaneous applications pending were also closed, with no order as to costs.

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