2023 (1) TMI 1191 - AT - Insolvency and Bankruptcy

Appellate Tribunal Overturns Order, Emphasizes Fair Consideration

VITOL S.A. Versus ASIAN NATURAL RESOURCES (INDIA) LIMITED, (FORMERLY BHATIA INTERNATIONAL LIMITED), SURINDER SINGH BHATIA, GURVINDER SINGH BHATIA, MANJEET SINGH BHATIA, AMARDEEP SINGH BHATIA, BANK OF INDIA, STATE BANK OF INDIA, UCO BANK, UNION BANK OF INDIA, STANDARD CHARTERED BANK

The Appellate Tribunal allowed the appeal, setting aside the Order dated 05.05.2022, and expunged paragraphs 14, 17, and 18 from the Order dated ... Seeking restraint order against respondent no. 2 to 5 except seeking direction to deposit their passport - whether the Appellant has locus to file application or not - whether the objection filed in application were valid? - HELD THAT:- It is clear that the Adjudicating Authority has observed that Application filed by the Applicant i.e. I.A. No. 287 of 2018 is not maintainable he being the Operational Creditor. I.A. No. 287 of 2018 was not listed for consideration and which Application is still pending and was not disposed of. In I.A. No. 287 of 2018, the Appellant has raised various issues and has prayed for several reliefs and without adverting to the said application and without giving opportunity to the Appellant on the said application it was not open for the Adjudicating Authority to make observations as noted above. When an Application is not listed before the Court nor the Adjudicating Authority heard the parties on the said application, any observations made in reference to the said application is bound to prejudice the rights of the Applicant. The Order impugned dated 05.05.2022 thus proceeded on misconception that I.A. No. 287 of 2018 was dismissed vide Order dated 14.02.2019 whereas on 14.02.2019 neither the I.A. No. 287 of 2018 was listed nor heard and nor decided. The Adjudicating Authority committed error in rejecting application - appeal allowed. Issues Involved:1. Challenge to the Order dated 05.05.2022 by the National Company Law Tribunal, Indore Bench.2. Participation rights of the Appellant in the Insolvency Proceedings.3. Allegations against the Ex-Promoters and the role of the Liquidator.4. Permission for travel by Surinder Singh Bhatia.5. Clarification and expunging of observations made in the Order dated 14.02.2019.6. Jurisdiction of the Adjudicating Authority to review or clarify its orders.Detailed Analysis:1. Challenge to the Order dated 05.05.2022 by the National Company Law Tribunal, Indore Bench:The appeal was filed against the Order dated 05.05.2022, which dismissed I.A. No. 156 of 2019 filed by the Appellant. The Appellant sought clarifications regarding the observations made in the Order dated 14.02.2019.2. Participation rights of the Appellant in the Insolvency Proceedings:The Appellant, an Operational Creditor, was granted the right to participate in the proceedings by the Adjudicating Authority's Order dated 06.11.2017. This included the right to present relevant materials concerning allegations against the Corporate Debtor. Despite this, the Appellant claimed that no appropriate actions were taken by the Liquidator, prompting the filing of I.A. No. 287 of 2018 under Section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC).3. Allegations against the Ex-Promoters and the role of the Liquidator:The Appellant alleged misconduct by the Ex-Promoters of the Corporate Debtor and sought various reliefs under Section 66(2) of the IBC. The Adjudicating Authority issued an Interim Order on 09.08.2018, restricting the Respondents from leaving the country without prior permission. The Liquidator's role in addressing these allegations was also scrutinized.4. Permission for travel by Surinder Singh Bhatia:Surinder Singh Bhatia filed I.A. No. 85 of 2019 seeking permission to travel to Abu Dhabi, which was granted by the Adjudicating Authority on 14.02.2019. The Appellant contended that the observations made in this Order adversely affected I.A. No. 287 of 2018, which was still pending.5. Clarification and expunging of observations made in the Order dated 14.02.2019:The Appellant filed I.A. No. 156 of 2019 seeking clarification that the observations in paragraphs 14, 17, and 18 of the Order dated 14.02.2019 were only prima facie and could be revisited. The Appellant also sought to expunge these observations, arguing they were premature and prejudiced the pending I.A. No. 287 of 2018.6. Jurisdiction of the Adjudicating Authority to review or clarify its orders:The Respondents argued that I.A. No. 156 of 2019 was essentially a review application, which the Adjudicating Authority lacked jurisdiction to entertain. The Appellant, however, maintained that they were not seeking a review but a clarification to prevent prejudice against their pending application.Judgment and Conclusion:The Appellate Tribunal found that the Adjudicating Authority erred in making observations in paragraphs 14, 17, and 18 of the Order dated 14.02.2019, which prejudiced the Appellant's pending application (I.A. No. 287 of 2018). The Tribunal noted that these observations were made without hearing the parties on the said application, which was neither listed nor decided on 14.02.2019. The Tribunal also observed that the Adjudicating Authority's statement that I.A. No. 287 of 2018 was dismissed on 14.02.2019 was incorrect, as the application was still pending.The Appellate Tribunal allowed the appeal, set aside the Order dated 05.05.2022, and expunged paragraphs 14, 17, and 18 from the Order dated 14.02.2019. The Tribunal emphasized that the questions regarding the Appellant's locus to file I.A. No. 287 of 2018 and the validity of objections in I.A. No. 386 of 2018 should be considered while deciding those applications, not while deciding I.A. No. 85 of 2019.