2023 (4) TMI 719 - AT - Insolvency and Bankruptcy

Tribunal overturns order, stresses fair hearing for parties

The National Company Law Appellate Tribunal, Chennai, set aside the Impugned Order due to non-compliance with tribunal orders and failure to adhere to ... Violation of principles of natural justice (audi alterem partem) - 2nd Respondent / Resolution Professional is a party to the proceeding or not - non-providing an opportunity to explain the facts as to why the 2nd Respondent / Resolution Professional, was a necessary Party - seeking summon to Resolution Professional, for not paying the Corporate Insolvency Resolution Process costs, for a period of nearly six months to the Appellant - HELD THAT:- On a careful perusal of the Impugned Order dated 25.08.2022 in IA/596(CHE)/2022 in CP/1264/IB/2018, on the file of the Adjudicating Authority, National Company Law Tribunal, Special Bench, Court – I, Chennai, this Tribunal, is of the considered view that, though the Learned Counsels appearing for the Parties, were present, nothing is made mention of or recorded in the Impugned Order, as to whether the Learned Counsels, had prayed for an opportunity, to explain the necessary facts having provided to them - Suffice it, for this Tribunal, to make a pertinent mention that the Impugned Order, is conspicuously silent, on this aspect. This Tribunal, to aptly points out the Judgment of the Hon’ble Supreme Court of India in Central Bank of India v. Vrajlal Kapurchand Gandhi & Anr. [2003 (7) TMI 708 - SUPREME COURT], wherein, it is observed that Statements of fact as to what transpired at the hearing recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in Court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to cull the attention of the very Judges who have made the record. That is the only way to have the record corrected. It is an axiomatic principle in Law, that the Tribunal / an Appellate Tribunal, are guided by the Principles of Nature Justice, notwithstanding the fact that it can regulate its own procedure, as it deems fit and proper. However, the Tribunal (Adjudicating Authority), under Section 5 (1) (a) of the I & B Code, 2016 - 408 of the Companies Act, 2013 and an Appellate Tribunal (NCLAT), as per Section 410 of the Companies Act, 2013, are very much required and guided to adhere to the Principles of Natural Justice, in terms of ingredients of Section 421 (4) of the Companies Act, 2013, and as per Rule 34 of the NCLT Rules, 2016 - the Principle of Audi Alteram Partem, has been negated, as seen from the Impugned Order. On this simple ground alone, this Tribunal, without delving deep into the merits of the matter nor expressing any opinion, one way or the other simpliciter, at this juncture, is inclined to set aside, the Impugned Order, and allows, the Comp. App (AT) (CH) (INS.) No. 53 / 2023, in furtherance of Substantial Cause of Justice. The matter is remitted back to the Adjudicating Authority, who shall restore the IA/596(CHE)/2022 in CP/1264/IB/2018 to its file and after restoration of the said Application, and taking it on file, is to pass an reasoned / speaking order, De novo, both on, qualitative and quantitative term(s), by adverting to the Arguments / Factual and Legal pleas, raised on behalf of the Parties - appeal disposed off. Issues Involved:The judgment involves issues related to non-compliance with tribunal orders, the necessity of a party in proceedings, adherence to principles of natural justice, and the requirement of a reasoned order.Non-compliance with Tribunal Orders:The Appellant filed an appeal dissatisfied with the Impugned Order dated 25.08.2022, where the Adjudicating Authority dismissed the Application as the Applicant failed to comply with the Tribunal's order to file an amended application within seven days. The Appellant argued that the Adjudicating Authority did not provide an opportunity to explain why the 2nd Respondent, a Resolution Professional, was a necessary party.Necessity of a Party in Proceedings:The Appellant contended that the Resolution Professional should have been summoned for not paying Corporate Insolvency Resolution Process costs, leading to liquidation. In contrast, the Counsel for the 2nd Respondent argued against including the Resolution Professional, stating that all documents were handed over to the Liquidator, making the inclusion unnecessary and futile.Adherence to Principles of Natural Justice:The Tribunal noted that the Impugned Order was silent on whether the Counsels had an opportunity to explain necessary facts. Citing the Supreme Court's judgment, the Tribunal emphasized the importance of recording statements of fact accurately and the need for reasoned orders for the appearance of justice.Requirement of a Reasoned Order:Emphasizing the significance of a reasoned order in upholding justice, the Tribunal set aside the Impugned Order due to the negation of the Principle of Audi Alteram Partem. The matter was remitted back to the Adjudicating Authority to pass a reasoned order, adhering to the Principles of Natural Justice within three weeks, ensuring a fair and just decision based on factual and legal pleas.Conclusion:The National Company Law Appellate Tribunal, Chennai, set aside the Impugned Order and remitted the matter back to the Adjudicating Authority for a reasoned order within three weeks. The judgment highlights the importance of adherence to natural justice principles and the necessity of providing parties with opportunities to present their case effectively for a fair and just decision.