2023 (6) TMI 408 - HC - Insolvency and Bankruptcy

Challenge to Interim Resolution Professional Appointment Resolved; Appeal Allowed; Stay Granted

The High Court disposed of the writ petition challenging the appointment of an Interim Resolution Professional under the Insolvency and Bankruptcy Code. ... Appointment of Interim Resolution Professional - Section 16(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Apparently, the impugned order having been passed on 22.12.2022, it is also pleaded in the writ petition itself that 23.12.2022 was the last working day of the National Company Law Appellate Tribunal and it was to reopen on 02.01.2023 and the petitioner had no notice whether any Vacation Bench was functioning and, therefore, it has been deprived of its statutory remedy of appeal under Section 61 of the Code. Resultantly, writ jurisdiction of this Court was being invoked. The writ petition is disposed off with liberty to the petitioner to avail his statutory remedy of appeal before the above said Tribunal within a period of two weeks from today. ISSUES PRESENTED AND CONSIDERED 1. Whether writ jurisdiction under Article 226 can be invoked against an order of the National Company Law Tribunal appointing an Interim Resolution Professional when a statutory remedy of appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 is available. 2. Whether interim relief granted by this Court (stay of operation of the NCLT order) should be continued pending exercise of the statutory remedy and, if so, on what terms. 3. Whether inability to file an appeal within the statutory period due to institutional closure or uncertainty about functioning of appellate fora (e.g., vacation benches) justifies exercise of writ jurisdiction or equitable extension of time under the Limitation Act, 1963 (Section 14). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Availability of writ jurisdiction vis-à-vis statutory appeal under Section 61 of the Code Legal framework: The Code provides a statutory appeal to the National Company Law Appellate Tribunal against orders of the NCLT (Section 61). Article 226 confers powers on High Courts to issue writs for enforcement of fundamental rights and for other purposes. Precedent Treatment: No explicit precedents were cited in the reasoning; the Court proceeded on established principles favoring exhaustion of alternative statutory remedies where available. Interpretation and reasoning: The Court noted that a specific statutory remedy of appeal exists under Section 61 and that parties and counsel agreed the matter could be relegated to the statutory tribunal. Given availability of that remedy, the Court declined to supplant the appellate forum and relegated the petitioner to file the prescribed statutory appeal. Ratio vs. Obiter: Ratio - where a specific statutory appellate remedy is available against an NCLT order, the High Court will ordinarily remit the dispute to that statutory forum rather than decide the matter under Article 226, absent exceptional circumstances. (This proposition forms the operative ratio.) Conclusion: The writ petition was disposed of by directing the petitioner to avail the statutory remedy of appeal to the appellate tribunal within a prescribed period. Issue 2 - Continuation and terms of interim relief (stay) pending appellate recourse Legal framework: High Courts have power to grant interim relief when exercising writ jurisdiction; equitable discretion may be exercised to protect parties' rights pending exercise of statutory remedies. Precedent Treatment: The Court did not rely on or distinguish particular authorities; it applied established discretionary principles to preserve status quo. Interpretation and reasoning: The Court observed that a conditional stay of the impugned NCLT order had already been granted by the High Court when the matter first came up. Given the petitioner's intention to pursue the statutory appeal and the factual premise that proceedings on a related forum were pending, the Court exercised its discretion to continue the stay, but limited it temporally and conditioned it upon timely filing of the appeal. Ratio vs. Obiter: Ratio - where the High Court refrains from finally deciding matters better suited to a statutory appellate forum, it may nevertheless continue interim protection already granted, subject to conditions (e.g., filing of appeal within a specified period). (Operative ratio on interim protection.) Conclusion: The stay operating since the earlier order was continued until the appeal is filed within two weeks; the petitioner was granted liberty to seek continuation of relief before the appellate tribunal. Issue 3 - Effect of institutional closure, vacation benches and limitation; Section 14 Limitation Act Legal framework: Limitation Act, 1963 - Section 14 permits exclusion of time when the ability to institute proceedings is prevented by sufficient cause; equitable considerations may apply when courts or tribunals are not functioning or filing is rendered impossible. Precedent Treatment: No precedents were cited; the Court directed procedural remedy rather than making a substantive finding on limitation, leaving the applicative determination to the appellate tribunal. Interpretation and reasoning: The petitioner pleaded that the statutory appellate forum was effectively inaccessible due to institutional closure and uncertainty about vacation bench functioning, thereby depriving it of the statutory appeal within time. The Court recognised this factual grievance but, instead of deciding limitation itself, allowed the petitioner to proceed to the appellate forum with liberty to move for appropriate relief under Section 14 of the Limitation Act, 1963, on account of the pendency of proceedings before this Court. Ratio vs. Obiter: Obiter that factual inability to file due to vacation/closure may warrant an application under Section 14; the Court did not decide on the merits of such an application, thus leaving the question open for the appellate tribunal. (Not binding as ratio.) Conclusion: The petitioner was permitted to file the statutory appeal within two weeks and was specifically granted liberty to file an application under Section 14 of the Limitation Act to seek extension/condonation of delay, keeping in view that the matter was pending before the High Court. Cross-References and Procedural Directions The Court emphasised the parties' concurrence to relegate the dispute to the statutory appellate forum and disposed of all pending applications. The continuation of interim relief was expressly confined to the period until filing of the appeal and conditioned on the petitioner's prompt invocation of the statutory remedy; thereafter the appellate tribunal may be moved for continuation of interim relief.