NCLT jurisdiction upheld for advocate discharge application in IBC proceedings under Rule 120

Bombay HC dismissed a writ petition challenging NCLT's order rejecting an application for discharge of advocate appointed by JCM group and appointment of company's own advocate. The court held NCLT had jurisdiction and followed natural justice principles while considering the interlocutory application. The dispute regarding compliance with Rule 120 of NCLT Rules could be raised in appeal rather than writ jurisdiction under Article 226. The court emphasized that inter se disputes between groups representing the corporate debtor should not delay or jeopardize Section 7 IBC proceedings filed by the financial creditor, as the insolvency petition had already been admitted.

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Issues Involved:
1. Challenge to the NCLT Order dated 22nd March 2024.
2. Rejection of Interlocutory Application No. 859 of 2024 by NCLT.
3. Jurisdiction and procedure under Rule 120 of the NCLT Rules.
4. Alleged breach of principles of natural justice.

Summary:

1. Challenge to the NCLT Order dated 22nd March 2024:
The Petitioners filed a Writ Petition u/s Article 226 of the Constitution of India challenging the NCLT Order dated 22nd March 2024, which dismissed Interlocutory Application No. 859 of 2024 filed by the Petitioners.

2. Rejection of Interlocutory Application No. 859 of 2024 by NCLT:
The NCLT rejected Interlocutory Application No. 859/2024, filed u/s 60(5) of the IBC r/w Rule 11 of the NCLT Rules, seeking to record the vakalatnama of Advocate Devanshu Desai and discharge the earlier Advocates. The NCLT observed that the application did not follow the procedure under Rule 120, specifically the requirement of obtaining an NOC from the existing counsel, and hence dismissed the application.

3. Jurisdiction and procedure under Rule 120 of the NCLT Rules:
Petitioners argued that the NCLT's refusal to decide who was authorized to represent Petitioner No. 1 was contrary to Rule 120 of the NCLT Rules, which mandates the Tribunal to decide on such matters. Respondent No. 3 contended that the Petitioners did not follow the procedure under Rule 120, which requires serving the application on the existing counsel.

4. Alleged breach of principles of natural justice:
Petitioners claimed that the NCLT's order violated the principles of natural justice as the correct representative of Petitioner No. 1 was not heard. They cited precedents asserting that breaches of natural justice warrant the High Court's intervention despite the availability of alternate remedies. Respondents countered that the NCLT had jurisdiction and provided reasons for dismissing the application, thus no breach of natural justice occurred.

Court's Decision:
The Court held that the controversy regarding compliance with Rule 120 should be decided by the NCLAT and not in writ jurisdiction. The Court emphasized that the NCLT had jurisdiction and provided reasons for its decision, indicating no violation of natural justice. The Court dismissed the Writ Petition but allowed the Petitioners to file an Appeal before the NCLAT within two weeks, directing the NCLAT to decide the Appeal on its merits within 12 weeks.

Orders:
a) Writ Petition is dismissed.
b) Petitioners may file an Appeal before the NCLAT within two weeks.
c) NCLAT to decide the Appeal on its merits within 12 weeks.
d) Interim Application (L) No. 1098 of 2024 is disposed of as infructuous.
e) No order as to costs.

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