2025 (7) TMI 848 - AT - IBC

NCLAT rejects video recording application under Rule 11 citing lack of special reasons per Administrative Order Para 15

NCLAT Principal Bench rejected an application for video recording of proceedings under Rule 11 of NCLAT Rules. The tribunal held that video recording ... Video recording of the proceedings u/r 11 of the NCLAT Rules - existence of special reason for recording or not - Locus of the Applicant - HELD THAT:- From a plain reading of Para 15 of the above Administrative Order it becomes clear that recording of proceedings is not to be ordinarily resorted to but has to be permitted by the Court concerned, on a request so made, subject to meeting the criterion of “special reason” warranting such recording. Given this backdrop and without commenting on the locus of the Applicant, we now like to dwell upon the request of the Applicant to allow video-recording of the proceedings. On looking at the sequence of events, it is an undisputed fact that both the resolution plans of ESIL and OSPIL have met the approval of the Adjudicating Authority as also of this Tribunal and most importantly that of the Hon’ble Apex Court. Both the resolution plans of ESIL and OSPIL have also been fully implemented. It is also apparent from material on record that the present Applicant did not participate in the CIRP proceedings of ESIL or OSPIL not being a party therein. It would not be off the mark to take the view that till the stage of plan approval, this Applicant was nowhere in the picture. Therefore, the question of the Applicant having agitated their cause on account of their interests having been adversely touched or affected, either substantially or marginally, either at the stage of CIRP proceedings of ESIL or OSPIL or until approval of the plan clearly does not arise. The Applicant came into the lis directly for the first time as late as in 2023 when it filed a recall application vide IA No. 283 of 2022 seeking recall of the order of Adjudicating Authority dated 22.02.2023. It is also pertinent to note that the Applicant has filed IA No. 2130 as mentioned at para 5 above in which IA a prayer has been made to the effect that the Company Appeal be adjudicated ex-parte without granting any opportunity of audience/ hearing/reply to certain Respondents who have been classified by the Applicant as “Prospective Accused”. In such peculiar circumstances, this Bench was of the view that the Applicant ought to proceed with making its submissions in the Appeal to make good its request for recording of proceedings. The pre-requisite conditions of indicating “special reasons” required to be met under Para 15(ii) of the Administrative Order does not stand fulfilled. There are no exceptional grounds or compelling consideration which warrants the need to record the proceedings. There exists no position to accede to the request of the Applicant for video-recording of the hearing - application disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Tribunal in this matter include:Whether the Applicant, who was not a party to the original Corporate Insolvency Resolution Process (CIRP) proceedings of Essar Steel India Ltd. (ESIL) and Odisha Slurry Pipeline Infrastructure Ltd. (OSPIL), has locus standi to seek video recording of the appellate proceedings under Rule 11 of the NCLAT Rules.The scope and permissibility of video recording of proceedings before the National Company Law Appellate Tribunal (NCLAT), particularly in light of the extant Revised Standard Operating Procedure (SOP) and the Administrative Order governing virtual hearings.Whether the Applicant has demonstrated 'special reasons' or exceptional grounds warranting the recording of the proceedings, especially when the Applicant alleges fraud in the approval of the resolution plans but has not participated in earlier stages of the CIRP.The propriety of the Applicant's request for ex-parte adjudication of the appeal without hearing certain Respondents classified as 'Prospective Accused.'The correctness of the Adjudicating Authority's orders dated 21.02.2023 and 17.03.2023 rejecting the applications filed by the Applicant and others concerning alleged fraudulent declarations and recall of earlier orders.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Locus Standi of the Applicant and Participation in CIRP ProceedingsRelevant Legal Framework and Precedents: The CIRP framework under the Insolvency and Bankruptcy Code (IBC) mandates participation of stakeholders and creditors in the insolvency resolution process. The Applicant's locus to challenge or intervene is generally contingent upon having a direct interest or being a party to the proceedings.Court's Interpretation and Reasoning: The Tribunal noted that the Applicant was not a party to the CIRP proceedings of ESIL or OSPIL and did not participate at any stage prior to the approval of resolution plans. The resolution plans had been approved by the Adjudicating Authority, affirmed by this Tribunal, and upheld by the Supreme Court, and fully implemented. The Applicant only entered the litigation in 2023 by filing a recall application against an order dated 21.02.2023.Application of Law to Facts: Since the Applicant did not raise any objection or participate during the CIRP or plan approval stages, the Tribunal found that the Applicant's locus to challenge the proceedings or seek extraordinary reliefs was questionable. The Applicant's late intervention undermined the claim of being adversely affected during the CIRP.Conclusions: The Tribunal implicitly held that the Applicant lacked sufficient locus to claim special procedural reliefs such as video recording, especially given their non-participation in earlier proceedings.Issue 2: Permissibility and Scope of Video Recording of ProceedingsRelevant Legal Framework and Precedents: The Tribunal referred to the Revised Standard Operating Procedure (SOP) issued by NCLAT and the Administrative Order dated 22.11.2024, which strictly prohibits recording or use of video recordings of virtual hearings unless permitted by the Court on showing 'special reasons.' The Tribunal also relied on precedents including the Supreme Court's order in Orbit Electricals Pvt. Ltd. and this Tribunal's order in Standard Chartered Bank vs Satish Kumar Gupta, as well as the Delhi High Court's order in Gujarat Operational Creditors Association.Court's Interpretation and Reasoning: The Tribunal emphasized that recording of proceedings is not an ordinary practice and can only be allowed upon a party demonstrating special reasons and after giving opportunity to the other side. The Tribunal extracted and relied on para 15 of the Administrative Order, which sets out the conditions and procedural safeguards for permitting recording.Key Findings: The Tribunal found that the Applicant failed to specify any special or exceptional grounds justifying video recording. The Applicant's generalized allegation of 'colossal fraud' was insufficient to meet the threshold. The Tribunal also noted that the Applicant was repeatedly assured that arguments would be duly recorded in the transcript and that written submissions could be filed to ensure a complete record.Application of Law to Facts: Given the absence of any exceptional circumstances and the Applicant's failure to demonstrate specific reasons to warrant recording, the Tribunal declined to permit video recording.Treatment of Competing Arguments: The Applicant's insistence on video recording was countered by the Tribunal's reliance on the procedural safeguards and the need to maintain orderly conduct of proceedings. The Tribunal also highlighted the Applicant's contradictory request for ex-parte adjudication, which undermined the credibility of their plea.Conclusions: The Tribunal concluded that the request for video recording did not meet the requisite legal standard and was accordingly rejected.Issue 3: Allegations of Fraud and Recall of OrdersRelevant Legal Framework: The Applicant sought to invoke provisions of the Indian Penal Code (IPC), Section 195 of the Criminal Procedure Code (CrPC), and Section 44 of the Indian Evidence Act, 1872, alleging perjury and fraudulent affidavits in the CIRP proceedings.Court's Interpretation and Reasoning: The Adjudicating Authority had earlier rejected the application seeking initiation of criminal proceedings on the ground that the dispute regarding title to the slurry pipeline was pending in the Civil Court and was not raised during the CIRP. The recall application filed by the Applicant was also rejected after the Authority found no fraud or misrepresentation in the previous order.Application of Law to Facts: The Tribunal noted that the allegations of fraud were not substantiated with evidence and that the Applicant had not raised these issues at the appropriate stage of the CIRP. The prior approvals and Supreme Court affirmations of the resolution plans further diminished the credibility of the fraud allegations.Conclusions: The Tribunal did not disturb the Adjudicating Authority's rejection of the applications alleging fraud and perjury.Issue 4: Request for Ex-Parte AdjudicationRelevant Legal Framework: Under Order I Rule 8A of the Civil Procedure Code (CPC), ex-parte adjudication can be granted where a party fails to appear or is deliberately avoiding participation.Court's Interpretation and Reasoning: The Applicant filed IA No. 2130 praying for ex-parte hearing of the appeal without hearing certain Respondents categorized as 'Prospective Accused.' The Tribunal found this approach unusual and inconsistent with principles of natural justice and fairness, especially in a matter involving serious allegations.Application of Law to Facts: The Tribunal persuaded the Applicant to desist from such a course and to proceed with submissions in the normal course to ensure all contentions are properly heard and recorded.Conclusions: The Tribunal did not accede to the Applicant's request for ex-parte adjudication and emphasized the importance of hearing all parties.3. SIGNIFICANT HOLDINGSThe Tribunal's key legal determinations include the following:'The recordal of proceedings in an Appeal/Application pending before the NCLAT is permissible only on prior order obtained by any of the parties to the proceedings from the Court concerned.''The permission for recording of the proceedings can be granted by Court concerned after looking into the special reason for recording as claimed by Applicant after giving an opportunity to other side.''The proceedings recorded by the Registry as per the direction of the Court shall be separately kept and shall be used and provided to the parties in the manner as directed by the Court.''The Applicant ought to proceed with making its submissions in the Appeal to make good its request for recording of proceedings... The Applicant will also have the liberty of filing written submissions wherein it can adequately and sufficiently highlight all questions of law and fact and other related contentions in the matter which would suffice for meeting the ends of justice.''The pre-requisite conditions of indicating 'special reasons' required to be met under Para 15(ii) of the Administrative Order does not stand fulfilled. We, therefore, do not find any exceptional grounds or compelling consideration which warrants the need to record the proceedings.''In result, we are not in a position to accede to the request of the Applicant for video-recording of the hearing.'These holdings establish the principle that video recording of NCLAT proceedings is an exceptional measure, permitted only upon demonstration of special reasons and after due procedural safeguards. The Tribunal also underscored the importance of locus and timely participation in CIRP proceedings to raise objections. Allegations of fraud must be substantiated and cannot be raised belatedly to disrupt finality. Finally, the Tribunal reaffirmed the commitment to fair hearing by rejecting ex-parte adjudication in the absence of compelling justification.