2025 (8) TMI 98 - HC - IBC

Petitioner denied late application after hearing; no miscarriage of justice under IBC, 2016 Section rules affirmed

The HC held that the petitioner was not entitled to have an application filed after the matter was reserved for orders heard before pronouncement by the ... Violation of principles of natural justice - denial of an opportunity to get an application, filed after the main matter has been reserved for orders, heard, caused any serious miscarriage of justice to the petitioner or not - HELD THAT:- When once the final hearing starts, if the same cannot be concluded on that date, the hearing is adjourned to a future date. The next stage is that the hearing is completed. Upon conclusion of hearing it is only for the convenience of the Tribunal that Rule 150(1) permits making and pronouncement of order after an interval after the conclusion of hearing. Three Hon’ble Judges of the Supreme Court of India in Arjun Singh [1963 (12) TMI 27 - SUPREME COURT] observed that once the hearing starts the Civil Procedure Code contemplates only two stages in the trial of the suit: (1) where the hearing is adjourned or (2) where the hearing is completed. The issue that fell for consideration in K.K. Velusamy [2011 (3) TMI 1803 - SUPREME COURT] was whether once the arguments are commenced, there could be reopening of evidence or recalling of any witness - While deciding such issue the Hon’ble Supreme Court after noticing that the provision in Order 18 Rule 17A stood deleted with effect from 01.07.2002 held that if there is a time gap between completion of evidence and hearing of arguments and if in the interregnum, a party comes across some evidence which he could not lay his hands on earlier or some evidence in regard to the conduct or action of the other party comes into existence, the Court may in exercise of its inherent power under Section 151 of the Code, permit the production of such evidence if it is relevant and necessary in the interest of justice, subject to such terms as the Court may deem fit to impose. This Court, therefore, holds that the petitioner cannot claim any right to have the application for bringing on record the letter dated June 30, 2025, filed after the matter was reserved for orders, heard prior to making and pronouncing the order by NCLT. To the mind of this Court no miscarriage of justice can be said to have been caused to the petitioner. The High Courts should be slow in interfering with the proceeding under IBC, 2016 and only in exceptional cases the High Courts can interfere. The petitioner herein failed to make out any case that interference is necessary for meeting the ends of justice. This Court is not inclined to grant any relief to the petitioner - Application dismissed. ISSUES: Whether an application filed after the matter has been reserved for orders can be entertained by the Tribunal.Whether denial of hearing of such an application causes a miscarriage of justice.The extent and application of the principles of natural justice in the context of the National Company Law Tribunal (NCLT) proceedings.The scope of the inherent powers of the Tribunal under Rule 11 of the National Company Law Tribunal Rules, 2016.The applicability of precedent decisions regarding reopening of evidence or hearing applications after reservation of judgment. RULINGS / HOLDINGS: The Court held that a party cannot claim any right to have an application, filed after the matter is reserved for orders, heard by the Tribunal (NCLT), applying the principle that 'once the hearing is completed... parties have no further rights or privileges in the matter.'Denial of opportunity to hear an application filed post-reservation of orders does not cause any serious miscarriage of justice where the party had earlier opportunity to raise relevant issues, including annexing documents in Written Notes of Argument.The Tribunal is guided by the principles of natural justice but such principles do not mandate hearing of applications filed after the matter is reserved for orders, as 'natural justice is no unruly horse, no lurking land mine nor a judicial cure-all.'The inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016, akin to Section 151 of the Code of Civil Procedure, cannot be invoked to entertain applications filed after reservation of orders to 'meet the ends of justice' when it would disrupt the finality of the hearing.Decisions such as Arjun Singh vs. Mohindra Kumar & Ors. and Loramitra Rath vs. JM Financial Asset Reconstruction Co. Ltd. establish that no applications for rehearing or to bring on record documents are maintainable after reservation of judgment.Decisions cited by the petitioner (e.g., K.K. Velusamy vs. N. Palanisamy and BDR Developers Pvt. Ltd. vs. Narsingh Shah) are distinguishable on facts and do not apply where the matter is fully reserved for orders and not at an intermediate stage. RATIONALE: The Court applied the procedural framework under the Companies Act, 2013 and the National Company Law Tribunal Rules, 2016, particularly Rules 146 and 150, which require the Tribunal to give 'a reasonable opportunity of being heard' before passing orders and permit pronouncement of orders within thirty days from final hearing.Section 424 of the Companies Act, 2013 guides the Tribunal to be 'guided by the principles of natural justice' and to regulate its own procedure, but not to be bound by the Code of Civil Procedure.The Court relied on the Supreme Court's ruling in Arjun Singh, which clarified that after hearing is completed and matter reserved, parties have no further rights to be heard; the interval before judgment is for the Court's convenience only.Precedents such as Rajasthan Financial Corporation vs. Pukhraj Jain and Loramitra Rath confirm that no applications can be entertained after final hearing and reservation of judgment.The Court distinguished the petitioner's reliance on K.K. Velusamy and BDR Developers, noting those cases involved applications filed during ongoing arguments or intermediate stages, not after reservation of judgment.The Court emphasized the need for adherence to time schedules mandated by the Supreme Court order directing completion of the Corporate Insolvency Resolution Process within six weeks, underscoring the importance of finality and expedition in insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.The Court referenced the Supreme Court's observation in Mohammed Enterprises (Tanzania) Ltd. that the IBC is a 'complete code in itself' and that High Courts should be slow to interfere with IBC proceedings except in exceptional cases to maintain discipline in law.The Court concluded that no breach of natural justice or miscarriage of justice occurred and that the Tribunal's refusal to entertain the post-reservation application was legally justified.