TaxTMI 
TaxTMI 
2024 (8) TMI 795
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....t to cost of Rs.50,000/-. Company Appeal (AT) (Insolvency) No.1488 of 2024 has been filed challenging order dated 05.07.2024, by which order, the Appellant was permitted to withdraw CP(IB)/65(AHM)2023 subject to cost of Rs.50,000/-. The Appellant aggrieved by aforesaid two orders has come up in this Appeal. 3. It is sufficient to refer to the facts and pleadings in Company Appeal (AT) (Insolvency) No.1487 of 2024 for deciding the Appeal. The Brief facts of the case necessary to be noticed for deciding the Appeal are : (i) The Appellant claiming an Operational Debt amounting to Rs.3,51,72,942/-, which is due and in default by the Corporate Debtor M/s Greenstone Granite Pvt. Ltd. has filed an Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"). The amount claimed was due, as per Invoices from the period 02.05.2021 to 30.03.2022. (ii) The Application was registered as CP(IB)/66(AHM)2023. The Adjudicating Authority issued notice in the Application on 28.03.2023 and Corporate Debtor appeared before the Adjudicating Authority. (iii) An IA No.409 of 2024 was filed by the Corporate Debtor levelling allegations against the Ap....
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....d much time has passed after filing application. Unnecessarily respondent is dragged into the litigation and consume time of the Tribunal. Hence, applicant must be saddled with the cost. Hence, We pass following orders: ORDER Applicant is allowed to withdraw the petition subject to cost of Rs.50,000/- to be paid to respondent towards legal cost." 5. The learned Counsel for the Appellant challenging the order contends that the Adjudicating Authority committed error in not granting liberty to the Appellant to file a fresh Application. It is submitted that the Adjudicating Authority ought to have granted liberty to the Appellant to file a fresh Application. It is submitted that Adjudicating Authority ought not to have denied the liberty while allowing withdrawal of Section 9 petition. Refusal to grant liberty to file, curtails the statutory right of the Appellant. It is submitted that when Application for withdrawal is allowed, it has to be allowed along with liberty, the Application has to be read in toto, i.e. withdrawal as well as liberty to file fresh, whereas the Adjudicating Authority committed error in permitting withdrawal without granting any liberty to file a fresh pe....
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....thdrawal pursish, the Appellant has not mentioned any reason for withdrawal as well for liberty to file fresh petition. The Adjudicating Authority held that as no reason is given and withdrawal is sought at belated stage, no liberty to file application again can be granted. Thus, liberty to file fresh Application was refused. Paragraph 4 of the judgment of the Adjudicating Authority is to the following effect : "4. It appears that vakalatnama of new counsel is filed with no objection of the earlier counsel. Learned Counsel also have authority to withdraw the petition. In the withdrawal pursish, applicant has not mentioned any reason for withdrawal as well for liberty to file fresh petition. They have repeatedly made averment of only withdrawal of petition with liberty to file again. As no reason is given and withdrawal is sought at belated stage, no liberty to file application again can be granted. As the pleadings are complete and much time has passed after filing application. Unnecessarily respondent is dragged into the litigation and consume time of the Tribunal. Hence, applicant must be saddled with the cost. Hence, We pass following orders : ORDER Applicant is allowed t....
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....iffs to abandon a suit or part of a claim under sub - rule (1), or to withdraw, under sub-rule (3), any suit or part of a claim, without the consent of the other plaintiffs." 11. The principles underlying Order 23 Rule 1 are also principles relevant for Adjudicating Authority to pass order while permitting withdrawal of an Application or granting leave to institute a fresh suit. When we look into order 23 Rule 1, sub-rule (3), it is clear that it may allow the plaintiff to institute fresh suit. Sub-rule (3) begins with word "Where the Court is satisfied,-". The principles under Order 23 Rule 1, cannot be read to mean that when withdrawal is allowed to a suit, the permission to allowing the plaintiff to institute a fresh suit is automatic or mandatory. The submission, which is pressed by the learned Counsel for the Appellant is against the clear principles as embodied in Order 23 Rule 1, sub-rule (3). The permission to file fresh suit can be granted only when the Court is satisfied that there are sufficient ground for allowing the plaintiff to institute a fresh suit. The submission that it is automatic and the Court was obliged to grant permission to file fresh suit, cannot be acc....
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....rict Munsif allowed the application in part permitting the plaintiff to withdraw the suit and denying leave to institute a fresh suit. Aggrieved the plaintiffs have come up with this Civil Revision Petition." 14. The High Court allowed the revision and set aside the order of District Munsif, refusing to grant leave to file fresh suit. It is relevant to notice that High Court has noticed in paragraphs 5 and 7 that Court haing no jurisdiction, the learned District Munsif, ought to have exercised his power to return the plaint to the plaintiff for being presented in the proper Court. Paragraphs 5, 6 and 7 of the judgment are as follows: "5. Needless to point out that the order of the learned District Munsif is far from satisfactory. This Court and the Hon'ble Supreme Court have repeatedly point out that while dealing with an Application under Order 23 Rule 1 of the Code of Civil Procedure, the Court has to either allow it in toto or dismiss it. There cannot be a partial allowing of the application, thereby dismissing the suit as withdrawn and not granting liberty to the plaintiff to file a fresh suit. The order of the learned District Munsif is therefore liable to be set aside....
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....ten statement, the plaintiff filed another suit on 23.03.1987, which was marked as OS No.13-A of 1987. OS No.228-A of 1986, on the premise that another suit has been filed, was sought to be withdrawn, which Application was allowed. The Trial Court has decreed the suit. However, the High Court has reversed the same, holding that in view of Order 23 Rule 1 of the CPC, the permission for filing another suit on the same cause of action having not been obtained, the second suit was not maintainable. The Hon'ble Supreme Court, in the facts of the said case held that no permission for filing second suit was necessary. The Hon'ble Supreme Court in paragraphs 9 and 14 of the judgment laid down following : " 9. Admittedly, the second suit was filed before filing the application of withdrawal of the first suit. The first suit was withdrawn as an objection had been taken by the respondent in regard to payment of proper court fee. We, therefore, are of the opinion that Order 23 Rule 1 of the Code was not applicable to the facts and circumstances of the present case. 14. The application filed for withdrawal of the suit categorically stated about the pendency of the earlier suit. The respond....
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.... defendant that previous suit was withdrawn by the plaintiff with liberty to institute a fresh suit. Hence, subsequent suit was not maintainable. The submissions of the defendant have been noticed in paragraph 4 of the judgment, which is as follows: "4. It is applicant's case that soon thereafter Respondent instituted Special Civil Suit No. 128 of 2007 on 20.02.2008 on same cause of action, as was in the previous suit. The applicant would contend that the previous suit was withdrawn by the Plaintiff unconditionally without liberty to institute a fresh suit in terms of Rule 3 r/w. Rule 4 and Order 23 of the CPC. The applicant would therefore contend that in absence of expressed liberty to institute a fresh suit, subsequent suit (present subject suit) was not maintainable, and thus sought for rejection of plaint under Order 7, Rule 11(d) of CPC. Learned Judge rejected the said application holding that previous suit was permitted to be withdrawn, with liberty to institute a fresh suit. Aggrieved by the order dated 23.01.2014, this application is preferred. 20. In the facts of the said case, the High Court held that prayer for withdrawal and liberty to file fresh suit cannot be....
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...., an Application is filed for withdrawal of the suit, Court has necessarily and mandatorily to grant permission to the plaintiff to institute a fresh suit. In the present case, the Adjudicating Authority has specifically denied the leave to file a fresh petition as observed in paragraph 4 of the impugned order. Thus, present is a case, where there was specific denial of leave to file a fresh suit. Whereas, Bombay High Court in case of Chandrakant Pandurang Shingade (supra), the Court vide its order dated 09.10.2007 has clearly allowed the permission to withdraw the suit, where the plaintiff wanted to convert the nature of its suit into Special Leave Suit. When the Court found substance in submission, the permission to withdraw was granted. Thus, withdrawal was granted in the above circumstances. Hence, the High Court did not commit any error in dismissing the revision, challenging the order dated 09.10.2007 passed in Summary Suit No.30 of 207. The judgment of the Bombay High Court was in the facts of its own case and does not help the Appellant in the present case. 22. Another judgment relied on by the learned Counsel for the Appellant is the judgment of the Rajasthan High Court i....
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....rule (3), be permitted by the Court to withdraw from a suit with liberty to sue afresh on the same cause of action. Such liberty being granted by the Court enables me plaintiff to avoid the bar in Order II Rule 2 and Section 11 CPC. The provision in Order XXIII Rule 1 CPC is an exception to the common law principle of non sait Therefore on principle an application by a plaintiff under sub-rule 3 cannot be treated on par with an application by him in excercise of the absolute liberty given to him under sub-rule 1, In (he former it is actually a prayer for concession from the Court after satisfying the Court regarding existences of the circumstances justifying the grant of the such concession. No doubt, the grant of leave envisaged in sub-rule (3) of Rule 1 is at the discretion of the Court but such discretion is to be exercised by the Court with caution and circumspection. The legislative policy in the matter of exercise of discretion is clear from the provisions of sub-rule (3) in which two alternatives are provided; (1) where the Court is satisfied that a suit roust fail by reason of some formal defect, and the other where the Court is satisfied that there are sufficient ground....
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....wing : 9. Order 23 Rule 1(3) CPC lays down the following grounds on which a Court may allow withdrawal of suit. It reads as under: "1. Withdrawal of suit or abandonment of part of claim.-(1)- (2) * * * (3) Where the Court is satisfied- (a) that a suit must fail by reason of some formal defect, or (b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim." ( emphasis supplied ) As per Order 23 Rule 1(3) CPC, suit may only be withdrawn with permission to bring a fresh suit when the Court is satisfied that the suit must fail for reason of some formal defect or that there are other sufficient grounds for allowing the plaintiff to institute a fresh suit. The power to allow withdrawal of a suit is discretionary. In the application, the plaintiff must make out a case in terms of Order 23 Rules 1(3)(a) or (b) CPC and must ask for leave. The Court ca....