TaxTMI 
TaxTMI 
2020 (8) TMI 963
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.... Bankruptcy Code, 2016 (hereinafter referred to as the said Code). By an order dated September 5, 2019, the said application was disposed of and the learned Tribunal directed initiation of Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. 3. The petitioner filed an application bearing No. 1285/KB/2019, under rule 11 of the National Company Law Tribunal Rules, 2016 (hereinafter referred to as the said Rules), read with section 60(5) of the said Code praying for recalling of the order dated September 5, 2019 and also for setting aside the application filed by the financial creditor, Oriental Bank of Commerce. It was urged that the learned Tribunal did not have jurisdiction to entertain such an application. It was further urged that the order dated September 5, 2019 was passed ex parte, without providing an opportunity of hearing to the corporate debtor, and the corporate debtor was not served with a copy of the said application despite a request being made to the counsel for the financial creditor for supply of a copy. The corporate debtor further alleged that the financial creditor had suppressed before the learned Tribunal that the registered office of....
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....e party/financial creditor, filed an affidavit-in-reply to the application for recalling filed by the petitioner. It was contended that the copy of the application in terms of Rule 4 (3) of the said Rules was sent to the corporate debtor's address at 5 Fancy Lane, 8th Floor, Kolkata, which was the address of the registered office of the corporate debtor as available from the records of the financial creditor. That the postal articles came back to the office of the financial creditor with the postal remark (Not delivered, addressee moved) on February 6, 2019. Thereafter, an e-mail was sent to the corporate debtor on February 7, 2019. In spite of having knowledge of the aforesaid proceedings, the corporate debtor did not contest the proceeding. In response to the letter dated February 11, 2019, sent by the corporate debtor, to the learned advocate for the financial creditor, a copy of the application along with all annexures was sent to the address of the financial creditor by speed post. A notice was also published in two daily newspapers namely, Indian Express and Aajkal on April 30, 2019. The aforementioned facts were sufficient to show that the corporate debtor was aware of t....
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....was urged that while rejecting the application filed by the petitioner, the learned Tribunal came to an erroneous conclusion that failure to contest the proceedings by the corporate debtor amounted to waiver of the objection on territorial jurisdiction of the learned Tribunal. 7. According to Mr. Mainak Bose, learned advocate appearing on behalf of the petitioner, Section 60(1) of the Code mandates that the adjudicating authority for corporate persons shall be the National Company Law Tribunal, having territorial jurisdiction over the place where the registered office of the corporate persons were located. It is the contention of the petitioner that even assuming that at the time filing of the said application by the financial creditor on January 9, 2019, the NCLT, Kolkata had the jurisdiction, but thereafter, once the NCLT Bench at Cuttack started functioning from March 18, 2019, the NCLT Kolkata could not have carried on with the proceedings. Mr. Bose further submitted that, when an issue of wrongful assumption of jurisdiction of a Tribunal was raised, the High Court having superintending as also correctional jurisdiction over all subordinate courts and Tribunals could enterta....
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....ditor to the change of place of the registered office of the corporate debtor. According to Mr. Bose, by suppressing the above-mentioned information and facts, the financial creditor by making a mis-statement about the address of the registered office of the corporate debtor as 5 Fancy Lane, 8th Floor, Kolkata, had invoked the jurisdiction of the Tribunal and had obtained the order. The said order was null and void in view of the lack of jurisdiction of the learned Tribunal. 10. Mr. Bose referred to the following decisions in support of his contention, namely, Embassy Property Developments (P.) Ltd. v. State of Karnataka 2019 LawSuit (SC) 1942, L. Chandra Kumar v. Union of India [1997] 228 ITR 725/1997 taxmann.com 1023 (SC), A.V. Venkateswaran, Collector of Customs, v. Ramchand Sobhraj Wadhwani AIR 1961 SC 1506, Sohan Lal Baid v. State of West Bengal AIR 1990 Cal. 168, Shree Maheshwari Vidyalaya (HS) v. State of West Bengal 2018 SCC OnLine Cal. 13971, Gainwell Enterprises (P.) Ltd. v. Ashoke Kumar Agarwal 2014 SCC OnLine Cal 4259, Bahrein Petroleum Co. Ltd v. P.J. Pappu AIR 1966 SC 634, Hari Vishnu Kamath v. Syed Ahmad Ishaque AIR 1955 SC 233, Innoventive Industries Ltd. v. ICIC....
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....m Co. Ltd. (supra), Hira Lal Patni v. Kali Nath AIR 1962 SC 199. 12. Heard the parties. The point of maintainability of this revisional application is taken up first. In the decision of Embassy Property Developments (P.) Ltd. (supra), the High Court entertained an application under Article 226 of the Constitution of India and held that in the facts of the said case, NCLT chose to exercise a jurisdiction not vested in it law. According to the Hon'ble Apex Court, the High Court at Karnataka was justified in entertaining the writ petition as the NCLT was coram non-judice. The Hon'ble Apex Court held that the NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplementary Lease Deeds for the extension of the mining lease even if proceedings in relation to the lease hold property were pending before it and the High Court rightly interfered with the said order. Relevant paragraphs of the said judgment are quoted below:- "15. One of the well recognized exceptions to the self imposed restraint of the High Courts, in cases where a statutory alternative remedy of appeal is available, is the lack of ju....
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....he Hon'ble Apex Court in the said judgment held that even if the code was a special code, yet, the jurisdiction of the High Court under Article 226 and Supreme Court under Article 32 of the Constitution of India could be invoked if the Tribunal had passed an order in excess of jurisdiction or had exercised jurisdiction not vested in it by law. The relevant paragraph is quoted below:- "45. Therefore, in fine, our answer to the first question would be that NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice." 14. In the decision of L. Chandra Kumar (supra) the power of judicial review was held to be the basic and essential feature of the Constitution. Hence the jurisdiction conferred on the High Court under Articles 226 and 227 of the Constitution and on the Supreme Court under Article 32 was held to be a part of the basic structure of the Constituti....
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.... Later, a two-Judge Bench of this Court in Baby v. Travancore Devaswom Board [(1998) 8 SCC 310] clarified that in spite of the revisional jurisdiction being not available to the High Court, it still had powers under Article 227 of the Constitution of India to quash the orders passed by the Tribunals if the findings of fact had been arrived at by non-consideration of the relevant and material documents, the consideration of which could have led to an opposite conclusion. This power of the High Court under the Constitution of India is always in addition to the revisional jurisdiction conferred on it. ** ** ** 32. The principles deducible, well-settled as they are, have been well summed up and stated by a two-Judge Bench of this Court recently in State v. Navjot Sandhu [JT (2003) 4 SC 605 : (2003) 6 SCC 641], SCC pp. 656-57, para 28. This Court held: (i) the jurisdiction under Article 227 cannot be limited or fettered by any Act of the State Legislature; (ii) the supervisory jurisdiction is wide and can be used to meet the ends of justice, also to interfere even with an interlocutory order; (iii) the power must be exercised sparingly,....
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....sed the powers vested in them in law, within the bounds of their authorities. 17. In the matter of A. V. Venkateswaran (supra) the Hon'ble Apex Court held that the principle that a party who applied for issue of a high prerogative writ, should before he approached the High Court, exhaust other remedies available to him under the law, was not one which barred the jurisdiction of the High Court to entertain the petition or to deal with it, but rather a rule which the courts had laid down for exercise of their discretion. The existence of other legal remedies or alternative remedies were not per se a bar to the issue of a writ of certiorari and the High Court was not bound to relegate the party to the other legal remedies available to him. 18. In the matter of Shree Maheshwari Vidyalaya (HS) (supra) the Division Bench of this court held that although much water had since flown under the bridge, but there had been no corrosive effect on these decision which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedie....
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....an be used to meet the ends of justice. It can be invoked to interfere even with an interlocutory order. It is settled law that the power of judicial superintendence under Article 227 must be exercised to keep sub-ordinate courts and Tribunals within the bounds of their authority but the same should not be used as a "cloak of an appeal in disguise" (State of New Delhi v. Navjot Sadhu [2003] 6 SCC 641). 24. There are no limits, fetters or restrictions placed on this power of superintendence and for all purposes, the High Court as the custodian of justice within the territorial limits of its jurisdiction was armed with a weapon that could be wielded for the purpose of seeing that justice is meted out fairly and properly by the subordinate Courts or Tribunals. 25. There is no quarrel with the proposition that the power of superintendence should not be exercised by the High Court as an Appellate Court but should be used to correct a wrong or erroneous decision which resulted in dereliction of duties and abuse of the power by sub-ordinate courts and Tribunals. 26. Thus there is no absolute bar on the High Court to entertain an application under Article 227 of the Constitution o....
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....g matters with regard to Insolvency, Bankruptcy and Resolution Process as mandated by section 60 of the Code would be the National Company Law Tribunal, within whose jurisdiction the registered office of the corporate debtor was situated. 30. In the matter of Innoventive Industries Ltd. (supra), it was held that the Code was a complete code. Thus, in my view when the territorial jurisdiction of adjudication authority has been provided under section 60 of the Code, the provisions of sections 15 to 20 of the Code of Civil Procedure with regard to place of suing will not be applicable. In this regard, reference to Section 238 of the Code is also relevant. The relevant portion is quoted below:- "238. Provisions of this Code to override other laws The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force of any instrument having effect by virtue of any such law. " 31. Thus, the contention of the opposite party that the objection as to the territorial jurisdiction of the Tribunal should have been raised at the first instance and that such objection was waived by non-appeara....
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....ad granted permission the corporate debtor for the same had suppressed the fact before the Tribunal. The contention of Mr. Bose that the order dated September 5, 2019, was obtained by suppression and fraud is established. The learned Tribunal also acknowledged the factum of shifting and grant of 'no objection' by the bank in its order dated October 14, 2019. 33. The next contention of Mr. Banerjee that the corporate debtor by not entering appearance in the proceedings despite knowledge of the same, had waived its objection with regard of territorial jurisdiction of the Tribunal is not accepted. The decisions cited by Mr. Banerjee, in this regard are all cases where parties participated in the proceedings and not only submitted to the jurisdiction of the Trial Court but contested up to the Appellate Court. On such facts, the parties were not allowed to raise the objection with regard to lack of territorial jurisdiction of the trial courts to entertain such suit. In this case, the corporate debtor did not submit to the jurisdiction of the learned Tribunal. When the Interim Resolution Personnel informed the corporate debtor about the order dated September 5, 2019, the appli....
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....here is no doubt that the High Court can even interfere with interim orders of the courts and tribunals under Article 227 of the Constitution if the order is made without jurisdiction. But then a too technical approach is to be avoided. When the facts of the case brought before the High Court are such that the High Court can itself correct the error, then it should pass appropriate orders instead of merely setting aside the impugned order of the Tribunal and leaving everything in a vacuum." 35. In the decision of the Apex Court in the matter of Sardar Hasan Siddiqui (supra) it was held that the Tribunal of limited jurisdiction could not derive jurisdiction apart from the statute. No approval or consent could confer jurisdiction upon such a tribunal. No amount of acquiescence, waiver or the like could confer jurisdiction upon a Tribunal, and the doctrine of nullity would come into operation and any decision taken or given by such a Tribunal would be a nullity. In that case, the Hon'ble Apex Court decided that when some matters were pending before a particular regional transport authority constituted under a statute, upon creation of another regional transport authority for a ....
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....he communication of the notification dated 14th Octobor, 1981 could not enable the Transport Authority constituted under the notification dated 29the July, 1981, to exercise the powers and functions under Chapter IV, as it became defunct upon the issuance of the notification dated 14th October, 1981." 36. In the matter of Bahrein Petroleum Co. Ltd. (supra), the Apex Court held that Section 21 was a statutory recognition of the principle that defects as to the place of suing under section 15 to 20 may be waived. The submission of the respondent before the Apex Court in the said case was that the defendant in the suit had waived the objection by conduct. The Hon'ble Apex Court did not accept such contention and held that long and continuance participation in a proceeding without protest may in an appropriate case amount to waiver by conduct but if such objection is taken at the earliest opportunity and before taking any steps in the suit even if the written statement had been filed by the defendants, the same would not amount to waiver. In the case before me, the petitioner did not submit to the jurisdiction of the learned Tribunal nor did it take any steps. In Principle Commi....