2017 (3) TMI 1702 - Tri - Companies Law

Default passed u/s. 9 of I & B Code and for restoration of the same - Held that - Once Company Petition is filed under any of the provisions namely Sections 7 to 10 of the I & B Code, the parties and the Advocates appearing on behalf of the parties must be diligent to appear on the dates given and it is not possible for any Court to inform the parties about the date of hearings. Since Cause-List has been timely uploaded, it is the duty of the parties filing cases to find out as to whether their matters are listed in the cause list or not. This Bench, notwithstanding the cause shown in the Application for Restoration, holds that restoration of a petition dismissed for default is against the letter and spirit of the Code, hence this application is hereby dismissed. The Petitioner is always at liberty to opt for other remedies available in accordance with the law. It is a restoration application filed in a Writ Petition, should I & B Petition dismissed for default be restored when law says I & B petition should be heard and pass orders within 14 days by admitting or dismissing it. I & B petition shall be brought to logical end in 14 days, unless and until it is extended by this Bench for the reasons mentioned therein. Once the proceeding is initiated under any of the three Sections of the Code mentioned above, it has to be completed within 14 days, since the life to the Petition u/s. 7, 9 & 10 remains for 14 days from the date of filing, this Bench cannot bring forth life to the said petition by restoration when its life itself is designed for fourteen days. If fresh life is given to it in the name of restoration after those 14 days, it will be in violation of the lifetime of 14 days given u/s. 7(4), 9(5) & 10(4) of the Code.

Summary

Issues involved:
Recall and restoration of a dismissed company petition under section 9 of the Insolvency and Bankruptcy Code, 2016 (I & B Code) before the National Company Law Tribunal, Mumbai.

Detailed Analysis:

1. Recall and Restoration Application: The Petitioner filed a Recall and Restoration Application seeking to set aside the order of dismissal for default passed by the Tribunal on 19.1.2017 in a company petition filed under section 9 of the I & B Code.

2. Grounds for Recall: The Petitioner claimed that the dismissal order was unexpected as the Advocate Clerk was under the impression that they would be informed of the hearing date by the Tribunal's Registry. However, the Tribunal noted that the cause list was uploaded on the website one day before the hearing dates, and the Petitioner and their Counsel failed to appear on both occasions.

3. Procedural Aspects: The Petitioner's Counsel argued for restoration under Rule 48(2) of NCLT Rules, stating that procedural aspects in I & B proceedings must align with the Rules prescribed under the Companies Act, 2013. The Counsel contended that the application was filed within 30 days, making it eligible for restoration.

4. Judicial Notice: The Tribunal emphasized that the cause list uploaded on the NCLT website serves as judicial notice for parties to appear on scheduled dates. Despite the Petitioner's arguments regarding lack of communication, the Tribunal held that the Petitioner should have been diligent in checking the cause list for hearing dates.

5. Time Limit Concerns: The Tribunal highlighted that restoring the company petition beyond the 14-day timeframe mandated by the I & B Code would contravene statutory provisions. The Bench deliberated on the conflict between Rule 48(2) of NCLT Rules and the Code's time limits, ultimately favoring adherence to substantive law over procedural rules.

6. Dismissal of Application: Despite arguments citing precedents, the Tribunal dismissed the Recall and Restoration Application, deeming restoration of a petition dismissed for default as contrary to the essence of the I & B Code. The Petitioner was advised to explore other legal remedies available to address the dismissal.

7. Precedent Reference: The Petitioner Counsel referred to a Supreme Court case to support the restoration application, but the Tribunal distinguished the circumstances of the cited case from the present matter, emphasizing the statutory timeline for disposal of I & B petitions.

8. Final Decision: Considering the legal framework and the specific provisions of the I & B Code, the Tribunal dismissed the Recall and Restoration Application, underscoring the importance of adhering to the prescribed timelines for processing company petitions under the Code.

This detailed analysis encapsulates the key arguments, considerations, and the ultimate decision rendered by the National Company Law Tribunal, Mumbai, regarding the recall and restoration of a dismissed company petition under section 9 of the Insolvency and Bankruptcy Code, 2016.