2017 (1) TMI 1789 - Tri - Insolvency and Bankruptcy

Ex-parte order or not - Prayer to set aside/recall ex-parte order - it is alleged that the order was obtained by perpetrating fraud, deceit and suppressing material facts from the Tribunal - violation of principles of natural justice - HELD THAT - It is crystal clear that without giving any notice to the original petitioner and without serving copy of the application to the petitioner in a pending matter, interim application was moved and order was passed on it. It is also pertinent to refer to another aspect, that is the status quo order passed by the Company Law Board, Delhi Bench on July 9, 2015. It was a consent order. In that order, the original respondents are directed to maintain status quo over the shareholding and assets of the company, to maintain the board with the petitioner and the second respondent as directors, suspension of respondent No. 3 as director in the company until further orders. It is further ordered in that order that the respondent shall take the consent of the petitioner in relation to banking operations until further orders - Since in the impugned order dated November 22, 2016 there is no reference to the Company Law Board, Delhi Bench order dated July 9, 2015 it cannot be given any preference or precedence over the order dated July 9, 2015 on the ground that it is a latest one. In view of the fact that no notice has been served upon the original petitioner and the impugned order was passed only after hearing respondent No. 2, it can only be called as an ex-parte order - In the petition, the original petitioner alleged about fraud, but there is no need to discuss that aspect on this application since the order itself is an ex-parte order. This application is allowed setting aside the ex-parte order.

Summary

Issues Involved:
1. Whether the order dated November 22, 2016, passed in I.A. No. 31 of 2016, was obtained by fraud, deceit, and suppression of material facts.
2. Whether the order dated November 22, 2016, was an ex-parte order.
3. Compliance with procedural requirements under the National Company Law Tribunal Rules, 2016.
4. The necessity and validity of the actions taken pursuant to the order dated November 22, 2016.
5. The applicability of cited legal precedents to the current case.

Detailed Analysis:

1. Fraud, Deceit, and Suppression of Material Facts:
The original petitioner claimed that the order dated November 22, 2016, was obtained by the original second respondent through fraud, deceit, and misrepresentation. It was alleged that the second respondent did not serve a copy of the application on the original petitioner and obtained the order without their knowledge. Furthermore, there were allegations of the second respondent opening bank accounts with forged documents and filing an FIR related to this matter.

2. Ex-Parte Nature of the Order:
The Tribunal examined whether the order dated November 22, 2016, was an ex-parte order. It was established that the application I.A. No. 31 of 2016 was filed and taken on board on the same day without notifying the original petitioner. The Tribunal noted that the original petitioner was not present on November 22, 2016, and had not been served with a copy of the application, thus confirming the ex-parte nature of the order.

3. Compliance with Procedural Requirements:
The Tribunal referred to Rule 23, sub-rule (5) of the National Company Law Tribunal Rules, 2016, which mandates serving copies of applications in pending matters to the opposite side in advance. The Tribunal found that this rule was violated as the original petitioner was not served with a copy of I.A. No. 31 of 2016. Additionally, Rule 49 of the NCLT Rules, which deals with ex-parte hearings and disposals, was discussed. The Tribunal concluded that the order dated November 22, 2016, was passed without adhering to these procedural requirements.

4. Validity of Actions Taken Pursuant to the Order:
The Tribunal addressed the actions undertaken by the original second respondent following the order dated November 22, 2016. It was noted that the second respondent had withdrawn Rs. 63,500 for salaries, taxes, and other dues. The Tribunal decided not to undo these actions since the withdrawal was limited to a specific period and the amounts were used for legitimate purposes.

5. Applicability of Cited Legal Precedents:
The original petitioner cited two legal precedents: M.S.D.C. Radha Ramanan v. Jayabkarath Textiles P. Ltd. and Smt. Pushpa Katoch v. Manu Maharani Hotels Ltd. The Tribunal found these precedents inapplicable to the current case. The former dealt with whether the Company Law Board is a Tribunal or court, and the latter discussed the power of review of the Company Law Board. The Tribunal clarified that it was not exercising review power but acting under Rule 49(2) of the NCLT Rules.

Conclusion:
The Tribunal allowed the application I.A. No. 33 of 2016, setting aside the ex-parte order dated November 22, 2016, passed in I.A. No. 31 of 2016. The matter was directed to be posted along with T.P. No. 100 of 2016 for replies from the original petitioner and other respondents. The second respondent was ordered to pay costs of Rs. 10,000 to the original petitioner within two weeks.