2020 (9) TMI 1261 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - Conflicting orders have been passed by the two Members comprising the Bench of Adjudicating Authority (National Company Law Tribunal) - mandate of Section 419(5) of the Companies Act followed by the two members or not - HELD THAT - It is deemed appropriate to dispose of this appeal with direction to the same Bench of the Adjudicating Authority which passed two conflicting orders to make a reference to Hon ble President NCLT if not already made in terms of Section 419(5) of the Companies Act 2013 for hearing on the issues and points on which the two Members of the Bench had divergent view in the split verdict so that the matter is placed before a third Member for hearing and the Company Petition is decided in accordance with the opinion of the majority of the Members who heard the case including the member before whom it is placed. Matter to be referred to Hon ble President NCLT - the appeal is accordingly disposed of.

Summary

Issues:
Conflicting orders by members of the Adjudicating Authority on admission of application under Section 7 of the I&B Code.

Analysis:
The judgment addresses conflicting orders passed by two Members of the Adjudicating Authority regarding the admission of an application under Section 7 of the Insolvency and Bankruptcy Code. One Member directed the admission of the application, while the other found it hit by limitation and recommended rejection. The Appellant argued that the mandate of Section 419(5) of the Companies Act was not followed due to the conflicting views of the Bench members. The Appellate Tribunal, after hearing the Appellant's counsel, decided to direct the same Bench of the Adjudicating Authority to refer the matter to the Hon'ble President of NCLT for a hearing on the divergent views. This referral aims to have a third Member hear the case and decide based on the majority opinion, ensuring a consistent outcome. The judgment emphasizes the importance of following due process and resolving conflicts within the Adjudicating Authority to maintain the integrity of the decision-making process.

The Appellate Tribunal's decision to instruct the Adjudicating Authority to refer the conflicting orders to the Hon'ble President of NCLT aligns with the procedural requirements under Section 419(5) of the Companies Act, 2013. By doing so, the Tribunal aims to address the discrepancies in the initial orders and ensure a fair and consistent resolution of the Company Petition. This approach underscores the significance of upholding legal procedures and seeking clarity on contentious issues through appropriate channels within the judicial framework.

Overall, the judgment underscores the need for adherence to statutory provisions and procedural fairness in resolving disputes within the Adjudicating Authority. By directing the referral of conflicting orders to a higher authority for resolution, the Appellate Tribunal upholds the principles of natural justice and consistency in decision-making. The decision reflects a commitment to ensuring a just and equitable outcome in matters of insolvency and bankruptcy, highlighting the importance of following established legal procedures to maintain the integrity of the adjudicatory process.