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2021 (7) TMI 1425 - HC - Insolvency and BankruptcyMaintainability of petition - availability of effective alternative remedy of appeal under Section 61 of I B Code - writ petitions are filed on the premise that the appeals and stay petitions are not being taken up by the NCLAT - HELD THAT - As observed by the Apex Court in M/s. Innoventive Industries Ltd v. ICICI Bank 2017 (9) TMI 58 - SUPREME COURT the IBC 2016 is a Single Unified Umbrella Code covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner. The code provides a three-tier mechanism namely (i) the NCLT which is the adjudicating authority (ii) the NCLAT which is the appellate authority (iii) the Supreme Court which is the final authority for dealing with all issues that may arise in relation to the re-organisation and insolvency resolution of corporate persons. An order passed by the NCLT is appealable to the NCLAT under Section 61 of the Code and the orders of the NCLAT are amenable to the appellate jurisdiction of the Supreme Court under Section 62. One of the issues that arose for consideration before the Division Bench in Sulochana Gupta 2021 (1) TMI 240 - KERALA HIGH COURT was the maintainability of the writ petition under Article 226 against an order of the NCLT. The Division Bench after elaborate survey of precedents answered the issue by holding that the writ petition to be not maintainable. Petition dismissed.
Issues:
Challenge against NCLT proceedings in Corporate Insolvency Resolution Process; Maintainability of writ petitions under Article 226 against NCLT orders. Analysis: The judgment pertains to the challenge against the proceedings of the National Company Law Tribunal (NCLT) in the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The proceedings were initiated concerning a Corporate Debtor at the instance of two Operational Creditors. The NCLT appointed an Interim Resolution Professional (IRP) who was later reappointed as the Resolution Professional (RP) by the Committee of Creditors. The RP filed an application seeking approval of the Resolution Plan submitted by the Resolution Applicant, which was approved by the NCLT. The Operational Creditors, aggrieved by this order, filed appeals before the National Company Law Appellate Tribunal (NCLAT), leading to the filing of writ petitions challenging the maintainability of the appeals. The maintainability of the writ petitions was challenged on the ground that the petitioners had an alternative remedy of appeal under Section 61 of the Insolvency and Bankruptcy Code. The respondents argued that the NCLAT was functional, and the appeals were defective, hence not taken up until the defects were rectified. They contended that interference by the High Court under Article 226 would defeat the objective of the Code. The petitioners, on the other hand, argued that their appeals were accepted by the NCLAT but were yet to be numbered and posted for admission. They sought the High Court's intervention to safeguard their interests until the appeals were considered. The Corporate Debtor also supported the petitioners' submissions, alleging that the order was illegal and its implementation would prejudice the Corporate Debtor and its creditors. The judgment referred to the three-tier mechanism provided by the Insolvency and Bankruptcy Code, involving the NCLT as the adjudicating authority, the NCLAT as the appellate authority, and the Supreme Court as the final authority for issues related to insolvency resolution. Referring to the Supreme Court's decision in a previous case, the judgment emphasized the self-contained nature of the Code and the need to adhere to the appellate process outlined in the legislation. Citing a Division Bench decision, the judgment concluded that writ petitions under Article 226 against NCLT orders were not maintainable. Considering the objective of the Code and the legal precedents, the High Court dismissed the writ petitions.
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