2019 (10) TMI 1576 - AT - Insolvency and Bankruptcy

Admission of section 7 application - order of admission is challenged on the ground that the matter having been heard by two Hon ble Members and the final order could not have been passed by Hon ble Member(Judicial) - HELD THAT - In the facts and circumstances, as suggested by the parties, it is opined that the matter may be remitted back for fresh hearing on merit relating to admission of application Under Section 7 of the I B Code after giving liberty to the parties. The matter is remitted back to the National Company Law Tribunal Bench III, New Delhi should be heard by Divisional Bench of Hon ble Member(Judicial) and Hon ble (Technical) as per the provisions of the Act and after notice and hearing, the Adjudicating Authority pass appropriate order in accordance with Law uninfluenced by an impugned order dated 27th August, 2019 - appeal disposed off.

Summary

Issues:
1. Challenge to the order of admission on the ground of passing the final order by a single member.
2. Interpretation of Section 419(3) of the Companies Act and Rule 152(4) of NCTL Rules, 2016.
3. Remittance of the matter for fresh hearing on merit.
4. Decision on the fee and cost of the Resolution Professional.

1. Challenge to the order of admission:
The case involved a challenge to the order of admission on the basis that the final order was passed by a single member after the retirement of another member. The appellant argued that the matter having been heard by two members, the final order should not have been passed by a single member. The learned senior counsel for the appellant referred to Section 419(3) of the Companies Act and Rule 152(4) of NCTL Rules, 2016 in support of their claim. The respondent, representing the Financial Creditor, accepted this fact. Consequently, the Tribunal decided to remit the matter back for fresh hearing on the merit relating to the admission of the application under Section 7 of the I&B Code.

2. Interpretation of Section 419(3) of the Companies Act and Rule 152(4) of NCTL Rules, 2016:
The learned senior counsel for the appellant and the respondent's counsel appeared before the Tribunal to discuss the interpretation of Section 419(3) of the Companies Act and Rule 152(4) of NCTL Rules, 2016. This discussion was crucial in determining the validity of the challenge to the order of admission based on the composition of the bench that passed the final order.

3. Remittance of the matter for fresh hearing on merit:
In light of the arguments presented by the counsels and the legal provisions cited, the Tribunal decided to remit the matter for a fresh hearing on its merit. The Tribunal emphasized the importance of adhering to the provisions of the Act and ensuring that the matter is heard by a Divisional Bench of Hon'ble Member (Judicial) and Hon'ble (Technical) as per the legal requirements. The Adjudicating Authority was directed to pass an appropriate order in accordance with the law, uninfluenced by the impugned order dated 27th August, 2019. The Tribunal set a timeline for the disposal of the application, expecting it to be taken up and resolved promptly.

4. Decision on the fee and cost of the Resolution Professional:
The Resolution Professional, represented by counsel, raised the issue of his expenses and entitlement to fees. However, the Tribunal did not make a decision on this matter at that stage, opting to remit the case back to the Adjudicating Authority for further consideration. The Tribunal directed that the fee and cost of the Resolution Professional would be decided in accordance with the law after the application under Section 7 is admitted, and if necessary, it would be decided by the Committee of Creditors as per the provisions of the Code.

In conclusion, the appeal was disposed of and remitted back with specific observations and directions, emphasizing the need for a fresh hearing on the merit of the case and the proper consideration of the Resolution Professional's fee and cost at the appropriate stage of the proceedings.