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2023 (2) TMI 1266 - AT - Insolvency and BankruptcyJurisdiction - multiplicity of proceedings or not - insolvency proceeding is pending in different court room of a particular Bench of the NCLT - proceedings under Section 95 have been entertained by another court of the same Bench - whether order passed under Section 95 application by the court different from court where insolvency proceeding is pending, is without jurisdiction? - Whether Section 60(2) of the IBC contemplate application for personal guarantor before NCLT or its Benches or it contemplates filing of Section 95 application in the same court room of the NCLT? - HELD THAT - NCLT Mumbai Bench transacts its business by two members out of which one is Judicial Member and another is Technical Member sitting in different Courts. The powers of the Tribunal as per sub-section (3) of Section 419 shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member - Sub-section (1) of Section 419 which empowers Central Government to constitute Benches of the Tribunal and sub-section (3) provides the powers of the Tribunal shall be exercisable by Benches consisting of two Members. The Adjudicating Authority is a NCLT which is constituted under Section 408 of the Companies Act, 2013 and the Bench means a Bench of the Adjudicating Authority i.e. a Bench of NCLT. Under Section 419, Central Government has constituted Benches of the NCLT - From the definition of bench as contained in the IBC as well as NCLT Rules, 2016 read with Sections 408 and 409, it is clear that the word bench refers to a bench of NCLT as constituted under Section 419. The expression bench as contained in IBC and NCLT Rules 2016 as well as under Section 419 of the Companies Act, 2013 only refers to Bench of NCLT. The legislature never contemplated NCLT for courts of particular Bench of NCLT sitting in composition of two members in a court, court of NCLT hearing a petition or application was not under contemplation in sub-section (2) of Section 60. Sub-section (2) of Section 60 refers to NCLT which includes also a bench of NCLT, hence, the bench shall mean a bench constituted under Section 419. Section 419(3) provides that the powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member. The above provision was for the purposes of laying down how the power of NCLT shall be exercisable. The expression benches as occurring in Section 419(3) has to be read along with the expression benches as used in Section 419(1) of the Companies Act, 2013. Principal bench as well as the benches of the tribunal constituted under Section 419(1) has to exercise jurisdiction by two members; one judicial member and one technical member. Section 60(2) only provided for filing of the application against personal guarantor before the same NCLT where insolvency resolution process against the corporate debtor is pending. Legislature neither contemplated nor intended hearing of both the applications by one particular court room. A bench of NCLT is a unit and filing of application and petitions are before the bench of the NCLT and not before a particular court - Where the petition filed for insolvency resolution under Sections 7, 9 and 10 as well as application filed under Section 95 against the personal guarantor are to be heard together or heard separately is a matter of general or special order issued by the President for hearing the application filed in a particular bench and no fetter can be read under sub-section (2) of Section 60 on exercise of general and special order passed by the President for hearing of the applications. It is to be considered as to whether the order passed under Section 95 directing for appointment of a Resolution Professional for submitting a report is without jurisdiction only on the ground that it is passed by different court than one where insolvency application is pending. Whether the court where Section 95 application is pending was required to necessarily sent the proceedings before Court where insolvency proceedings is pending can be answered holding that since the court did not lack jurisdiction it was not necessary for the court to refuse to proceed to hear. The interpretation which is sought to be advanced by the Appellant in event it is accepted shall lead to uncertainty and conflict regarding jurisdiction of a NCLT to entertain an application under Section 95. All applications and petitions filed in NCLT including its benches have to be heard and decided as per the general and special order of the President. Applications are listed in different court of one bench of NCLT as per the general and special order of the President. When a matter is listed before a particular court of bench of NCLT, the Court where the matter is listed has necessarily jurisdiction to entertain it. The submission that court has no jurisdiction since application of insolvency is pending in different court of same bench if accepted the same will be contrary to general and special order of the President under which Section 95 application is listed in different court. In the facts of the present case, impugned order dated 18.12.2023 passed by Court III of the NCLT, Mumbai Bench was well within its jurisdiction. Similarly, the impugned order passed by NCLT, Court 1 dated 17.08.2023 was well within the jurisdiction of the court which passed the order. No infirmity can be found with the impugned order on the submission which has been advanced by the Appellant in the present appeal. When an insolvency proceeding is pending in different court room of a particular Bench of the NCLT, the proceedings under Section 95 can be entertained by another court of the same Bench as per general or special order of the President and order passed under Section 95 application by the court different from court where insolvency proceeding is pending, shall not be without jurisdiction - Section 60(2) of the IBC contemplate filing of application for personal guarantor before NCLT or its Benches and not to a particular courtroom of NCLT or its benches. Appeal dismissed.
Issues Involved:
1. Jurisdiction of NCLT courts in handling insolvency proceedings and applications under Section 95 of the IBC. 2. Interpretation of Section 60(2) of the IBC regarding the filing of applications against personal guarantors. Issue-wise Detailed Analysis: 1. Jurisdiction of NCLT Courts: The primary issue was whether an order passed under Section 95 by a different court of the same NCLT Bench, where the insolvency proceeding of a corporate debtor is pending, is without jurisdiction. The judgment clarifies that the NCLT, constituted under Section 408 of the Companies Act, 2013, operates through benches as specified under Section 419. The term "bench" refers to a unit of the NCLT, which can transact business through multiple courtrooms within the same bench. The judgment emphasizes that the allocation of cases to different courts within a bench is under the general and special orders of the President of the NCLT. Therefore, an application filed under Section 95 can be entertained by any court within the same bench, and the jurisdiction is not limited to the specific courtroom where the insolvency proceeding is pending. The court concluded that the orders passed by different courts of the same NCLT Bench are within jurisdiction and do not violate the provisions of the IBC. 2. Interpretation of Section 60(2) of the IBC: Section 60(2) of the IBC states that when a corporate insolvency resolution process (CIRP) or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or bankruptcy of a personal guarantor of such corporate debtor shall be filed before such NCLT. The judgment interprets this to mean that the application should be filed before the same NCLT Bench, not necessarily the same courtroom. The judgment highlights that the terms "a" and "such" NCLT in Section 60(2) indicate that the legislature intended for both proceedings to be before the same NCLT Bench. This interpretation ensures that the proceedings are handled by the same bench, maintaining consistency and avoiding jurisdictional conflicts. The court rejected the argument that Section 60(2) requires both proceedings to be heard by the same courtroom within the bench, stating that such an interpretation would lead to unnecessary complications and conflicts. Conclusion: The court concluded that the orders passed by different courts within the same NCLT Bench are valid and within jurisdiction. It clarified that Section 60(2) of the IBC requires applications against personal guarantors to be filed before the same NCLT Bench where the insolvency proceedings of the corporate debtor are pending, but not necessarily in the same courtroom. The appeals were dismissed, and the court directed that the applications under Section 95 be decided by the Adjudicating Authority in accordance with the law.
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