2020 (3) TMI 33 - HC - Insolvency and Bankruptcy

Maintainability of petition - alternative remedy of appeal - Reversal/recall of the Resolution Plan - Section 32 of IBC - HELD THAT - The NCLT/Tribunal in the impugned order held that the said prayer virtually amounts to reversal/recall of the Resolution Plan and the same cause could be taken as a ground for filing an appeal under Section 32 of IBC and not by way of this application which is impermissible in law. As regards exercise of inherent power the Tribunal has observed that assuming the power of recall is inbuilt in IBC and it can be exercised only in cases where the order is passed without jurisdiction or fraudulently obtained and that is not the case here and the Tribunal further observed that in the absence of specific conferment of review jurisdiction it cannot exercise the power to review. The revision petitioner under the guise of filing a revision under Article 227 of the Constitution of India wants this Court to issue a positive direction to NCLT Chennai Bench to exercise its inherent power in a particular manner. In the considered opinion of the Court it cannot issue a positive direction to NCLT Chennai Bench as to how it should exercise its inherent power. The NCLT/Tribunal also found that in real sense the revision petitioner wants to recall of the Resolution Plan and the said cause could be taken as a ground for filing an appeal under Section 32 of IBC. Thus there is an effective alternate remedy provided to the revision petitioner who also claimed to be an Operational Creditor. If this Court starts entertaining revision petitions like this there is a likelihood of opening of flood gates where the alleged aggrieved person without resorting to the alternate remedy of appeal would often approach this Court and that is not the object of IBC - This Court on an independent appraisal of the entire materials as well as the contents of the impugned order passed by NCLT Chennai Bench is of the considered view that there is no error apparent or infirmity in the reasons assigned and finds no merit in this Civil Revision Petition. Petition dismissed.

Summary

Issues:
1. Challenge to the dismissal of a petition by NCLT and seeking appellate remedy before NCLAT.
2. Allegations of criminal acts by the Corporate Debtor leading to a settlement and subsequent disputes.
3. Dispute over the rejection of a claim by the Insolvency Resolution Professional.
4. Invocation of inherent powers by NCLT and the availability of alternative legal remedies.
5. Jurisdiction of NCLT in exercising inherent powers and the need for adherence to statutory provisions.

Detailed Analysis:
1. The revision petitioner challenged the dismissal of their petition by NCLT and sought appellate remedy before NCLAT. The NCLT had dismissed the petition and granted liberty to appeal. The petitioner contested the legality of the order, citing issues with the Resolution Plan and lack of communication regarding the proceedings.

2. The petitioner alleged criminal acts by the Corporate Debtor, leading to a settlement agreement. Disputes arose over payments, cheques dishonored, and criminal complaints filed. Arbitration proceedings were initiated, but cooperation from the Corporate Debtor was lacking. The petitioner claimed a substantial amount due from the Corporate Debtor, raising concerns over the insolvency proceedings initiated by another party.

3. Dispute arose over the rejection of the petitioner's claim by the Insolvency Resolution Professional (IRP). The IRP communicated reasons for the rejection, citing lack of evidence and discrepancies in the claim amount. The petitioner challenged this rejection, leading to miscellaneous applications before NCLT, which were subsequently dismissed, questioning the recall of the Resolution Plan.

4. NCLT invoked inherent powers under Rule 11 of the NCLT Rules, emphasizing the limitations on recalling a Resolution Plan. The Tribunal highlighted the availability of appellate remedies under the IBC, indicating that the recall power is not applicable in this case. The petitioner's plea for setting aside the order was deemed impermissible in law.

5. The judgment referred to relevant legal provisions and a Supreme Court decision regarding the jurisdiction and powers of NCLT. The Court emphasized the distinction between lack of jurisdiction and wrongful exercise of jurisdiction, underscoring the need for statutory remedies. The Court dismissed the revision petition, emphasizing the availability of alternative legal recourse through the appeal process under the IBC.