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2020 (4) TMI 418 - HC - Insolvency and BankruptcyValidity of order of spcial bench of NCLT - Irregularity in publishing of Cause List in the prescribed manner - Whether non-adherence to Rules 89, 150 to 153 of NCLT Rules, 2016 would vitiate the impugned order? - initiation of CIRP - the petitioner is ready and willing to clear the outstanding dues of the secured creditor / 4th respondent herein within a period of 15 days HELD THAT - This Court is of the considered view that though Rule 89 of the NCLT Rules have not been complied with by the 2nd respondent, the fact remains that after the pronouncements of the impugned common order on 20.01.2020, certified copy of the said order was furnished to the learned counsel for the petitioner on 27.01.2020 i.e., within 7 days from the date of pronouncement of the order. Section 30 of IBC speaks about Submission of Resolution Plan and Section 31 speaks about Approval of Resolution Plan. Section 61 speaks about Appeals and Appellate Authority and Sub-Section (1) of Section 61 says that Notwithstanding anything to the contrary contained under the Companies Act, 2013, any person aggrieved by the order of the Adjudicating Authority under this Part may prefer an appeal to the NCLAT . Sub-Section (2) of Section 61 says that the appeal shall be filed within 30 days before the NCLAT and Sub-Section (3) of Section 61 says that an appeal against an order approving a resolution plan under Section 31 may be filed on five grounds - petitioner got the certified copy of the order within 7 days from the date of pronouncement of the common order dated 20.01.2020 i.e., within the timeline contemplated under Section Sub-Section (2) of Section 61 of IBC and as such, it cannot be said that he has been put to serious prejudice on account of non-uploading of the information relating to pronouncement of the orders on 20.01.2020 and non indication of the same in the Cause List. Mandatory nature of NCLT Rules, 2016, more particularly Rules 150 and 153 - HELD THAT - In the light of the settled legal position that consequences that may arise on account of the non-adherence to the time line/procedure have not been indicated in the said Rules, it can be considered to be only directory. Petition dismissed.
Issues Involved:
1. Challenge to the common order passed by the National Company Law Tribunal (NCLT), Chennai. 2. Compliance with the procedural rules of the National Company Law Tribunal Rules, 2016 (NCLT Rules). 3. Validity and impact of the pronouncement of orders without proper notification. 4. Directory vs. mandatory nature of statutory rules. Issue-wise Detailed Analysis: 1. Challenge to the Common Order by NCLT: The petitioner, a suspended Managing Director of M/s. Empee Distilleries Limited, challenged the common order passed by the NCLT, Chennai on 20.01.2020 in MA/780/2019 and MA/1250/2019 of CP/280/IB/2018. The challenge was based on the initiation of the Corporate Insolvency Resolution Process (CIRP) and the approval of a third-party Resolution Plan despite the petitioner’s claims of settling the debts with the creditors. 2. Compliance with Procedural Rules of NCLT Rules, 2016: The petitioner argued that Rule 150 of the NCLT Rules, which pertains to the pronouncement of orders, was not followed. The petitioner highlighted that the Cause List for 20.01.2020 did not include the pronouncement of orders in MA/1250/2019, causing grave prejudice and irreparable loss due to non-compliance with Rule 89 regarding the preparation and publication of the daily cause list. 3. Validity and Impact of Pronouncement of Orders Without Proper Notification: The petitioner contended that the orders were pronounced beyond office hours without prior notification on the website, violating the procedural rules. The petitioner cited the Division Bench decision of the Bombay High Court in Kamal K. Singh v. Union of India, emphasizing the importance of transparency and adherence to procedural rules in judicial proceedings. 4. Directory vs. Mandatory Nature of Statutory Rules: The respondents argued that the procedural rules are directory and not mandatory. They contended that substantial compliance with the rules was sufficient and that no serious prejudice was caused to the petitioner. The court considered various judgments, including Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur, and Sharif-ud-Din v. Abdul Gani Lone, to determine whether the non-compliance with procedural rules vitiates the impugned order. Court's Observations and Conclusion: The court noted that the NCLT, Chennai had pronounced the common order on 20.01.2020 with proper legal sanctity, and the timeline for pronouncement was not adhered to. However, the court found that the procedural rules were directory and not mandatory, as the consequences of non-compliance were not specified in the rules. The court emphasized that the petitioner was not seriously prejudiced as the certified copy of the order was furnished within seven days. Final Judgment: The writ petition was dismissed, and the court did not delve into the merits of the impugned order, advising the petitioner to seek remedy through appeal before the NCLAT. The court also observed that the second respondent should ensure adherence to procedural rules in the future to avoid similar complaints. The interim orders granted in WMP.No.2253 of 2020 were vacated, and no costs were imposed.
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