2020 (9) TMI 597 - Tri - Insolvency and Bankruptcy

Restoration of company petition seeking initiation of CIRP - In view of another petition, the fist petitioner was asked to approach IRP for further action - effect of Withdrawal of another Company Petition - allegation of default in payment of a Financial Debt - Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT - This Authority by order dated 12.02.2020 admitted the other Company Petition against the same Respondent/Corporate Debtor. The order dated 13.02.2019 was made suo motu after the order of admission was passed. The said order of admission was set at naught by withdrawal of the Company Petition under Section 12A of the Code. Therefore, necessary corollary would have been that the order dated 13.02.2020 passed in this case was accordingly suo motu recalled, its basis having become non-existent. The Applicant however filed an application for recall of the order dated 13.02.2020 to restore the Company Petition for hearing it on merits. Now the Application having been not pressed, what could be the fate of the Company Petition Whether the same should be left unattended in view of the order dated 13.02.2020 or should the Authority take some action for redressal of the Company Petitioner on merits. As already indicated the Company Petitioner cannot be left in the lurch for none of its dereliction. An Application for restoration of the Company Petition is sought as a matter of prudence and practice, so that disposal of Company Petition, as in the present case, is not ignored and the Petitioner is left without a remedy. Taking into consideration the principle of law discussed, the Company Petition needs to be restored to file and relegated to date of hearing i.e. 11.02.2020 for further action in the matter. While ordering so it would not be out of place to mention that the allegation of forgery and perjury raised in IA Nos. 51 and 52 of 2020 shall not be affected by the orders passed herein.

Summary

Issues Involved:
1. Withdrawal and restoration of Company Petition.
2. Allegations of forgery and perjury.
3. Jurisdictional limits of the Tribunal.
4. Procedural justice and substantial justice.

Detailed Analysis:

1. Withdrawal and Restoration of Company Petition:
The judgment addressed the procedural history of the Company Petition filed by the Financial Creditor (FC) under Section 7 of the Insolvency and Bankruptcy Code (the Code) against the Corporate Debtor (CD). The Company Petition was initially disposed of based on the admission of another Company Petition filed by an Operational Creditor (OC) and the subsequent withdrawal of the same after an out-of-court settlement. The FC filed applications (IA Nos. 41 and 42 of 2020) seeking the restoration of the Company Petition and the interim order. The Tribunal allowed the withdrawal of these applications but did not grant liberty to file another application for the same prayer. The Tribunal emphasized that the Company Petition should be restored to file and heard on merits, underscoring the principle that litigations should be adjudicated on merits rather than terminated by default.

2. Allegations of Forgery and Perjury:
The CD raised allegations of forgery and perjury regarding the signatures on the verifying affidavits in IA Nos. 41 and 42 of 2020. The CD filed applications (IA Nos. 51 and 52 of 2020) alleging forgery and sought criminal proceedings against the FC. The Tribunal refrained from commenting on the merits of these allegations, stating that such matters fall within the jurisdiction of a competent Criminal Court. The Tribunal allowed the CD to pursue these allegations before the appropriate forum, maintaining that the allegations of forgery and perjury would not be affected by the orders passed in the current proceedings.

3. Jurisdictional Limits of the Tribunal:
The Tribunal clarified its jurisdictional limits, stating that it could not order criminal prosecution or cross-examination related to allegations of forgery and perjury. Such matters are outside the realm of the Tribunal's jurisdiction and fall within the domain of the Criminal Court. The Tribunal emphasized that it would not venture into areas not conferred upon it by law, ensuring that the criminal adjudication system remains unaffected by its orders.

4. Procedural Justice and Substantial Justice:
The Tribunal highlighted the importance of procedural justice as a means to achieve substantial justice. It cited precedents emphasizing that litigation should be adjudicated on merits and not terminated by procedural defaults. The Tribunal noted that procedural rules are intended to aid the cause of justice and not to hamper it. The judgment stressed that the FC should not be left without a remedy due to procedural technicalities and that the Company Petition should be restored and heard on merits to ensure justice.

Conclusion:
The Tribunal dismissed IA Nos. 41 and 42 of 2020 as not pressed and allowed the withdrawal without granting liberty to file another application for the same prayer. IA Nos. 51 and 52 of 2020 were disposed of, allowing the CD to approach the appropriate forum for redressal of forgery and perjury allegations. IA No. 62 of 2020 was dismissed as infructuous. The Company Petition was restored to file and scheduled for a hearing on 06.07.2020. The Tribunal ensured that the allegations of forgery and perjury would not influence any criminal investigation or proceedings.