2020 (10) TMI 391 - Tri - Insolvency and Bankruptcy

Restoration of the Company Petition which was dismissed inter alia for non-prosecution by this Adjudicating Authority - initiation of CIRP - HELD THAT - It is a settled judicial principle that procedure should ultimately subserve the cause of justice, and that procedural niceties should not be allowed to defeat the same. With this cardinal principle in mind, we have examined the rival contentions in the present application. For good measure, we have also carefully looked at the main Company Petition itself to see whether there is indeed a case made out for restoration of the Company Petition and retrieve it from procedural tangles. There is a finding of this Adjudicating Authority that at the very threshold the debt in question is disputed by the Respondent/ Corporate Debtor. This is a finding that has not been challenged so far in a manner known to law. There is a further finding that the petition is not complete in all respects and therefore the petition is dismissed on the ground of non-prosecution. Therefore, there are two reasons for dismissal (1) that the debt is disputed; and (2) that the petition was not prosecuted diligently by the Applicant/ Operational Creditor. The present application has been filed even without the mandatory affidavit verifying the contents. Even without this, the present application is devoid of merits and deserves to be dismissed - application dismissed.

Summary

Issues:
1. Restoration of a dismissed Company Petition under the Insolvency and Bankruptcy Code.
2. Non-prosecution of the petition and disputed debt by the Operational Creditor.
3. Preliminary objections on maintainability and merits raised by the Respondent/Corporate Debtor.

Analysis:
1. Restoration of Dismissed Company Petition:
The Interlocutory Application sought the restoration of a Company Petition dismissed for non-prosecution. The Applicant, an Operational Creditor, argued that the dismissal was due to procedural issues, including lack of notice and non-listing of the case on scheduled dates. The Applicant requested condonation of non-appearance and a hearing for the petition.

2. Non-prosecution and Disputed Debt:
The Respondent, the Corporate Debtor, raised objections to the restoration, citing procedural violations and lack of merit. The Respondent contended that the debt was disputed from the beginning and the petition was incomplete. The Respondent highlighted the absence of the necessary affidavit and the finality of the previous order dismissing the petition.

3. Preliminary Objections and Merits:
The Respondent objected to the maintainability of the Application, alleging a violation of NCLT Rules regarding notice and timing of filing. Additionally, the Respondent argued that the Tribunal lacked jurisdiction to review its previous judgment. The Respondent emphasized the lack of service of the original petition and the present Application, along with delays and insufficient reasons for non-appearance.

4. Judicial Observations and Decision:
The Tribunal emphasized that procedural rules should serve the cause of justice and not impede it. While considering the Application, the Tribunal noted the dispute over the debt and the incomplete petition as reasons for the previous dismissal. The Tribunal found that the disputed debt issue could not be revisited without an appeal. Moreover, the absence of a verifying affidavit and lack of merit led to the dismissal of the Application, with no costs awarded.

In conclusion, the Tribunal dismissed the Application for restoration of the Company Petition due to the disputed debt, procedural irregularities, lack of merit, and failure to comply with necessary legal requirements. The judgment underscores the importance of adherence to procedural rules and the significance of addressing substantive issues in legal proceedings.