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2021 (9) TMI 418 - AT - Insolvency and BankruptcyAdmissibility of application - application was for initiation of CIRP - grievance of the Appellant is that till date the matter was never listed for pronouncement of an order - principles of natural justice - HELD THAT - This Tribunal pertinently points out that when the main C.P.(IB) No.116/BB/2020 was listed before the Adjudicating Authority under the caption For Hearing/Clarification on 11.12.2020 and when the matter was reserved For Orders on that date, however, the same being not uploaded in the NCLT Online Website Portal, certainly, the order in the main CP(IB)/116/BB/2020 could not have been pronounced on 07.12.2020 (vide Annexure E of the Appeal Paper Book Diary No.137 dated 08.03.2011). Apart from that, there was no communication that was received by the Appellant in regard to the pronouncement of the order which was received by the Adjudicating Authority in the aforesaid Company Petition. It cannot be gainsaid that if an order/judgment of a Tribunal is not pronounced at all, the same is a nullity in the eye of law , considering the fact that the pronouncement is primarily a judicial act, which is the Sanctum Sanctorum of any judicial proceedings in our justice delivery system , as opined by this Tribunal - If an order/judgment is delivered by a Tribunal ignoramus of rules, then, it will result in untold hardship, misery and unerringly leading to a miscarriage of justice. Moreover, expediency in pronouncement of an Order / Judgment by a Tribunal is not desirable/palatable, in the earnest opinion of this Tribunal . This Tribunal taking note of the totality of the attendant facts and circumstances of the instant case, comes to a resultant conclusion that when the main CP(IB) No.116/NCLT/BB/2020 was heard on 11.12.2020 by the Adjudicating Authority and considering the prime fact that when the matter was listed on 07.12.2020 an interim order was passed adjourning the main case to 11.12.2020, by no stretch of imagination the Impugned Order of the Adjudicating Authority in main CP(IB)No.116/NCLT/ BB/2020 would have been pronounced on earlier date on 07.12.2020. This Tribunal without delving deep into the matter and not expressing any opinion on the merits of the matter, any further, at this stage, simpliciter sets aside the said Impugned Order of the Adjudicating Authority to prevent an aberration of justice and to promote substantial cause of justice. Appeal allowed.
Issues Involved:
1. Validity of the order dated 07.12.2020 passed by the Adjudicating Authority. 2. Compliance with procedural rules for pronouncement of orders. 3. Existence of a pre-existing dispute and its impact on the insolvency proceedings. 4. Solvency of the Respondent and its capability to pay the debt. Detailed Analysis: 1. Validity of the Order Dated 07.12.2020: The Appellant challenged the order dated 07.12.2020 passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) on the grounds that the order was neither pronounced nor listed for pronouncement on that date. The Appellant argued that the matter was only adjourned to 11.12.2020 for hearing/clarification, and the order was reserved on that date. The Appellant discovered the order dated 07.12.2020 on the Tribunal’s website on 06.02.2021, which was not communicated to them earlier. The Tribunal concluded that the order dated 07.12.2020 was never pronounced and declared it a nullity in law, setting it aside to prevent an aberration of justice. 2. Compliance with Procedural Rules for Pronouncement of Orders: The Appellant contended that the pronouncement of the order is mandatory as per Rule 150 and 151 of the National Company Law Tribunal Rules, 2016. The Tribunal emphasized that pronouncement of an order is a judicial act and an essential part of judicial proceedings. It referred to the Hon’ble High Court of Bombay’s judgment in WP (L) No.3250 of 2019, which highlighted the necessity of pronouncing orders to maintain the sanctity and transparency of judicial proceedings. The Tribunal found that the order dated 07.12.2020 was not pronounced as required by the rules, rendering it invalid. 3. Existence of a Pre-existing Dispute and Its Impact on the Insolvency Proceedings: The Adjudicating Authority had observed that the Appellant’s contentions regarding the quality of goods and disputes with the Respondent could not be adjudicated in summary proceedings under Section 9 of the I&B Code, 2016. It noted that the Respondent had disputed the quality of goods even before the MSME Council, indicating a pre-existing dispute. The Tribunal agreed that the existence of a real dispute takes the petition out of the scope of the IBC proceedings and that the Tribunal cannot be used as a recovery forum for decrees of the MSME Council. 4. Solvency of the Respondent and Its Capability to Pay the Debt: The Adjudicating Authority found that the Petitioner had not made out a case that the Respondent was insolvent and incapable of paying the debt. The Respondent had provided a solvency certificate and demonstrated that it was a viable company with ongoing operations and several clients. The Tribunal concurred that pushing a solvent company into insolvency resolution would be against the objectives of the I&B Code, 2016. Disposition: The Tribunal allowed the appeal, set aside the impugned order dated 07.12.2020, and remitted the matter back to the Adjudicating Authority (National Company Law Tribunal, Bengaluru) to hear the matter afresh. The Adjudicating Authority was directed to provide adequate opportunities to both sides to present their arguments and to pass orders on merits in a fair and just manner, in accordance with the National Company Law Tribunal Rules, 2016 and the law. The application seeking exemption from filing the original impugned order was closed.
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