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2022 (9) TMI 636 - HC - Insolvency and BankruptcyPrayer to guide the NCLT on how to adjudicate cases pending before it - Proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC) - proceedings were instituted by the Standard Chartered Singapore (SCS) before the learned NCLT - it is alleged that the documents cited by SCS in its support could not be relied upon in view of Sections 33 and 35 of the Indian Stamps Act, 1899 - HELD THAT - It appears that the petitioner has completely misconstrued the scope of Article 227 of the Constitution of India. Article 227 is a power which recognises the superintending jurisdiction of the High Courts over courts or judicial fora hierarchically below it. The jurisdiction vested by the Article 227 of the Constitution of India is supervisory in nature. Where authorities who are subject to the superintendence of the High Court function in a manner which calls for supervisory correction, the High Court can step in. In no other circumstance is the High Court expected to exercise jurisdiction under Article 227. In the present case, ironically, the petitioner does not challenge any order of the learned NCLT which is presently holding fort. The petition itself is in fact manifestly premature. The learned NCLT has adequately taken a view, albeit at an interim stage, that Section 238 of the IBC would prevail over Sections 33 and 35 of the Stamp Act. That view may be right or may be wrong. The petitioner appealed against the said decision. The learned NCLAT has relegated the petitioner to the learned NCLT keeping in mind all issues of fact and law alive. The learned NCLAT has wiped the slate clean. The tabula is, thus, once more rasa. It is open, therefore, to the petitioner to again attempt to convince the learned NCLT regarding the interpretation that the petitioner seeks to place on Sections 33 and 35 of the Stamp Act. No case, therefore, exists for this court to interfere at this stage, under Article 227 of the Constitution of India - Petition disposed off.
Issues Involved:
1. Jurisdiction of High Court under Article 227 of the Constitution of India. 2. Applicability of Sections 33 and 35 of the Indian Stamp Act, 1899 in proceedings under the Insolvency and Bankruptcy Code (IBC). 3. Overriding effect of Section 238 of the IBC over the Indian Stamp Act. 4. Procedural correctness of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) orders. Issue-wise Detailed Analysis: 1. Jurisdiction of High Court under Article 227 of the Constitution of India: The petitioner filed a petition under Article 227 of the Constitution of India, seeking directions to the NCLT regarding the procedure to be adopted when the provisions of the Stamp Act are invoked. The High Court emphasized that the jurisdiction under Article 227 is supervisory in nature and not meant to correct mere errors or act as an appellate court. The court cited multiple precedents, including Estralla Rubber v. Dass Estate (P) Ltd. and Garment Craft v. Prakash Chand Goel, to underline that the power under Article 227 is intended to be used sparingly and only in appropriate cases to keep subordinate courts and tribunals within the bounds of their authority. The High Court concluded that the petitioner's request to guide the NCLT on how to adjudicate cases was untenable and amounted to judicial overreach. 2. Applicability of Sections 33 and 35 of the Indian Stamp Act, 1899 in proceedings under the Insolvency and Bankruptcy Code (IBC): The petitioner contended before the NCLT that the documents cited by Standard Chartered Singapore (SCS) could not be relied upon as they were not stamped in accordance with Sections 33 and 35 of the Indian Stamp Act. The petitioner filed IA 1408/2022, urging the NCLT to impound the documents and rule that they were inadmissible due to improper stamping. However, the NCLT rejected this objection, stating that Section 238 of the IBC, which has an overriding effect, would prevail over the provisions of the Stamp Act. 3. Overriding effect of Section 238 of the IBC over the Indian Stamp Act: The NCLT's decision to reject the petitioner's objection was based on Section 238 of the IBC, which states that the provisions of the IBC shall have effect notwithstanding anything inconsistent contained in any other law. The petitioner appealed this decision to the NCLAT, which upheld the NCLT's order but clarified that any observations made by the NCLT while rejecting the application would not affect the final decision on the merits of the case. The High Court noted that the NCLAT had directed the NCLT to proceed uninfluenced by its previous order, allowing the petitioner to re-argue the applicability of Sections 33 and 35 of the Stamp Act. 4. Procedural correctness of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) orders: The High Court observed that the NCLT had taken an interim view that Section 238 of the IBC would prevail over the Stamp Act. The NCLAT had protected the petitioner's rights by ensuring that the NCLT would consider the matter afresh without being influenced by its earlier order. The High Court emphasized that it could not interfere with the NCLT's jurisdiction or guide it on how to exercise its authority. The court concluded that the petition was premature and that the petitioner should press its case before the NCLT, which would take a de novo decision on the applicability of the Stamp Act vis-a-vis the IBC. Conclusion: The High Court dismissed the petition, stating that no case existed for interference under Article 227 of the Constitution of India at this stage. The court reiterated that it is for the NCLT to decide on the applicability of the Stamp Act after hearing both parties, and any aggrieved party could challenge the NCLT's decision subsequently. The petition was disposed of with these observations.
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