2023 (3) TMI 1077 - HC - Insolvency and Bankruptcy

Review of Order - Upon filing of section 95 application, interim moratorium under section 96 of the IBC commenced and all legal action and proceeding against the judgment debtor no.2 are deemed to be stayed - HELD THAT - The scope of review under order XLVII rule 1 read with section 114 of the Code of Civil Procedure is applicable where mistake or error is apparent on the face of the record and it is not synonymous with re-hearing of the matter, for detecting any error in earlier decision and to correct the same. Error which is not self evident and has to be detected by a process of reason, can hardly be said to be an error apparent of the face of the record, justifying court to exercise his power of review under order XLVII rule 1 CPC. It is also settled position of law that in case of review, it must be remembered that it can be used for limited purpose and it s not an appeal in disguise. There is a clear distinction between erroneous decision and error apparent on the face of the record. When the court has specifically directed the judgment debtor no. 2 to file affidavit of asset, long back on 2nd April 2019 and also by subsequent order and when judgment debtor in spite of appearance did not bother to comply the same on the plea that such affidavit is not required to be filed in the present context, there are no mistake or error which is apparent on the face of the record. Even when impugned order was passed, opportunity was given to judgment debtor to file affidavit of asset within four weeks and in case filing the same opportunity was given to them for mentioning to discharge the warrant of arrest. Till date, judgment debtor has not complied the same and as such there is no mistake or error apparent on the face of the record and as such the prayer for review is not sustainable. Application dismissed.

Summary

Issues:
Review of order issuing warrant of arrest against judgment debtor No. 1 and No. 2.

Analysis:
The application sought a review of the order dated 23rd November 2022, which issued a warrant of arrest against judgment debtor No. 1 and No. 2. The judgment debtor No. 2 argued that due to financial hardships faced by judgment debtor No. 1, legal proceedings were initiated, leading to an insolvency application under the Insolvency Bankruptcy Code, 2016 (IBC) by Canara bank. The IBC proceeding was allowed, resulting in a moratorium under section 14 of the IBC, suspending judgment debtor No. 2 from directorship. An appeal was filed against the exception in the moratorium order, clarifying that suits for recovery against judgment debtor No. 1 could not proceed post-moratorium. The decree holder filed a suit against the judgment debtor, seeking a decree for a specified sum, which led to the present execution proceeding.

The counsel for judgment debtor No. 2 argued that no decree had been passed against No. 2, and the suit was pending. They highlighted an application under IBC against No. 2 as a personal guarantor, leading to a moratorium on legal actions. Despite participation in the proceedings, No. 2 could not appear before the court on the date the impugned order was passed, leading to the request for a review to prevent legal actions against No. 2. The decree holder's counsel opposed the review, stating that sufficient opportunities were given to file an affidavit of assets, justifying the order.

The court considered the scope of review under the Code of Civil Procedure, emphasizing that it is not an appeal but for correcting self-evident errors. The court reviewed the history of orders directing No. 2 to file an affidavit of assets, noting non-compliance despite multiple opportunities. The court found no apparent error on record justifying a review, as the judgment debtor failed to comply with the court's directives, leading to the rejection of the review application.

In conclusion, the court rejected the review application, emphasizing the importance of complying with court directives and the limited scope of review. The judgment highlighted the necessity of following court orders and the distinction between erroneous decisions and self-evident errors on record, ultimately upholding the warrant of arrest against judgment debtor No. 2.

Judgment:
The review application was rejected, and parties were directed to comply with all formalities for receiving a certified copy of the order.