2023 (4) TMI 774 - AT - Insolvency and Bankruptcy

Principles of natural justice (audi alterem partem) - emphatic stand that the Adjudicating Authority / Tribunal, while passing the main Impugned Order, dated 25.08.2022 in IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018, had not provided an opportunity to explain the facts as to why the 2nd Respondent / Resolution Professional, was a necessary Party - HELD THAT - A Reasoned Order, will have an appearance of justice. In any Order, Reasons, one way or the other, ascribed by the Tribunal / Adjudicating Authority / Competent Court of Law, will be its Heart and Soul, and so to say a Jewel in a Crown. An Unreasoned Order, will have an appearance of injustice, being meted out to the Affected Party, because of the fact that the concerned Party, is prejudicially and substantially affected. However, even an unreasoned order, may be valid, from the view point of the person, who got a favourable order - It is an axiomatic principle in Law, that the Tribunal / an Appellate Tribunal, are guided by the Principles of Nature Justice, notwithstanding the fact that it can regulate its own procedure, as it deems fit and proper. However, the Tribunal (Adjudicating Authority), under Section 5 (1) (a) of the I B Code, 2016 - 408 of the Companies Act, 2013 and an Appellate Tribunal (NCLAT), as per Section 410 of the Companies Act, 2013, are very much required and guided to adhere to the Principles of Natural Justice, in terms of ingredients of Section 421 (4) of the Companies Act, 2013, and as per Rule 34 of the NCLT Rules, 2016. The Principle of Audi Alteram Partem, has been negated, as seen from the Impugned Order. On this simple ground alone, this Tribunal, without delving deep into the merits of the matter nor expressing any opinion, one way or the other simpliciter, at this juncture, is inclined to set aside, the Impugned Order, dated 25.08.2022 in IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018 and allows, the Comp. App (AT) (CH) (INS.) No. 54 / 2023, in furtherance of Substantial Cause of Justice. The matter is remitted back to the Adjudicating Authority, who shall restore the IA(IBC)/601(CHE)/2022 in CP/1264/IB/2018 to its file and after restoration of the said Application, and taking it on file, is to pass an reasoned / speaking order, De novo, both on, qualitative and quantitative term(s), by adverting to the Arguments / Factual and Legal pleas. Application disposed off.

Summary

Issues Involved:
The judgment involves issues related to the failure of the Adjudicating Authority to provide an opportunity for the Appellant to explain why the Resolution Professional was a necessary party, the non-payment of Corporate Insolvency Resolution Process costs, the adherence to the Principles of Natural Justice, and the need for a reasoned order.

Issue 1: Failure to Provide Opportunity to Explain the Necessity of the Resolution Professional:
The Appellant challenged the Impugned Order, contending that the Adjudicating Authority did not allow an opportunity to explain why the Resolution Professional was a necessary party. The Appellant's Counsel emphasized the importance of summoning the Resolution Professional for not paying the Corporate Insolvency Resolution Process costs, leading to liquidation. In contrast, the Respondent's Counsel argued against including the Resolution Professional, stating that it would be futile as all documents were handed over to the Liquidator.

Issue 2: Adherence to Principles of Natural Justice:
The Tribunal highlighted the importance of adhering to the Principles of Natural Justice, specifically the Audi Alteram Partem principle. The Tribunal noted that the Impugned Order failed to reflect this principle, leading to the decision to set it aside without delving into the merits of the case. The Tribunal emphasized the need for a reasoned order to ensure justice and fairness in proceedings.

Issue 3: Requirement for a Reasoned Order:
The Tribunal underscored the significance of a reasoned order, stating that it is essential for justice to prevail. It mentioned that even an unreasoned order may be valid for the party receiving a favorable outcome but could appear unjust to the affected party. The Tribunal referenced legal principles guiding the Adjudicating Authority and the Appellate Tribunal to follow the Principles of Natural Justice in their proceedings.

Conclusion:
The National Company Law Appellate Tribunal, Chennai, set aside the Impugned Order due to the failure to provide an opportunity for the Appellant to explain the necessity of the Resolution Professional and the lack of adherence to the Principles of Natural Justice. The matter was remitted back to the Adjudicating Authority to pass a reasoned order, allowing both parties to present their arguments. The Tribunal emphasized the importance of a fair and just process in accordance with the law.