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2024 (4) TMI 634 - HC - Insolvency and BankruptcyMaintainability of petition - availability of alternative remedy - discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate - representative of Petitioner No. 1-Company - whether Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules whilst seeking discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate to represent Petitioner No. 1-Company? - Violation of the principles of natural justice. HELD THAT - In the present case, there is no doubt that the NCLT had the jurisdiction to pass the said Order dated 22nd March 2024, inter alia, in respect of Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1. The NCLT, in its Order dated 22nd March 2024, has considered Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1 and has recorded reasons as to why the said Interlocutory Application was being dismissed. This clearly shows that there is no violation of the principles of natural justice. The case of the Petitioners is that Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules and therefore the NCLT ought to have decided the said Application in its favour. On the other hand, it is the case of Respondent No. 3 that Petitioner No. 1 had not followed the procedure under Rule 120 of the NCLT Rules, and, therefore, the NCLT has correctly rejected Petitioner No. 1 s Application. This is surely an issue which can be raised in Appeal by Petitioner No. 1 and does not warrant interference by this Court in its writ jurisdiction under Article 226 of the Constitution of India. Moreover, this Court cannot lose sight of the fact that this inter se dispute between two groups for representing the Petitioner No. 1, who is the Corporate Debtor, cannot delay or jeopardize the proceedings filed by Respondent No. 3 as the financial creditor under Section 7 of the IBC. Any interference by the Writ Court would clearly affect the said proceedings as, by the said Order dated 22nd March 2024, the Petition filed by Respondent No. 3, under Section 7 of the IBC, has been admitted against the Corporate Debtor, i.e., Petitioner No. 1. Petition dismissed.
Issues Involved:
1. Challenge to the NCLT Order dated 22nd March 2024. 2. Rejection of Interlocutory Application No. 859 of 2024 by NCLT. 3. Jurisdiction and procedure under Rule 120 of the NCLT Rules. 4. Alleged breach of principles of natural justice. Summary: 1. Challenge to the NCLT Order dated 22nd March 2024: The Petitioners filed a Writ Petition u/s Article 226 of the Constitution of India challenging the NCLT Order dated 22nd March 2024, which dismissed Interlocutory Application No. 859 of 2024 filed by the Petitioners. 2. Rejection of Interlocutory Application No. 859 of 2024 by NCLT: The NCLT rejected Interlocutory Application No. 859/2024, filed u/s 60(5) of the IBC r/w Rule 11 of the NCLT Rules, seeking to record the vakalatnama of Advocate Devanshu Desai and discharge the earlier Advocates. The NCLT observed that the application did not follow the procedure under Rule 120, specifically the requirement of obtaining an NOC from the existing counsel, and hence dismissed the application. 3. Jurisdiction and procedure under Rule 120 of the NCLT Rules: Petitioners argued that the NCLT's refusal to decide who was authorized to represent Petitioner No. 1 was contrary to Rule 120 of the NCLT Rules, which mandates the Tribunal to decide on such matters. Respondent No. 3 contended that the Petitioners did not follow the procedure under Rule 120, which requires serving the application on the existing counsel. 4. Alleged breach of principles of natural justice: Petitioners claimed that the NCLT's order violated the principles of natural justice as the correct representative of Petitioner No. 1 was not heard. They cited precedents asserting that breaches of natural justice warrant the High Court's intervention despite the availability of alternate remedies. Respondents countered that the NCLT had jurisdiction and provided reasons for dismissing the application, thus no breach of natural justice occurred. Court's Decision: The Court held that the controversy regarding compliance with Rule 120 should be decided by the NCLAT and not in writ jurisdiction. The Court emphasized that the NCLT had jurisdiction and provided reasons for its decision, indicating no violation of natural justice. The Court dismissed the Writ Petition but allowed the Petitioners to file an Appeal before the NCLAT within two weeks, directing the NCLAT to decide the Appeal on its merits within 12 weeks. Orders: a) Writ Petition is dismissed. b) Petitioners may file an Appeal before the NCLAT within two weeks. c) NCLAT to decide the Appeal on its merits within 12 weeks. d) Interim Application (L) No. 1098 of 2024 is disposed of as infructuous. e) No order as to costs.
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