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2024 (6) TMI 89 - AT - Insolvency and BankruptcyRestoration of the dismissed petition for non-prosecution - reasonable ground established by the Applicant for restoration of the Application or not - applicant involved in Forum shopping. Whether there was any sufficient case for nonappearance on 01.05.2024? - HELD THAT - It was not the case of the Bank that no death took place. The Adjudicating Authority has never directed the Appellant to file the copy of death certificate. The observations that no specific relationship of the deceased has been mentioned and no death certificate has been placed on record are not sufficient ground to reject the cause given in the Restoration Application for restoration. Further, it is noticed that the Adjudicating Authority embarked upon the earlier litigations under Section 13, sub-section (2) between the parties and came to the conclusion that Applicant has not approached the Tribunal with clean hands and rather he is involved in Forum shopping, as was found in paragraph 27. It is relevant to notice that Application under Section 94, was not up for consideration and the consideration on merits of the Application was uncalled for. Observation of the Adjudicating Authority that the Appellant has not approached the Tribunal with clean hands and is involved in Forum shopping, were the observations, which were made prematurely. It was open for the Adjudicating Authority to consider all the above issues when Application under Section 94 comes for consideration. Sufficient cause for non-appearance or not - HELD THAT - Hon ble Supreme Court in in G.P. Srivastava vs. R.K. Raizada and Ors. 2000 (3) TMI 1126 - SUPREME COURT , observed that while considering the question of sufficient cause for non-appearance, other circumstances anterior in time cannot be relied - Applicants were unable to show their bonafides and establish sufficient cause. It was further noticed in the facts of the said case that a defendant cannot be penalized and made to suffer the rigours of litigation over decades. The judgment of the above case was on the facts of the said case and has no bearing in the present matter. The sufficient cause had been shown by the Appellant for restoration of the Application. The Adjudicating Authority committed error in rejecting the Application by the impugned order dated 22.05.2024 - the Application under Section 94 was not up for consideration, hence, observations made by the Adjudicating Authority that Applicant has not approached the Tribunal with clean hands and rather he is involved in Forum shopping, were uncalled for and premature. The Adjudicating Authority could have considered the merits of the Application under Section 94 and the conduct of the Appellant, when the Application comes for consideration. Thus, sufficient cause was shown by the Appellant for allowing Restoration Application for recalling of order dated 01.05.2024, dismissing the Application for non-prosecution. Appeal allowed.
Issues Involved:
1. Dismissal of Application u/s 94 of IBC for non-prosecution. 2. Rejection of Restoration Application by NCLT. Summary: Issue 1: Dismissal of Application u/s 94 of IBC for non-prosecution The Appellant, a Personal Guarantor of the Corporate Debtor, filed an Application u/s 94 of the Insolvency and Bankruptcy Code, 2016 (IBC) on 27.02.2024, with the physical copy submitted on 28.02.2024. The Application was first listed on 17.04.2024 but was adjourned to 01.05.2024 due to the Bar abstaining from work. On 30.04.2024 at 08:00 PM, the Appellant's Counsel emailed the Registrar requesting an adjournment due to personal difficulty. On 01.05.2024, the Application was dismissed for non-prosecution as no one appeared. The Appellant's Counsel appeared later that day and was advised to file a Restoration Application. Issue 2: Rejection of Restoration Application by NCLT The Restoration Application was filed on 01.05.2024, citing the Counsel's inability to attend due to a bereavement in the close family. The Adjudicating Authority heard the Application on 08.05.2024, and the Union Bank of India (Financial Creditor) was granted time to file a reply. Despite the Appellant's request for an early hearing due to ongoing SARFAESI Act proceedings, the Application was adjourned to 30.05.2024. The Restoration Application was ultimately rejected on 22.05.2024, with the Adjudicating Authority noting the Appellant had not approached the Tribunal with clean hands and was involved in Forum shopping. Appellant's Arguments: The Appellant argued that sufficient cause was shown for non-appearance on 01.05.2024 due to the Counsel's bereavement. The Appellant contended that the Union Bank of India had no right to oppose the Restoration Application and that the Adjudicating Authority erred by considering the merits of the Application u/s 94 during the Restoration Application hearing. Respondent's Arguments: The Union Bank of India argued that the Appellant's Application u/s 94 was intended to derail SARFAESI Act proceedings and that the Appellant had a history of filing multiple writ petitions and not complying with High Court orders. They contended that the Restoration Application was rightly rejected as the Appellant had not approached the Tribunal with clean hands. Tribunal's Analysis and Conclusion: The Tribunal found that the Adjudicating Authority erred in rejecting the Restoration Application by considering the merits of the Application u/s 94 and the Appellant's past conduct. The Tribunal emphasized that the focus should have been on whether there was sufficient cause for non-appearance on 01.05.2024. The Tribunal noted that the Appellant had provided a valid reason supported by an affidavit and that the Adjudicating Authority's observations regarding the relationship of the deceased and the absence of a death certificate were insufficient grounds for rejection. The Tribunal set aside the order dated 22.05.2024, allowed the Restoration Application, and directed the Adjudicating Authority to fix an early date for hearing the Application u/s 94. Result: The Appeal was allowed, and the order dated 22.05.2024 was set aside. The Restoration Application (IBC)/11(CH)/2024 was allowed, with directions for an early hearing of CP (IB) No.89/Chd/Pb/2024. No order as to costs.
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