2020 (1) TMI 200 - HC - Companies Law

Stay on encashment of the Bank Guarantee - appealable order or not - HELD THAT - As the impugned order dated 13th December, 2019 passed by the NCLT is an appealable order under Section 61 of the Code, 2016, we are not entering into the merits of the case. This is neither a case that a Labour Court is conducting a criminal case, nor a revenue Court is conducting a labour matter. In such eventuality, it can be said that there is want of jurisdiction - In the facts of the present case, the NCLT, Principal Bench, New Delhi has all power, jurisdiction and authority to decide the case in question. There can be an erroneous order of the NCLT, Principal Bench, New Delhi, but, an efficacious alternative remedy is available with the petitioner by way of statutory appeal under Section 61 of the Code, 2016 - thus, there is no reason to exercise our powers of judicial review vested under Article 226 of the Constitution of India, as there is nothing so special or extraordinary in this case. As an efficacious alternative remedy is available with the petitioner, we are not entertaining this writ petition and the same is disposed of without entering into the merits of the case.

Summary

Issues involved:
1. Jurisdictional error of NCLT in granting stay against bank guarantee encashment.
2. Validity of Section 60(5) of the IBC.
3. Jurisdiction of NCLT under the Insolvency and Bankruptcy Code, 2016.
4. Availability of alternative statutory appeal under Section 61 of the Code.
5. Violation of principles of natural justice.
6. Unconstitutionality of IBC provisions.
7. Fundamental rights violation allegations.

Detailed Analysis:

1. The petitioner challenged the impugned order of the NCLT granting a stay against the encashment of a bank guarantee. The petitioner argued a jurisdictional error by NCLT, citing various sections of the Insolvency and Bankruptcy Code, 2016 (IBC). The High Court noted the appealable nature of the NCLT order under Section 61 of the Code, refraining from delving into the case's merits.

2. The petitioner sought a declaration that Section 60(5) of the IBC is null and void, alleging it does not empower NCLT to issue orders related to independent bank guarantees. The High Court emphasized the availability of an alternative statutory appeal under Section 61, avoiding a direct examination of the provision's validity.

3. The Court affirmed the NCLT's jurisdiction in the case, highlighting the authority granted under the IBC. It clarified that the NCLT had the power to decide the matter and emphasized the availability of an efficacious remedy through the statutory appeal process.

4. Regarding the petitioner's contentions on the violation of natural justice principles, the Court found the issue debatable and subject to clarification before the appellate forum. It stressed the petitioner's ability to argue these points before the National Company Law Appellate Tribunal (NCLAT).

5. The High Court dismissed claims of unconstitutionality of IBC provisions and fundamental rights violations, noting the absence of substantial arguments or evidence supporting these allegations. It emphasized the availability of legal recourse through the statutory appeal mechanism under the Code.

6. Ultimately, the Court declined to entertain the writ petition, citing the availability of an alternative statutory appeal as a more appropriate legal remedy. It directed the petitioner to raise all issues before the NCLAT, including those related to bank guarantees and contractual matters, keeping the matters open for the appellate tribunal's consideration.