2020 (2) TMI 384 - HC - Insolvency and Bankruptcy

Recall of order denying petitioner /award-debtor from taking recourse to the provisions of The Insolvency and Bankruptcy Code, 2016 (IBC) - delay in hearing of the Section 34 application - HELD THAT - The only question which was before the Court was whether the Section 34 can be proceeded with in view of the objection taken by the petitioner that the respondent /award-holder has not filed any claim in the resolution proceedings before the National Company Law Tribunal (NCLT). It may also be pointed out that the entire discussion in the order with regard to the said issue was by reason of the protracted submissions made on behalf of the petitioner and upon the Court being invited to decide on the issue. The apprehension expressed by learned counsel appearing for the petitioner that the petitioner may risk the effect of the observations made in the order at the time of enforcement of the award cannot therefore be accepted. If no view has been expressed on the merits of the award, such apprehension is misplaced. The prayer of learned counsel for the respondent /award-holder that costs are be imposed on the petitioner for the frivolity of the application is considered and rejected - Decided against petitioner.

Issues:
1. Recalling of an order disallowing recourse to provisions of The Insolvency and Bankruptcy Code, 2016 (IBC) for delaying Section 34 application hearing.
2. Clarification regarding the binding nature of the impugned award on the petitioner.
3. Objection by the petitioner regarding respondent's failure to file a claim in the resolution proceedings before the National Company Law Tribunal (NCLT).
4. Apprehension of the petitioner regarding potential impact of court's observations on enforcement of the award.
5. Imposition of costs on the petitioner for the application's frivolity.

Issue 1: Recalling of the order:
The petitioner, an award-debtor, sought the recalling of an order disallowing the use of IBC provisions due to delaying the Section 34 application hearing. The petitioner's counsel argued that certain observations in the order might prejudice the petitioner's interests during enforcement of the award. However, after hearing both parties, the Court found no finding in the order suggesting the impugned award was binding on the petitioner. Consequently, the Court dismissed the application for recalling the order.

Issue 2: Clarification on the binding nature of the award:
The petitioner raised concerns about the order's paragraph 10, which allegedly contained a finding that the impugned award was binding on the petitioner. However, the Court clarified that the discussion in the order was centered on whether the Section 34 application could proceed, not on the merits of the award. The Court did not express any views on the award's merits, thereby rejecting the petitioner's apprehension about potential adverse effects during enforcement.

Issue 3: Objection regarding respondent's failure to file a claim:
The petitioner objected to the respondent's failure to file a claim in the NCLT resolution proceedings. The Court noted that the discussion on this issue arose due to the petitioner's submissions and did not delve into the merits of the Section 34 application. The Court emphasized that the objection was based on a different aspect of the matter and did not impact the application's maintainability.

Issue 4: Apprehension of impact on enforcement:
The petitioner expressed concerns about the order's potential impact on the enforcement of the award. However, the Court clarified that since no views were expressed on the award's merits, the petitioner's apprehension was unfounded. The Court dismissed the application, emphasizing that no adverse consequences were warranted based on the order's observations.

Issue 5: Imposition of costs for frivolous application:
The respondent requested costs to be imposed on the petitioner for the frivolity of the application. The Court considered and rejected this request, noting that since no affidavit was required, the allegations in the application were deemed not admitted. Consequently, the Court dismissed the application without imposing costs on the petitioner.

This judgment primarily addressed the petitioner's concerns regarding the order disallowing recourse to IBC provisions, the binding nature of the award, the respondent's failure to file a claim, potential enforcement implications, and the imposition of costs. The Court clarified that the observations in the order did not prejudice the petitioner and dismissed the application while emphasizing that no adverse impact on enforcement was warranted.

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