2022 (1) TMI 810 - HC - Insolvency and Bankruptcy

Review order - Maintainability of appeal - appeal maintainable against the orders challenged in the writ petition under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ) and not under Section 421(1) of the Companies Act, 2013 - HELD THAT - There is no scope of review of the order merely on the basis of the finding that an appeal lay under Section 421(1) of the 2013 Act. It is well-settled that allegations on fact as to what transpired in Court on certain particular dates have to be levelled, for the ends of propriety, before the said Court itself, where the irregularity allegedly occurred, preferably before the same Presiding Officer. A challenge before a superior forum, including under Article 226 of the Constitution of India, is illusory in nature, since it is most appropriate that the forum concerned itself, being in the best position to ascertain the veracity of such factual allegations, adjudicates such factual disputes - the mere allegation of violation of Rule 44 of 2016 Rules could not be sufficient justification for this Court to invoke the writ jurisdiction. An appeal, either under Section 421(1) of the 2013 Act or under Section 61 of the Code, would be a more efficacious and exhaustive remedy available to the petitioner in comparison to the writ petition - In the present case, however, the entire gamut of the petitioner s allegations in the writ petition revolved around specific factual allegations which ought to have been decided by the NCLT itself. Moreover, since all the impugned orders had been passed in the absence of the petitioner, who failed to avail the opportunity of being represented before the NCLT, there is extremely limited scope of entering into the nitty-gritties of such factual allegations within the constraints of the writ jurisdiction. The order under review cannot be subjected to a review on the ground of error apparent on the face of the record, simply because there is no such apparent error in the impugned order which can be decided at the first blush without looking into the materials annexed to the writ petition and the connected records of the proceeding before the NCLT - there is no merit in the review application. Application dismissed.

Summary

Issues:
1. Maintainability of the writ petition under Section 421(1) of the Companies Act, 2013 vs. Section 61 of the Insolvency and Bankruptcy Code, 2016.
2. Challenge of three orders passed by the National Company Law Tribunal (NCLT) - dismissal for want of prosecution, dismissal on merit, and dismissal for non-prosecution.
3. Allegations of irregularities and non-compliance of Rule 44 of the NCLT Rules, 2016.
4. Applicability of writ jurisdiction in cases involving factual disputes and alternative remedies available through appeals.
5. Review of the order based on error apparent on the face of the record.

Analysis:
1. The review application sought to challenge the order dismissing the writ petition as not maintainable under Section 421(1) of the Companies Act, 2013, contending that appeals should have been made under Section 61 of the Insolvency and Bankruptcy Code, 2016. The Court noted that Section 421(1) of the 2013 Act allows appeals against all NCLT orders, while Section 61 of the Code pertains to insolvency matters. The writ petition was dismissed with liberty to approach the appropriate appellate forum, leaving the choice open for the petitioner.

2. The three orders challenged in the writ petition involved dismissals by the NCLT for various reasons, including want of prosecution and absence of representation by the petitioner. The Court observed that the petitioner's claims lacked clarity on whether they fell under Part II of the Code, which deals with insolvency and liquidation of corporate debtors.

3. Allegations of irregularities and non-compliance with NCLT Rules were raised, but the Court emphasized that factual disputes should be addressed before the concerned forum, and that a challenge through appeals would be a more comprehensive remedy compared to a writ petition.

4. The judgment highlighted that writ jurisdiction should not be invoked solely based on alleged violations of procedural rules, especially when the petitioner failed to participate in the NCLT proceedings. The Court emphasized the importance of addressing factual disputes before the appropriate forum.

5. The Court underscored that the review application did not present any apparent errors in the impugned order that could alter the outcome. The judgment concluded that there was no merit in the review application, and it was dismissed without any costs being imposed. The parties were directed to receive certified copies of the order promptly.