2022 (3) TMI 1173 - SC - Insolvency and Bankruptcy

Initiation of CIRP - pre-existing dispute or not - NCLT rejected the application - NCLAT allowed the application admitting the additional evidences - Section 3(11) read with Section 5(21) of the Code - HELD THAT - the impugned order allowing the appeal and even admitting the application under Section 9 of the Code cannot be sustained on a short point that the said additional documents were taken on record only while finally deciding the appeal and without adequate opportunity of response to the corporate debtor. However, at the same time, due consideration of the said documents also appears requisite and the documents i.e., the said e-mails, cannot be removed out of consideration only because they were not on record before NCLT. After taking the said documents on record, for the appropriate process of adjudication in the matter, it is also considered just and proper that the order dated 06.10.2020 passed by NCLT be also set aside and the NCLT be directed to re-consider the application under Section 9 of the Code as filed by the applicant-respondent while taking into consideration the additional documents now taken on record and at the same time, while extending an adequate opportunity of hearing to the corporate debtor. In any case, in the present matter, the impugned order was passed on 15.12.2021 and admittedly, no other steps had been taken in the matter including that of appointment of resolution professional. In the given set of facts, we overruled the objections raised by the learned senior counsel for the respondent - The application under Section 9 of the Code in CP(IB) 841(ND) of 2020 stands restored for reconsideration by the Adjudicating Authority keeping in view the observations and requirements foregoing. Appeal allowed.

Summary

Issues: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 dismissed by the National Company Law Tribunal (NCLT) on grounds of limitation - Appeal filed before the National Company Law Appellate Tribunal (NCLAT) - Additional documents submitted during appeal proceedings - Admissibility of additional documents and their impact on the case.

Analysis:
1. Limitation Grounds and NCLT Decision:
The appellant-company, a corporate debtor under the Insolvency and Bankruptcy Code, challenged the NCLT's order dismissing the application under Section 9 of the Code due to limitation. The NCLT found that the application filed on 30.06.2020 was beyond the three-year period prescribed by the Limitation Act, 1963, based on the documents provided by the applicant. The NCLT concluded that the application was time-barred and rejected it.

2. Submission of Additional Documents and NCLAT Decision:
During the appeal before the NCLAT, the applicant submitted additional documents, specifically email exchanges from 2017 to 2019, indicating admissions of liability and willingness to settle dues by the corporate debtor. The NCLAT allowed the submission of these documents and considered them as acknowledgments of debt within the limitation period, contrary to the NCLT's decision.

3. Judgment and Directions by Supreme Court:
The Supreme Court, after considering the submissions and documents, found that while the NCLAT's decision to admit additional documents was appropriate, the appeal and application under Section 9 could not be sustained as the corporate debtor was not given adequate opportunity to respond to the new evidence. The Court set aside the NCLAT's order allowing the application but retained the part admitting the additional documents for further consideration.

4. Maintainability of Appeal and Final Directions:
The Supreme Court overruled objections regarding the maintainability of the appeal by the corporate debtor, emphasizing the right to challenge the NCLAT's decision. The Court directed the NCLT to re-consider the application under Section 9, taking into account the additional documents, and ensuring a fair hearing for the corporate debtor. The Court clarified that it did not make any determination on the merits of the case, leaving all aspects for the Adjudicating Authority to examine.

5. Expedited Consideration:
Considering the timeline of the case and the importance of expeditious proceedings, the Supreme Court urged the Adjudicating Authority to prioritize the matter and proceed promptly with the reconsideration of the application under Section 9 of the Code.

In conclusion, the Supreme Court allowed the appeal, reinstated the application under Section 9 for reconsideration by the NCLT, emphasized fair proceedings and timely resolution, and left the detailed examination of the case to the Adjudicating Authority in accordance with the law.