2024 (7) TMI 1322 - HC - Companies Law

Maintainability of the writ petition - petitioner s account has been declared as Non-Performing Asset - NCLAT observed that since the NCLT had reserved the proceedings filed by the Bank under Section 7 of the Code for passing orders, it was not inclined to entertain the appeal - HELD THAT - The petitioner having filed the interlocutory application, the interest of justice demands that this application be considered prior to passing any order on the Company Petition preferred by the Bank. This is for the reason that in the interlocutory application, the petitioner has prayed that various subsequent events be taken note of and pronouncement of the order in the Company Petition be deferred. If the interlocutory application as well as the Company Petition are decided together, the apprehension of the petitioner of prejudice being caused to it cannot be brushed aside as unfounded - The interlocutory application now filed before the NCLT seeks consideration of these aspects before adjudicating the Company Petition. This request made by the petitioner ought to be considered by the NCLT before deciding the Company Petition. The interest of justice demands that the interlocutory application preferred by the petitioner being Interim Application No. 3623 of 2024 be first decided before proceeding to pronounce final order on the Company Petition - Petition dispsoed off.

Issues:
1. Stay on passing final orders in Company Petition No. 132 of 2024.
2. Effect and operation of the order dated 21st June 2024 passed by the NCLT.
3. Consideration of subsequent events by NCLT before deciding Company Petition.
4. Interlocutory Application No. 3623 of 2024 and its significance.
5. Compliance with the orders related to depositing amounts with relevant authorities.

Stay on passing final orders in Company Petition No. 132 of 2024:
The petitioner obtained finance from the 2nd respondent, Canara Bank, leading to the account being declared a Non-Performing Asset. The Bank initiated actions under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Insolvency and Bankruptcy Code, 2016. The petitioner appealed the Debt Recovery Tribunal's order and approached the National Company Law Tribunal (NCLT) and the Debts Recovery Appellate Tribunal (DRAT). The NCLT reserved the proceedings in Company Petition No. 132 of 2024 for final orders, prompting the petitioner to seek a stay until the DRAT decides on the appeal.

Effect and operation of the order dated 21st June 2024 passed by the NCLT:
The petitioner, through its counsel, argued that subsequent events, including the stay of the DRT order by DRAT, should be considered by the NCLT before passing final orders. The petitioner expressed concerns about the adverse impact on its credibility if a drastic order under the Insolvency and Bankruptcy Code is passed without considering these events. The petitioner complied with the DRAT's order of pre-depositing an amount and committed to depositing outstanding dues with the DRT. The petitioner sought relief to prevent prejudice resulting from premature final orders by the NCLT.

Consideration of subsequent events by NCLT before deciding Company Petition:
The High Court emphasized the importance of the NCLT considering the petitioner's Interlocutory Application No. 3623 of 2024, which highlighted subsequent events and requested a deferral of the final order in the Company Petition. The Court noted that deciding both the application and the petition together could lead to prejudice against the petitioner. Acknowledging the stay on the DRT order by DRAT and the petitioner's bona fides, the Court directed the NCLT to address these aspects before concluding on the Company Petition.

Interlocutory Application No. 3623 of 2024 and its significance:
The petitioner filed Interlocutory Application No. 3623 of 2024 before the NCLT, urging a deferral of the final order in the Company Petition to consider subsequent events. The Court stressed the necessity of the NCLT evaluating this application before proceeding with the Company Petition. The petitioner's request to have the interlocutory application decided first was deemed essential to ensure justice and prevent any adverse consequences for the petitioner.

Compliance with the orders related to depositing amounts with relevant authorities:
The High Court accepted the petitioner's commitment to deposit a specified amount with the DRAT within a set timeframe. It directed that any adverse order resulting from the Interlocutory Application should not be enforced for a specific period. The Court clarified that it did not assess the merits of the application and left all contentions to be raised before the NCLT. The writ petition was disposed of with these directions for the parties to act accordingly.

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