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TMI Blog2020 (4) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... speaks about Submission of Resolution Plan and Section 31 speaks about Approval of Resolution Plan. Section 61 speaks about Appeals and Appellate Authority and Sub-Section (1) of Section 61 says that Notwithstanding anything to the contrary contained under the Companies Act, 2013, any person aggrieved by the order of the Adjudicating Authority under this Part may prefer an appeal to the NCLAT . Sub-Section (2) of Section 61 says that the appeal shall be filed within 30 days before the NCLAT and Sub-Section (3) of Section 61 says that an appeal against an order approving a resolution plan under Section 31 may be filed on five grounds - petitioner got the certified copy of the order within 7 days from the date of pronouncement of the common order dated 20.01.2020 i.e., within the timeline contemplated under Section Sub-Section (2) of Section 61 of IBC and as such, it cannot be said that he has been put to serious prejudice on account of non-uploading of the information relating to pronouncement of the orders on 20.01.2020 and non indication of the same in the Cause List. Mandatory nature of NCLT Rules, 2016, more particularly Rules 150 and 153 - HELD THAT:- In the light of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively in CA(AT)(Insolv.)Nos.690/2018 and 742/2018 and Review Application Nos.07/2019 and 08/2019. The petitioner, challenging the legality of the said order, filed Special Leave Petition, which was entertained and converted as Civil Appeal and vide order dated 14.06.2019 in Civil Appeal Diary No.20571 of 2019, taking note of the submission that the petitioner is ready and willing to clear the outstanding dues of the secured creditor / 4th respondent herein within a period of 15 days, time has been granted and accordingly, liberty was granted to move the NCLT within a period of two weeks from the date of the order in terms of the said request with a further direction to NCLT to consider and decide the same expeditiously in accordance with law. 4. The petitioner, in pursuant to the said liberty, had sent a communication as well as E-mail dated 23.07.2019 and the petitioning creditor has also confirmed that the dues as on 24.07.2019 was ₹ 12,65,00,000/-. The petitioner has also issued a Bankers Pay Order dated 23.07.2019 for the said sum in favour of the 4th respondent towards full and final settlement and so also the two other financial creditors, namely the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 475.04 Crores proposed to be paid by the 3rd respondent. The petitioner also expressed grievance that despite the 4th respondent having received the Settlement Plan of the petitioner and M/s.Empee Holdings Limited, had refused to submit the same before RP in Form FA and that apart, the 4th respondent having accepted and encashed the Demand Draft for a sum of ₹ 12,65 Crores, had also refused to provide Bank Guarantee as requested by the petitioner for a sum of ₹ 10.79 Crores towards the estimated cost of Corporate Insolvency in terms of Regulation 30A. The 4th respondent has also acknowledged the receipt of ₹ 12.65 Crores and also indicated that it is towards full and final settlement. 9. The petitioner has sent a communication to the 3rd respondent on 02.11.2019 as well as to the 4th respondent seeking certain clarifications as to the methodology adopted in adjusting the amount paid by him and it was rejected and the 11th COC Meeting went ahead on 04.11.2019. Therefore, the petitioner was constrained to file the application in MA/780/2019 under Section 60(5) of IBC and prayed for appropriate direction directing the 4th respondent to submit the relevant Form FA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cause List of Court No.II of NCLT, Chennai had comprised of 31 items that were to be heard by a Special Bench of Mr.R.Varadharajan (Member Judicial) and S.Vijayaraghavan (Member Technical). The petitioner to the shock and surprise became aware of the fact that at about 06.15 p.m. on 21.01.2020, Mr.B.S.V. Prakash Kumar and Mr.S.Vijayaraghavan had commenced sitting and the Cause List was affixed as to the constitution of the Bench and pronouncement of orders, which include MA/780/2019 and MA1250/2019, which was heard along with the same, was not shown in the Cause List. However, common order came to be passed on 20.01.2020 in allowing MA/780/2019 and dismissing MA/1250/2019. 14. The petitioner obtained the certified copy of the order dated 25.01.2020 after repeating requests and after going through the order, became aware of the passing of the common order and challenging the same, present writ petition is filed. 15. Mrs.Vibhadatta Makhija, learned Senior Counsel assisted by Mr.Karuppaiah Meyyappan made the following submissions: ✔ Rule 150 of the National Company Law Tribunal Rules, 2016 [in short NCLT Rules ] speaks about pronouncement of order by any one member o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders reserved by the Bench comprising of Mr.B.S.V. Prakash Kumar, Member (Judicial) and Mr.S.Vijayaraghavan, Member (Technical), in modification of the earlier order dated 05.01.2020 and an yet another order came into being on the very same day and the Registrar of NCLT, Principal Bench at NCLT, Delhi has passed an order that the Acting President Mr.B.S.V. Prakash Kumar was on tour on 20.01.2020 and therefore, reconstituted a Special Bench at New Delhi and even in the said notification, it has not been made clear as to the place on which the Acting President went on tour. ✔ Attention of this Court was also invited to the order dated 17.01.2020 passed by the Registrar of NCLT, Principal Bench of NCLT, New Delhi as to the re-constitution of Principal Bench at New Delhi with a coram of Mr.B.S.V. Prakash Kumar as Acting President and Ms.Sumita Purkayastha, Member (Technical) on 20.01.2020 and made a submission that in terms of the notification, Mr.B.S.V. Prakash Kumar, who form part of the Bench as to the pronouncement of orders in MA/780/2019 was suppose to sit at New Delhi on 20.01.2020 and if it is so, the Bench consisting of the said Member as well as Member Tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be construed as infraction of exercise of powers of the Acting President under Section 419(3) of the Companies Act, 2013. The 2nd respondent, in meeting out the allegations of the petitioner, in para 9 of the affidavit would state that on 20.01.2020, orders were pronounced in 9 cases including MA/780/2019 and MA/1250/2019 and for the said pronouncement, Cause List was displayed on 20.01.2020 at 10 a.m. in the Notice Board at the NCLT, Chennai and it is further averred that the Registry of NCLT, Chennai was unable to display the Cause List as well as on the Notice Board on the previous day as 19.01.2020 was a Sunday (Holiday) and owing to the same, the Registry was unable to upload the Cause List in the website and it cannot be construed as neither wilful nor wanton. The learned Standing Counsel appearing for the 2nd respondent further pointed out that when the orders were pronounced on 20.01.2020, attendance sheets have been signed by number of counsels, who were present in the Court for pronouncement, only after seeing the Cause List on the Notice Board and in para 11 of the counter affidavit, a submission has been made that the common order passed in MA/780/2019 and MA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns: (i) Raza Buland Sugar Co. Ltd., Rampur v. Municipal Board, Rampur [(1965) 1 SCR 970: AIR 1965 SC 895] (ii) Sharif-Ud-Din v. Abdul Gani Lone [(1980) 1 SCC 403] (iii) Bhavnagar University v. Palitana Sugar Mill (P) Ltd. and Others [(2003) 2 SCC 111] (iv) P.T.Rajan v. T.P.M.Sahir and Others [(2003) 2 SCC 498] (v) M/s.Hyundai Motor India Ltd. v. Union of India, Ministry of Finance and Others [2014 SCC OnLine Mad 12157] 19. Mr.P.H.Arvind Pandian, learned Senior Counsel appearing for the 10th respondent apart from adopting the arguments of the learned Senior Counsel appearing for the 3rd respondent as to the directory nature of the relevant statutory rules, would submit that even for the sake of arguments, the Registry of NCLT, Chennai do not follow the rules in letter and spirit, still the petitioner cannot termed to be an aggrieved person for the reason that the alleged non-compliance of the rules do not result in any serious prejudice or loss to the petitioner and would further add that the 10th respondent also espoused bonafide by complying with the terms of the Resolution Plan and despite the petitioner has been shown indulgence to come out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial also had a sitting at New Delhi on the same day on 20.01.2020 i.e., on the date of pronouncement of the impugned orders and therefore, has no jurisdiction to pronounce the order at all. The learned Senior Counsel appearing for the petitioner has also placed reliance upon the decision in Anil Rai v. State of Bihar [(2001) 7 SCC 318] as to the adherence of the time line prescribed for pronouncement of the orders. 22. This Court paid it's best attention and anxious consideration to the rival submissions and also perused and analysed the entire materials placed as well as the decisions relied on by the respective learned Senior Counsel appearing for the parties. 23. At the outset, this Court is not inclined to go into the merits of the impugned orders for the reason that the grounds urged by the petitioner can be decided only by the Appellate Forum, as it is an efficacious and alternative remedy available. 24. The sole question arises for consideration is Whether nonadherence to Rules 89, 150 to 153 of NCLT Rules, 2016 would vitiate the impugned order? 25. Part IX of NCLT Rules deals with Cause List and it is relevant to extract Rule 89: 89. Preparat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute(s) and in partial modification of the order dated 05.01.2020 and the following Benches came to be reconstituted and it is relevant to extract the same: Principal Bench at NCLT, New Delhi Court No.1 1.Shri B.S.V. Prakash Kumar, Acting President. 2. Ms.Sumita Purkayastha, Member (Technical). NCLT, Division Bench at New Delhi Court No.111 1.Shri Ch.Mohd.Sharief Tariq, Member (Judicial), 2.Smt. Saroj Rajware, Member (Technical. The very same official has passed an order dated 17.01.2020 stating that there shall be a Special Bench for NCLT, Chennai on 20.01.2020 for pronouncement of orders at Court No.II, reserved by the Bench comprising of Mr.B.S.V.Prakash Kumar, Member (Judicial) and Mr.S.Vijayaraghavan, Member (Technical) and the said order is in modification of the order dated 25.07.2019 for 20.01.2020 only and it was issued with the approval of the Hon'ble Acting President of NCLT. 28. In para 5 of the 2nd respondent's affidavit dated 13.02.2020, it is averred that on 17.01.2020, four orders were passed by the Registrar, NCLT, under directions from the Acting President and orders in Sl.Nos.(iii) and (iv) pertain to Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on 17.01.2020 itself. The 2nd respondent also took a stand that non-mentioning of MA/1250/2019 in the Cause List is neither wilful nor wanton and that the common order in MA/780/2019 and MA/1250/2019 was pronounced in the open Court right in the presence of parties. 31. The learned Senior Counsel appearing for the petitioner has placed heavy reliance on the Division Bench judgment of the Bombay High Court in Kamal K.Singh v. Union of India [2019 SCC OnLine Bom 5609]. A perusal of the facts of the said case would disclose among other things that the action of the 5th respondent therein in taking charge / possession of the registered office of the 6th respondent on the basis of an order passed by the NCLT, Mumbai was put to challenge and it was contended among other things that the Insolvency Petition/Proceedings were not listed for pronouncement of the order on 22.10.2019 before the concerned Bench and that part, Judicial Member was expected to demit office as a member of the NCLT, as he was appointed as a member of the NCLAT, vide notification dated 15.10.2019. As regards pronouncement of the orders, additional Cause List dated 26.10.2019 was uploaded and it pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assurance that if by reason of declaration of holiday or for any other unforeseen reason, the Bench does not function for the day, the daily cause list for that day shall, unless otherwise directed, be treated as the daily cause list for the next working day in addition to the cases already posted for that day. Now that information technology is introduced, particularly for listing of cases, then, all the more with the advances therein, the rule makers desired that there should be complete transparency, fair and just treatment to litigants and parties. Nobody should carry an impression that the case has been heard behind their back or that they have been taken up without any intimation or knowledge to the party or litigant and disposed of. Therefore, when cases are preponed or postponed, litigants have to be informed. They may have engaged advocates, but such transparency, faith, consistency, credibility and sanctity of judicial acts and proceedings is maintained. Everything in relation to judicial proceedings, therefore, is covered in the broad and wider concept of dispensation of justice. Ultimately, courts are endowed with the duty to render justice. If courts and tribunals ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order could have been pronounced. It could have been pronounced in the Chambers as well. However, in this case, there is no evidence of pronouncement at all. In para 79, the Division Bench of Bombay High Court has dealt with Rules 150 and 151 of the NCLT Rules, 2016 and the purport of the said Rule in para 80 and in para 84 has dealt with Justice Delivery System and concluded that the writ petition challenging the order of the NCLT, Bombay is maintainable and after making observations as to the nature and concept of the Tribunals, has set aside the impugned order on the ground that it is nullity and directed that the application is to be decided afresh in accordance with law. 32. The judgment of the Division Bench of Bombay High Court in Pushpa Shan v. Union of India and Others [2019 SCC OnLine Bom 2385] (cited supra) has no application to the case on hand for the reason that in respect of the order passed by NCLT, Bombay, which was the subject matter of challenge, the other Member had neither given concurrence with his reasoning on conclusion nor had he signed the transcript of the purported judgment/order dated 28.08.2018. 33. In the case on hand, the fact remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove an application before the Chief Justice of the High Court with a prayer to withdraw the said case and to make it over to any other Bench for fresh arguments. It is open to the Chief Justice to grant the said prayer or to pass any other order as he deems fit in the circumstances. It is also relevant to extract Para 46 of the said judgment: 46. I have chosen to reiterate the above instructions in this separate judgment only for providing added emphasis to them. I make it clear that if the Chief Justice of a High Court thinks that more effective measures can be evolved by him for slashing down the interval between conclusion of arguments and delivery of judgment in that particular court, it is open to him to do so as a substitute for the measures suggested by us hereinbefore. But until such measures are evolved by the Chief Justice of the High Court concerned, we expect that the measures suggested above would hold the field. I may also mention that the above-enumerated measures are intended to remain only until such time as Parliament would enact measures to deal with this problem. 35. In Arcelormittal India Private Limited v. Satish Kumar Gupta and Others [(2019) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase including the language of the provision, have all to be taken into account in arriving at the conclusion whether a particular provision is mandatory or directory. In para 9, the judgments rendered by the Hon'ble Apex Court in State of U.P. v. Manbodhan Lal Srivastava [(1958) SCR 533], wherein the observations of the Judicial Committee of the Privy Council in Montreal Street Railway Company v. Normandin [(1917) LR, AC 170] were extracted and it is relevant to extract the following observations made in para 9: 9...Thus this Court approximated Article 320(3)(c) to a statutory provision like the one which came up for consideration in Montreal Street Railway Company case [(1917) LR, AC 170] and held that if the article were construed as mandatory, it would cause serious general inconvenience, and injustice to persons who had no control over those entrusted with the duty. That decision was clearly based on the special facts in that case dealing with appointments and dismissals of public servants and the duty of the Government to consult the Public Service Commission in that behalf and cannot and should not be extended to cases based on a different set of facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pled with another provision which confers an immunity on another when such act is not done in that manner, the former has to be regarded as a mandatory one. A procedural rule ordinarily should not be construed as mandatory if the defect in the act done in pursuance of it can be cured by permitting appropriate rectification to be carried out at a subsequent stage unless by according such permission to rectify the error later on, another rule would be contravened. Whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow. On the facts of the case, it was held that Section 89(3) of the Jammu and Kashmir Representation of the People Act, 1957 is mandatory and noncompliance of the same would result in dismissal of the Election Petition under Section 94 of the said Act. 39. In Bhavnagar University v. Palitana Sugar Mill (P) Ltd. And Others [(2003) 2 SCC 111], Section 21 of the Gujarat Town Planning and Urban Development Act, 1976 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the enactment is what is called imperative or only directory. The Hon'ble Apex Court, as to the interpretation of Section 21 of the Gujarat Town Planning and Urban Development Act, 1976 found that Section 21 is to meet the changed situation and contingencies which might not have been contemplated while preparing the first final development plan. 40. In P.T.Rajan v. T.P.M.Sahir and Others [(2003) 8 SCC 498], the purport and object of preparation of an electoral roll especially with regard to the timeline came up for consideration and it was held that Where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory. Furthermore, a provision in a statute which is procedural in nature although employs the word shall may not be held to be mandatory if thereby no prejudice is caused . [Paras 48 to 50] 41. In Pesara Pushpamala Reddy v. G.Veeraswamy and Others [(2011) 4 SCC 306], relied on by the learned Senior Counsel appearing for the 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... men should not be condemned unheard, that decision should not be reached behind their back, that proceedings that affect their lives and properties should not continue in their absence and that they should not be precluded from participating in them. 58. In Sharif-Ud-Din v. Abdul Gani Lone [(1980) 1 SCC 403 : AIR 1980 SC 303], the Supreme Court indicated that the question whether a provision of law is mandatory or not depends upon its language, the context in which it is enacted and its object. The Court made an important observation, which will resolve the problem for us and hence it is extracted as follows:- In order to find out the true character of the legislation, the Court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as well as Advocate name, no names have been stated and there was no indication as to the pronouncement of the orders in MA/1250/2019. Thus, there appears to be a lapse on the part of the 2nd respondent for which they took a stand that it cannot be construed as neither wilful nor wanton. 46. A perusal of the impugned order would disclose that reasons were assigned for allowing of MA/780/2019 filed by the 3rd respondent and dismissal of MA/1250/2019 filed by the petitioner and however, this Court is not inclined to go into the merits or demerits of the said order and it has also expressed so. 47. A perusal of the orders dated 17.01.2020 passed by the Registrar, NCLT, Principal Bench, New Delhi would disclose that a Special Bench at NCLT, Chennai will sit on 20.01.2020 for pronouncement of the reserved orders by Mr.B.S.V.Prakash Kumar, Member (Judicial) [Acting President of NCLT, New Delhi] and Mr.Vijayaraghavan, Member (Technical) and the said constitution of the Bench is having legal sanctity and it was passed under Section 419(3) of the Companies Act, 2013. 48. Rule 151 (1) of the NCLT Rules, 2016 says that any Member of the Bench may pronounce the order for and on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is another aspect of the matter which cannot be lost sight of. It is a well-settled principle that if a thing is required to be done by a private person within a specified time, the same would ordinarily be mandatory but when a public functionary is required to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified. In Sutherland's Statutory Construction, 3rd Edn., Vol. 3, at p. 107, it is pointed out that a statutory direction to private individuals should generally be considered as mandatory and that the rule is just the opposite to that which obtains with respect to public officers. Again, at p. 109, it is pointed out that often the question as to whether a mandatory or directory construction should be given to a statutory provision may be determined by an expression in the statute itself of the result that shall follow non-compliance with the provision. At p. 111 it is stated as follows: As a corollary of the rule outlined above, the fact that no consequences of non-compliance are stated in the statute, has been considered as a factor tending towards a directory construction. But this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified . Admittedly, the consequences that may emanate as to the nonadherence/infraction of the Rules have not been indicated in the Statutory Rules. Hence, the impugned common order cannot be set aside on that ground. 57. This Court has entertained the writ petition on 27.01.2020 only on that issue and finds the grounds put forward by the petitioner in this regard, lack merit. It is once again made clear that this Court have not gone into the merits or otherwise of the impugned common order, as it is for the petitioner to workout his remedy by making a challenge to the said order before the competent forum in accordance with law. It is also be observed at this juncture that the second respondent shall be careful and not to give any room for emanation of such complaints in future. 58. In the result, this Writ Petition is dismissed, subject to above observations. Consequently, the interim orders granted in WMP.No.2253 of 2020 shall stand vacated and consequently, WMP.No.2253 of 2020 is dismissed. However, in the circumstances of the case, there s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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