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TMI Blog2022 (8) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... LAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT ] held that the doctrine of resjudicata is applicable to the proceeding of IBC. Since the adjudication by this Tribunal is in effect right in rem, the Appellant, being shareholder, filed this appeal. The law declared by Hon ble Apex Court is not in dispute, but the Appellant herein is claiming interest through Corporate Debtor. When the Corporate Debtor challenged the same applying doctrine of resjudicata, in view of law declared by Apex Court in Ebix Singapore Pvt. Ltd. and the judgment has attained finality, the Appellant who is claiming interest through Corporate Debtor is debarred from re-agitating the same applying doctrine of resjudicata. In view of the principle of resjudicata, though a part of CPC, it would be applicable to the proceeding of this Tribunal and IBC. Only to prevent the abuse of process of law and give a finality to any proceeding, or orders, and to avoid an endless litigation to frustrate the very object of enacting IBC, the claim of appellants is liable to be rejected. There are no merit in the contention of the Appellants and we find no ground to warrant interference by this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal after hearing the Counsel on record passed a detailed order in Company Appeal(AT)(Ins) No. 183 of 2021. This Appellate Tribunal formulated certain points regarding limitation, relationship between Financial Creditor and Corporate Debtor, acknowledgement of debt etc. The specific points directed by this Tribunal in paragraph-7 of the Judgment are as follows: i) Whether the Corporate Debtor owed a financial debt to the Appellant in the facts of the present case? ii) Whether the balance sheet for the years 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 contain acknowledgment of debt as per the meaning of Section 18 of the Limitation Act, 1963 so as to give benefit fresh limitation period to the Appellant? And iii) Whether the application filed under Section 7 of IBC by the Appellant was barred by time and rightly rejected by the Adjudicating Authority? 6. All these three questions were answered against the Appellants herein and in favour of Respondent Arrow Engineering Ltd., adverting several provisions of IBC, more particularly, Sections 3(11) and 5(8) and other provisions of Limitation Act, 1963, decided all the points against the Appellant Ex- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Section 14(1), shall follow in relation to the Corporate Debtor, prohibiting as per proviso (a) to (d) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall come in force. 14. A copy of the order shall be communicated to the Applicant, Corporate Debtor and IRP above named, by the Registry. In addition, a copy of the order shall also be forwarded to IBBI for its records. Applicant is also directed to provide a copy of the complete paper book to the IRP. A copy of this order be also sent to the RoC for updating the Master Data. RoC shall send compliance report to the Registrar, NCLT. 15. We further clarify that since the Hon ble NCLAT had directed to pass order within one month from the date when order is produced before NCLT, which was to be utilized by the parties to endeavour to settle the matter, the said one month shall be considered from the date of the receipt by NCLT of the order of the Hon ble Supreme Court dated 05.05.2022. The said order of Hon ble Supreme Court was first submitted by the applicant alongwith IA 426 of 2022 filed on 09.05.2022. It is directed that if parties settle the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order admitting Section 7 of IBC application, appointing Mr. Vichitra Narayan Pathak as IRP to complete CIRP. Therefore, the admission of Application and Interlocutory Application of Financial Creditor is illegal and requested to set aside the same. 16. During hearing, learned Counsel for the Appellant in appeal No. 699, Mr. Abhijeet Sinha vehemently contended that in the absence of any finding recorded by the Adjudicating Authority as to the subsisting legally enforceable financial debt and its acknowledgment by the Appellants herein, the order is illegal. Apart from that, the Adjudicating Authority did not consider the question of limitation. Therefore, the order of the Adjudicating Authority is ex facie erroneous and requested to set aside the common order passed by the Adjudicating Authority. 17. The Appellant Oval Investment Pvt. Ltd. in appeal no. 812 contended that the Appellant is a shareholder of the Corporate Debtor Company and merely because there is no appeal against the findings of the Appellate Tribunal, the Appellant is not debarred from challenging the legality of the order as it would seriously affect the rights of the shareholder in the Corporate Debtor, Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a query as to the maintainability of the appeal on the same grounds which were raised in the earlier round of litigation, in Company Appeal (AT) (Ins.) No. 183 of 2022 dated 02.12.2021, decided in favour of the Respondent and affirmed by the Hon ble Apex Court in Civil Appeal No. 7715 of 2021. But the learned Sr. Counsel Mr. Dhruba Mukherjee contended that when the Appellant, Oval Investment Pvt. Ltd. was not a party, the Appellant is entitled to file an appeal challenging the findings, though no appeal was preferred. 21. Mr. Abhijeet Sinha, learned Counsel in Appeal No. 699/2022 and Shri Vikas Mehta learned Counsel in both the appeals filed their respective brief Written Submissions whereas instructing counsel of Mr. Dhruba Mukherjee, learned Sr. Counsel did not submit any Written Submission on behalf of the Appellant in Appeal No. 812/2022. The Appellants and Respondents reiterated their contentions raised during the argument, the respondent annexed a copy of the judgment in Edukanti Kistamma (Dead)Through L.Rs Vs. Venkatareddy (Dead) Through L.R.s 22. Considering the rival contentions, perusing the materials available, points need to be answered by this Appellate Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5(8) of IBC, the application is not maintainable. 24. In fact, the Appellant in the earlier round, contested the Company Petition before the Adjudicating Authority and the Adjudicating Authority, after considering entire material, dismissed the Company Petition filed by the Financial Creditor. The same was assailed in Company Appeal (AT)(Ins) No. 183 of 202, where this Tribunal reversed the order passed by the Adjudicating Authority and allowed the appeal, while directing the Adjudicating Authority to initiate CIRP appointing IRP and impose moratorium. 25. The order of this Tribunal attained finality in view of the judgment delivered in Civil Appeal No. 7715 of 2021 dated 05.05.2022 by the Hon ble Apex Court. 26. This Tribunal framed three points which we referred in earlier paragraph 4 (i)(ii)(iii), for consideration and this Tribunal adverted to the contentions, noted in paragraphs 4, 5 of the order, so also in paragraph-7.This Appellate Tribunal recorded its findings as to the acknowledgment of debt in paragraphs 19,20, 21 etc. and concluded that the debt due to the Financial Creditor Respondent herein is the financial debt within the meaning of Section 5(8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed twice for the same cause - nemo debetbisvexari pro eadem causa [Corpus Juris, Vol. 34, p. 743]. In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. Estoppel rests on equitable principles and res judicata rests on maxims which are taken from the Roman Law [Ibid p. 745]. Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under Article 32 cannot be accepted. After adverting the laid down in various decisions the Apex Court concluded that the erroneous judgment will not operate as Resjudicata. The judgment of this Tribunal cannot be held to be erroneous as the judgment was affirmed by Apex Court. If for any reason the judgment of this Tribunal is held to be erroneous it would amount to reviewing not only the judgment of this Tribunal but also the judgment of the Apex Court in Civil Appeal No. 7715 of 2021. This Tribunal is incompetent to exercise a jurisdiction to review its own judgment or judgement of Apex Court. Hence we are unable to accede to the request of the counsel for the Appellant Sh. Abhijeet Sinha. The Hon ble Apex Court also note the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court takes place. However, there are certain notable exceptions to the application of the doctrine. One well known exception is that the doctrine cannot impart finality to an erroneous decision on the jurisdiction of a Court. Likewise, an erroneous judgment on a question of law, which sanctions something that is illegal, also cannot be allowed to operate as res judicata. This case is concerned with the application of the last mentioned exception to the rule of res judicata. The brief facts necessary to appreciate the applicability of the said exception to the doctrine of res judicata are as follows. In the present case, respondent No.1 availed a credit facility from the petitioner bank sometime in 2001. Respondent No.2, his son, stood as a guarantor for repayment of the said facility. As respondent No.1 defaulted in repayment of a sum of Rs.53,49,970.22, the petitioner bank filed O.A. No. 440 of 2002 before the DRT Bangalore, against respondent Nos.1 and 2. Respondent No.1, in order to repay the dues of the bank, signed an assignment deed dated 8.10.2003 with the Chief Manager, Basavanagudi Branch, Bangalore for assignment of the trademark EENADU in respect of agarbathies (inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the Hon ble Apex Court in Civil Appeal No. 7715 of 2021 dated 05.05.2022, again raising such grounds in the second round of litigation in incidental proceedings is nothing but an abuse of process of Court. 32. Though the learned Counsel for the Appellant Sh. Abhijeet Sinha contended that the Appellant only challenged the order of remand to the Adjudicating Authority passed by this Tribunal in Company Appeal (AT)(Ins) No. 183 of 2021, only the findings with regard to the remand to Adjudicating Authority attained finality in Civil Appeal No. 7715 of 2021 passed on 05.05.2022 and not on other grounds. Assuming for a moment that Civil Appeal No. 7715 of 2021 was preferred challenging the finding of this Tribunal with regard to remand of the matter to the Adjudicating Authority, still the findings recorded by this Tribunal on various other contentions raised by the Appellants became final. In fact, the Appellants did not place on record the grounds of appeal in Civil Appeal No. 7715 of 2021, which was decided on 05.05.2022 and in absence of the appeal grounds, this Tribunal has no other alternative except to reject the contention that the Appellant only challenged the remand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -agitating the same applying doctrine of resjudicata, in view of law decided by Apex Court in Ebix Singapore Pvt. Ltd. Learned Sr. Counsel Mr. Dhruba Mukherjee contended that though the Appeal was allowed, still the Appellant who was not a party to earlier proceeding, he can challenge the same relying on Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. wherein the Hon ble Supreme Court held as follows: Because in Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. [(2018) 2 SCC 674], the Hon ble Supreme Court in an Insolvency and Bankruptcy matter, while dealing with the issue of merger of judicial pronouncements, held that such order was not law declared in terms of Article 141, and hence, was of no precedential value, as extracted hereunder: 28. The decision in Smart Timing (supra) by the NCLAT, which was relied upon by the impugned judgment, was then pressed into service by Dr Singhvi stating that an appeal from this judgment has been dismissed by this Court and that, therefore, following the principle in Kunhayammed v. State of Kerala (2000) 6 SCC 359, the NCLAT s judgment has merged with the Supreme Court s order dated August 18, 2017, which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and order of the High Court also attained finality as it was not challenged by the respondents any further. Thus, in our view, the question of reconsideration of the validity of the tenancy certificate under Section 38-E(2) so far as Appellants 1 and 3 are concerned, could not arise in any subsequent proceedings whatsoever. More so, the entitlement of the said Appellants 1 and 3 to claim restoration of possession also cannot be reopened/questioned., as their entitlement to that effect had attained finality as the judgment and order of the High Court dated 28-4-2000, wherein their right to claim restoration of possession had been upheld, was not challenged by the respondents any further. .. 38. In view of the above factual matrix, we are of the considered opinion that it was not permissible for the High Court to reopen the issue either of grant or issuance of tenancy certificate under Section 38-E(2) or deal with the issue of restoration of possession so far as Appellants 1 and 3 are concerned. At the most, the High Court could proceed in the case of Appellant 2. 39. Admittedly, Smt. Ayesha Begum, the original landholder, had 127 acres of land. The claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle laid in the above judgment to the present facts, to give quietus to the dispute and to avoid abuse of the process of Court to challenge the judgment which attained finality in a collateral or incidental proceeding, the appellants must be nonsuited. 39. In view of the principle laid down in the above judgements, the principle of resjudicata, though a part of CPC, it would be applicable to the proceeding of this Tribunal and IBC. Only to prevent the abuse of process of law and give a finality to any proceeding, or orders, and to avoid an endless litigation to frustrate the very object of enacting IBC, the claim of appellants is liable to be rejected. 40. Indeed, a judgment obtained by playing fraud on the Tribunal or judgment or order passed without inherent jurisdiction is nonest in the eye of law and the same can be challenged in a collateral or incidental proceeding, but it was not the case of the Appellants in these appeals. Hence in any collateral or incidental proceeding, the judgment cannot be agitated which attained finality. If such course is permitted it would amount to exercise of power of review of its own judgment or sitting over the judgment in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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