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TMI Blog2023 (2) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... cts its business by two members out of which one is Judicial Member and another is Technical Member sitting in different Courts. The powers of the Tribunal as per sub-section (3) of Section 419 shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member - Sub-section (1) of Section 419 which empowers Central Government to constitute Benches of the Tribunal and sub-section (3) provides the powers of the Tribunal shall be exercisable by Benches consisting of two Members. The Adjudicating Authority is a NCLT which is constituted under Section 408 of the Companies Act, 2013 and the Bench means a Bench of the Adjudicating Authority i.e. a Bench of NCLT. Under Section 419, Central Government has constituted Benches of the NCLT - From the definition of bench as contained in the IBC as well as NCLT Rules, 2016 read with Sections 408 and 409, it is clear that the word bench refers to a bench of NCLT as constituted under Section 419. The expression bench as contained in IBC and NCLT Rules 2016 as well as under Section 419 of the Companies Act, 2013 only refers to Bench of NCLT. The legislature nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court did not lack jurisdiction it was not necessary for the court to refuse to proceed to hear. The interpretation which is sought to be advanced by the Appellant in event it is accepted shall lead to uncertainty and conflict regarding jurisdiction of a NCLT to entertain an application under Section 95. All applications and petitions filed in NCLT including its benches have to be heard and decided as per the general and special order of the President. Applications are listed in different court of one bench of NCLT as per the general and special order of the President. When a matter is listed before a particular court of bench of NCLT, the Court where the matter is listed has necessarily jurisdiction to entertain it. The submission that court has no jurisdiction since application of insolvency is pending in different court of same bench if accepted the same will be contrary to general and special order of the President under which Section 95 application is listed in different court. In the facts of the present case, impugned order dated 18.12.2023 passed by Court III of the NCLT, Mumbai Bench was well within its jurisdiction. Similarly, the impugned order passed by NCLT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed a Resolution Professional who was directed to examine the application and submit a report as provided under Section 99(1) of the IBC. 2.3. Company Appeal (AT) (Insolvency) No.1341 of 2023 has been filed against the order dated 17.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-I in C.P.(IB)- 452(MB)2022 by which the Adjudicating Authority has appointed a Resolution Professional who was directed to examine the application and file report. 3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant in Company Appeal (AT) (Insolvency) Nos. 75 77 of 2024 and Shri Krishnendu Datta, Learned Senior Counsel for the Appellant in Company Appeal (AT) (Insolvency) No.1341 of 2023. We have also heard Shri Akshay Sapre, Learned Counsel appearing for Kookmin Bank in Company Appeal (AT) (Insolvency) Nos.75 77 of 2024 and Shri Ankur Mittal, Learned Counsel appearing for the State Bank of India. Shri Abhishek Anand, Learned Counsel has also appeared for Respondent No.2 in Company Appeal (AT) (Insolvency) No.1341 of 2023. 4. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant in support of the Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. Thus, both for insolvency resolution and personal guarantor proceedings shall be placed before same Bench of NCLT as per Section 60(1). It is submitted that Section 60(2) provides that where a CIRP proceeding of a Corporate Debtor is pending before a NCLT, an application relating to the personal guarantor shall be filed before such NCLT, clearly means that such Bench of NCLT where insolvency proceedings are pending. It is submitted that the clear intendment of sub-section (2) of Section 60 is that both the proceedings should be heard by same Bench. It is submitted that there was no necessity for sub-section (2) of Section 60 unless legislature intended that both the proceedings should be heard by same court. It is submitted that although legislation is example of a bad drafting but intendment of legislature is clear that both insolvency proceedings and proceedings against personal guarantor should be heard by the same court. In event both the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLT Mumbai Bench which is located at Mumbai has territorial jurisdiction over State of Chhattisgarh, State of Goa and State of Maharashtra. All applications pertaining to the aforesaid geographical area has to be filed before the NCLT Mumbai Bench. It is submitted that the expression shall be filed as occurring in sub-section (2) of Section 60 only refers to filing to the NCLT Bench and not to a particular Court. The NCLT Mumbai Bench for the purpose of effective adjudication and to deal with the workload, is sitting in multiple combinations i.e. in five courts. Separate courts of NCLT Mumbai Bench have not been notified under any separate gazette notification. All the courts functioning in Mumbai NCLT constitute part of NCLT Mumbai Bench only. In the present case, the CIRP proceedings and proceedings under Section 95 have been proceeded by the same Bench i.e. NCLT Mumbai Bench, which court shall hear the matter is the matter of internal arrangement of the NCLT and depends on general and special orders issued by the President of the NCLT or the members authorised. Learned Counsel for the Respondent has also referred to Section 421 of the Companies Act, 2013. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Members of the Tribunal authorised in this behalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify: Provided further that if at any stage of the hearing of any such case or matter, it appears to the Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the President, or, as the case may be, referred to him for transfer, to such Bench as the President may deem fit 13. As per Section 419 of the Companies Act, the Central Government has issued notification dated 01.06.2016 constituting 10 Benches of NCLT. Notification dated 01.06.2016 is as follows:- NOTIFICATION New Delhi, the 1st June, 2016 S.O. 1935(E).- In exercise of the powers conferred by sub-section (1) of section 419 of the Companies Act, 2013 (18 of 2013), the Central Government hereby constitutes the following Benches of the National Company Law Tribunal mentioned in column (2) of the table below, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolkata (1) State of Bihar (2) State of Jharkhand (3) State of Odisha (4) State of West Bengal (5) Union territory of Andaman and Nicobar Islands 10. National Company Law Tribunal, Mumbai Bench Mumbai (1) State of Chhattisgarh (2) State of Goa (3) State of Maharashtra 14. We, in the present case, are concerned with NCLT Mumbai Bench. NCLT Mumbai Bench transacts its business by two members out of which one is Judicial Member and another is Technical Member sitting in different Courts. The powers of the Tribunal as per sub-section (3) of Section 419 shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member. 15. Sub-section (1) of Section 419 which empowers Central Government to constitute Benches of the Tribunal and sub-section (3) provides the powers of the Tribunal shall be exercisable by Benches consisting of two Members. 16. The expression Benches has been defined in the IBC under sub-section (2) of Section 3 which is as follows:- 3. Definitions.- ..(2) benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration in the present case. Subsection (2) of Section 60 provides that where a corporate insolvency resolution process of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution of a personal guarantor, as the case may be, of such corporate debtor shall be filed before such National Company Law Tribunal. Sub-section (2) uses two expressions before NCLT i.e. a and such . The provision makes it clear that when insolvency resolution process of a corporate debtor is pending before a NCLT, an application relating to insolvency of personal guarantor shall be filed before such NCLT. Uses of expression a and such makes it clear that both the proceedings have to be before the same NCLT. 21. Both the parties have referred to the judgment of this Tribunal in State Bank of India, Stressed Asset Management Branch vs. Mahendra Kumar Jajodia, Personal Guarantor to Corporate Debtor- Company Appeal (AT) (Insolvency) No.60 of 2022 decided on 27.01.2022. Subsections (1) and (2) of Section 60 came for consideration in the above judgment where following has been laid down in paragraphs 7 and 8:- 7. Sub-Section 1 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applications have been filed before the NCLT, Mumbai Bench. 23. NCLT Rules framed under Section 469 of the Companies Act, 2013 also defines bench in sub-rule (7) of Rule 2, which is as follows:- 2. Definitions. -(7) Bench means a Bench of the Tribunal constituted under section 419 of the Act and includes Circuit Benches constituted by the President with prior approval of the Central Government to sit at such other geographical locations as may be necessary having regard to requirements. 24. From the definition of bench as contained in the IBC as well as NCLT Rules, 2016 read with Sections 408 and 409, it is clear that the word bench refers to a bench of NCLT as constituted under Section 419. The expression bench as contained in IBC and NCLT Rules 2016 as well as under Section 419 of the Companies Act, 2013 only refers to Bench of NCLT. The legislature never contemplated NCLT for courts of particular Bench of NCLT sitting in composition of two members in a court, court of NCLT hearing a petition or application was not under contemplation in sub-section (2) of Section 60. Sub-section (2) of Section 60 refers to NCLT which includes also a bench of NCLT, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of two or more members posted at particular bench. In a particular bench business are transacted if there are more than two members in different court room. For example, in NCLT Mumbai Bench, there are five courts who are transacting business with regard to cases filed before NCLT Mumbai Bench. 29. Learned Counsel for the Appellant contends that what is contemplated under sub-section (2) of Section 60 is when a CIRP against the Corporate Debtor has been filed before one particular court of a bench of the NCLT, an application against personal guarantor should be filed in the same court of the NCLT. 30. When we look into the Scheme of the IBC and the Rules framed thereunder i.e. NCLT Rules 2016, it is clear that Section 60(2) only provided for filing of the application against personal guarantor before the same NCLT where insolvency resolution process against the corporate debtor is pending. Legislature neither contemplated nor intended hearing of both the applications by one particular court room. A bench of NCLT is a unit and filing of application and petitions are before the bench of the NCLT and not before a particular court. How the different courts transact their busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efuse to proceed to hear. 32. Now we come to the cases which have been relied by Counsel for the Appellant in support of his submission. The judgment of this Tribunal in Mahendra Kumar Jajodia (supra) was a case where this Tribunal were examining the question as to when no insolvency proceeding pending against corporate debtor whether an application under Section 95 can be entertained by the Adjudicating Authority. The Adjudicating Authority in the said case has refused to entertain the application against which Appeal filed was allowed by this Tribunal and it was held that even if no insolvency proceedings are pending against the Corporate Debtor, application under Section 95 can be entertained. In the above context, sub-section (2) of Section 60 was interpreted in Paragraphs 7 and 8 of the judgment, already noticed and extracted above. The judgment was not considering the issue which has been raised in the present appeal, hence, no assistance can be taken by the Appellant from the above judgment. 33. The next case of this Tribunal relied by the Appellant in Schweitzer Systemtek India Pvt. Ltd. vs. Phoenix ARC Pvt. Ltd. Ors.- 2017 SCC OnLine NCLAT 235 . In the above case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that as per the provision of Administrative Tribunals Act, 1985, every bench of tribunal must consist of a Judicial Member and an Administrative Member, hence, the case could not have been disposed of by the Judicial Member alone. In paragraph 4, following was held:- 4. In view of the above state of the law we have no hesitation in coming to the conclusion that the matter ought not to have been disposed of by the Administrative Member alone. We, therefore, set aside the impugned order and remand the matter to the Tribunal for disposal in accordance with law by a bench properly constituted as required by Section 5(2) of the statute. The civil appeal is accordingly disposed of. 36. The question which arose for consideration in the above case was entirely different and has no bearing on the issue which has been sought to be raised in the present case. The above judgment is clearly distinguishable. 37. Another judgment of this Tribunal relied by the Appellant is Monica Jajoo vs. PHL Fininvest Pvt. Ltd. Anr.- 2023 SCC OnLine NCLAT 348 in which a two members bench was hearing a case arising out of a proceeding under Section 95 against personal guarantor. In the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the word NCLT used in sub-section (2) of Section 60 refers to NCLT including its benches and was not to a particular court room. Thus, the conclusion to which this Tribunal arrived in Monica Jajoo case is not in accord with the statutory scheme delineated by the IBC. Reliance on judgment of this Tribunal in Mahendra Kumar Jajodia (supra) was misplaced, hence, two-member bench erred in laying down that sub-section (2) of Section 60 provides both in liquidation proceeding as well as Section 95 proceedings have to be heard by the same court of NCLT. 39. We, thus, are of the view that the judgment of this Tribunal in Monica Jajoo does not lay down the correct law. The interpretation which is sought to be advanced by the Appellant in event it is accepted shall lead to uncertainty and conflict regarding jurisdiction of a NCLT to entertain an application under Section 95. As observed above, all applications and petitions filed in NCLT including its benches have to be heard and decided as per the general and special order of the President. Applications are listed in different court of one bench of NCLT as per the general and special order of the President. When a matter i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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