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TMI Blog2024 (8) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... le cannot be held to be applicable at the stage of Section 97(5), i.e., at the stage when RP has been appointed. It is to be noted that Appeal(s) were filed by the Appellant challenging order dated 10.04.2023 by which, RP was appointed in the Application under Section 95 filed by the Financial Creditor. The Appellant while challenging order dated 10.04.2023, did not implead the RP as one of the party, whereas RP was required to be impleaded, since the appointment of RP was sought to be challenged in the Appeal, the Appellant cannot take benefit of its own mistake, in not impleading the RP in the Appeal, who was required to be impleaded. It does not lie in the mouth of the Appellant to contend that RP has no locus to file the Application. The objection, which are sought to be raised by the Appellant, are only clear endeavor to prolong the proceedings under Section 95 - the submission of the Appellant that RP has no locus is rejected. Furthermore, the Adjudicating Authority in its order dated 09.05.2024 has observed that there is no assistance from the learned Counsel for the RP in the matter. It was due to the above observations that present Application has been filed by the RP, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the RP are as follows: (i) Company Appeal (AT) (Insolvency) Nos.692, 693 716 of 2023 have been filed by the Appellant(s) Personal Guarantors of the Corporate Debtor challenging order dated 10.04.2023 passed by the National Company Law Tribunal, New Delhi Bench (Court-II) appointing RP (the Applicant herein) in Section 95 Application filed by the Asset Care Reconstruction Enterprise Ltd. (ii) The Financial Creditor - Asset Care Reconstruction Enterprise Ltd. has filed three separate applications under Section 95 being IB-78/ND/2023 against Neeta Saha (giving rise to Company Appeal (AT) (Insolvency) No.692 of 2023); IB- 82/ND/2023 against Aunirban Saha (giving rise to Company Appeal (AT) (Insolvency) No.693 of 2023); and IB-79/ND/2023 against Aniel Kumar Saha (giving rise to Company Appeal (AT) (Insolvency) No.716 of 2023). In all the aforesaid Applications filed under Section 95, the Adjudicating Authority appointed the RP by order dated 10.04.2023, which came to be challenged in the above Appeal(s) filed by the Appellant the Personal Guarantors. (iii) Company Appeal (AT) (Insolvency) No.692 of 2023 and Company Appeal (AT) (Insolvency) No.693 of 2023 came to be disposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 95 of the Code filed by the Financial Creditor. Counsel for the Appellant submits that two appeals have been filed by the Personal Guarantor against the same order which have already been disposed of by the judgment dated 30.05.2023 in Company Appeal (AT) (Ins.) No. 692 of 2023 and Company Appeal (AT) (Ins.) No. 693 of 2023. This Appeal is also disposed of in terms of the aforesaid order dated 30.05.2023. (v) After passing of order dated 30.05.2023 and 02.06.2023 by this Tribunal, the Application under Section 95 against the Personal Guarantors proceeded before the Adjudicating Authority. It is useful to notice the order passed by Adjudicating Authority in IB-78/ND/2023, i.e. filed against Neeta Saha. On 09.05.2024, when IB-78/ND/2023 came for consideration, learned Counsel appearing for the Personal Guarantor, i.e. Appellant submitted that Adjudicating Authority cannot further proceed with the matter without considering his objections to the appointment of RP in the wake of the order passed by this Tribunal on 30.05.2023. The said order of the Adjudicating Authority has been brought on record by reply filed on behalf of Neeta Saha, in IA No.5603 of 2024. The said order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided at the time of hearing of the Application under Section 100 and the objections filed by the Appellant Personal Guarantors also has to be considered at the time of hearing the Application under Section 100, as per the law laid down by the Hon ble Supreme Court. It is submitted that the judgment of the Hon ble Supreme Court bind all including NCLT, NCLAT, Appellant and Respondent. 7. Learned Counsel appearing for the Financial Creditor also supports the submissions of RP and relies on paragraph 82 of the judgment of the Hon ble Supreme Court in Dilip B Jivrajka and submits that at the time of passing order under Section 97, no adjudicatory issue need to be decided. 8. Learned Counsel for the Appellant, i.e., Personal Guarantors has opposed the Application of RP. It is submitted that RP being not party to the Appeal(s), he had no locus to file Application(s). It is submitted that present Application(s) are not maintainable, the RP having no locus. It is submitted that this Tribunal after considering detail submissions of the Appellant(s) passed order dated 30.05.2023 directing the Adjudicating Authority to consider the objections of the Appellant(s). It is submitted that Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the judgment, which paragraphs were under the Heading-B, Applicability of the Principles of Natural Justice . In paragraphs 64, 65 and 72, the Hon ble Supreme Court laid down following : 64. At the same time, it needs to be noted that the principles of natural justice are not to be construed in a straitjacket. The nature of natural justice is liable to vary with the exigencies of the situation. In a given situation, it may extend to a fullyfledged evidentiary hearing while, on the other hand, the principles of natural justice may require that a bare minimum opportunity should be given to an individual who is liable to be affected by an action, to furnish an explanation to the allegations or the nature of the enquiry. 1. Role of the Resolution Professional as a facilitator is to collate facts 65. In the provisions of Chapter III, particularly in Section 99, Parliament has provided for an engagement of the debtor with the resolution professional at various stages. Sub-section (2) of Section 99 stipulates that where an application has been filed by the creditor under Section 95, the resolution professional may require the debtor to prove the repayment of the debt in the manner wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, the nature of the information or the explanation which is sought must have a nexus with the application. Therefore, properly read, the power to seek information or, for that matter, to seek an explanation is related to the nature of the application which has been submitted under Section 94 or Section 95. We are of the view that the right to file such representation is sufficient compliance of audi alterum partem requirements. 76. Hence, the petitioners' assertion that the statutory framework, as interpreted and applied by the adjudicating authority, results in a violation of natural justice lacks merit. The reliance on State Bank of India v Rajesh Agarwal does not help the case of the petitioners, as the court in that case established that exceptions to natural justice must be confined to the 'narrowest possible limits.' The court underscored that the waiver of prior hearing is permissible only in situations where its inclusion would obstruct the entire process. In that case, the court specifically addressed the duties of banking authorities, emphasizing the obligation to adopt fair procedures and afford borrowers a hearing before classifying their acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des particulars of the applicant, particulars of the guarantor, particulars of the debt and particulars of the insolvency professional. The creditor who fills up Form C would have to furnish such information as lies within the knowledge of the creditor who is the applicant under Section 95(4). When the resolution professional is empowered to seek information or an explanation in connection with the application, such information or explanation must be relevant to and bearing a connection with the nature of the application itself. 14. Thus, there cannot be any denial that principles of natural justice are applicable, but the stage for applicability has been clearly laid down by the Hon ble Supreme Court. In paragraph 82, the Hon ble Supreme Court has held following: 82. For the reasons which we have already indicated, we have come to the conclusion that an adjudicatory decision making process of the nature which has been suggested by the petitioners would not be implicated under Section 97(5). To accept the submission of the petitioners would render the provisions of Sections 99 and 100 otiose. 15. The conclusion of judgment in paragraph 86 is as follows: V. Conclusion 86. We summari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel for the Appellant that RP has no locus to file the Application cannot be accepted. It is to be noted that Appeal(s) were filed by the Appellant challenging order dated 10.04.2023 by which, RP was appointed in the Application under Section 95 filed by the Financial Creditor. The Appellant while challenging order dated 10.04.2023, did not implead the RP as one of the party, whereas RP was required to be impleaded, since the appointment of RP was sought to be challenged in the Appeal, the Appellant cannot take benefit of its own mistake, in not impleading the RP in the Appeal, who was required to be impleaded. It does not lie in the mouth of the Appellant to contend that RP has no locus to file the Application. The objection, which are sought to be raised by the Appellant, are only clear endeavor to prolong the proceedings under Section 95. We have already noted that it is the Personal Guarantors, who have contended before the Adjudicating Authority that Adjudicating Authority cannot proceed further without deciding the objections of the Appellant as directed by this Tribunal. We, thus, reject the submission of the Appellant that RP has no locus. Furthermore, the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose provisions are read in the manner in which we now propose to elucidate. 18. We, thus, are of the view that RP cannot be precluded form submitting its Report as per the law laid down by the Hon ble Supreme Court and the Adjudicating Authority has to consider all objections raised by the Appellant(s) at the time of hearing of Section 100 and the order passed by this Tribunal dated 30.05.2023, cannot be read in any manner as to exclude the applicability of judgment of Hon ble Supreme Court dated 09.11.2023 in Dilip B Jivrajka. 19. Insofar as the submission of the Appellant(s) that Financial Creditor has not disclosed the relevant materials in the Application, these are the issues, which can be pressed by the Appellant at the time of hearing of the Application under Section 100. We in the present proceedings are not expressing any opinion on the merits of the contentions of either of the parties, which can be examined at the time of hearing of the Application under Section 100. 20. In view of the foregoing discussion we dispose of the IA Nos.5603, 5595 and 5598 of 2024 clarifying that the Adjudicating Authority may proceed in the proceedings under Section 95 as per the law laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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