KHATEMA FIBRES LIMITED vs NATIONAL COMPANY LAW TRIBUNAL AND ANOTHER

1. Present petition has been filed seeking the following reliefs:-

(i) To issue a writ, direction or order in the nature of certiorari quashing the impugned order dated 27.10.2017 passed in CP No. (IB) 109/ALD/2017

(Annexure No. 1).

(ii) To issue a writ, direction or order in the nature of prohibition, prohibiting the learned NCLT to not entertain the CP. (IB) No. 109/2017 on merit,

the same being defective and not to proceed further and also allow the application for dismissal of CP. (IB) No. 109/2017 and dismiss the CP. (IB)

No. 109/2017 pending before the learned NCLT Allahabad.

Counter affidavit along with stay vacation application has been filed on behalf of respondent no. 2 Bank. Rejoinder affidavit to the counter

affidavit/stay vacation application has also been filed by the petitioner. Subsequent thereto, respondent no. 1 has filed counter affidavit, challenging the

maintainability of the writ petition. In the counter affidavit, two annexures have been mentioned but the second annexure has not been annexed. The

petitioner has also filed rejoinder affidavit to the counter affidavit of respondent no. 1. In both the rejoinder affidavits plea have been taken that false

averments have been made in the counter affidavit filed by Ravindra Kumar on behalf of respondent no. 1 and in the counter affidavit filed by

Akhilesh Kumar, Chief Manager, Bank of Baroda, Naveen Mandi Branch, Haldwani.

Learned Senior Counsel for the petitioner placed reliance on the provision laid down in the Procedure of the High Court for Uttar Pradesh, Act,

1869, which is also applicable to this High Court and draw attention of this Court to section 4 which is penalty clause and submitted that decision be

taken in view of section 4 of the Act against the persons who have filed the false counter affidavit.Â

The writ petition has not been admitted yet and maintainability of the writ petition is to be decided. Though, respondents have said in their counter

affidavits that writ petition is not maintainable and sought adjournment to adjourn the hearing of the writ petition for another date, but it would not be

proper to adjourn the hearing of the case.

In the pre-session, this Court has suggested to the counsel for the parties that since objections have been raised by the petitioner before National

Company Law Tribunal (hereinafter referred as NCLT) to the effect that Registrar, NCLT has pointed some defects in the application submitted by

the bank but without recordings satisfaction and reason, notice was issued to the petitioner inviting objection.

It is submitted by the learned Counsel for the petitioners that NCLT without considering the provision of section 7 of Insolvency and BankruptcyÂ

Code, 2016 issued notice to the petitioner. Section 7 is reproduced hereunder:-Â

Initiation of corporate insolvency resolution process by financial creditor

(1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution

process against a corporate debtor before the Adjudicating Authority when a default has occurred. Explanation.-- For the purposes of this sub-section,

a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the

corporate debtor.

 (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be

prescribed.Â

(3) The financial creditor shall, along with the application furnish-

(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;

 (b) the name of the resolution professional proposed to act as an interim resolution professional; and

(c) any other information as may be specified by the Board.

(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under subsection (2), ascertain the existence of a default

from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).

(5) Where the Adjudicating Authority is satisfied thatâ€" (a) a default has occurred and the application under sub-section (2) is complete, and there is

no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed

resolution professional, it may, by order, reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to

rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).Â

(7) The Adjudicating Authority shall communicate-- (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case

may be.]

Parties are agreed to the extent that bank shall remove the defect(s) within one week, if already not removed. Thereafter, the Registrar, NCLT

shall submit the report. If report is submitted by the Registrar, NCLT will take decision on the application filed by the Bank as to whether the case

of the Bank requires issuance of notice to the petitioner or not.Â

Mr. Siddhartha Sah, Advocate appearing for Bank submits that Bank has already removed the defect but NCLT has not taken any decision, as the

matter is subjudice before this Court and there was an order passed by this Court directing the petitioner to move adjournment application before

respondent no. 1 who shall adjourn hearing of the proceedings pending before NCLT.

Mr. Virendra Kaparwan, Advocate appearing for NCLT submitted that he is not aware whether the defects has been removed or not. In case,

Bank has submitted an application of removing the defect then Registrar, NCLT shall submit the report positively stating therein whether defects have

been removed or not, within a week from the date of production of the certified copy of the order passed today. Thereafter, NCLT shall take its own

decision whether the application filed by the Bank is in accordance of law or not. In case, NCLT is convinced and satisfied that it is a case of

issuance of notice, then no formal notice is required to be issued to the petitioner herein, rather NCLT shall provide complete up-to-date copy of the

application so filed by the Bank before it for its adjudication and inviting objection from the petitioner and thereafter shall adjudicate the matter in

accordance with law. However, for the purpose of the allegations made by the petitioner against the affidavit persons who have filed the affidavit, the

matter is kept pending.

List on 16th April 2018.

Let a certified copy of the order be issued to the counsel for the parties within 24 hours on payment of usual charges.Â