M/s.Wittur Elevator Components India Pvt Ltd vs National Company Law Tribunal, Kochi Bench, Through Its Registrar, Company Law Bhavan, Bmc Road, Thrikkakara P.O., Kakkanad, Kochi-682 021

T.R.RAVI, J.

This Writ petition is filed challenging Exhibit P18 order passed by the National Company Law Tribunal, Kochi Bench (1st respondent herein). The petitioner has filed an application before the 1st respondent as TIBA No.34/KOB/2019, under the Insolvency and Bankruptcy Code, 2016 (IBC for short) in their capacity as Operational Creditor (OC for short) against M/s.Axiomata Elevators Pvt.Ltd., as the Corporate Debtor (CD for short). The case of the petitioner is that they are involved in the business of supplying elevator components and based on purchase order issued by the CD, they had supplied materials. When the CD failed to pay the amounts due to the petitioner, despite several notices, a statutory notice was issued on 21.6.2017 under Section 8 of the IBC, calling upon them to pay the sum of Rs. 38,83,488/-, which was outstanding. A reply was received from the CD, disputing the liability. The petitioner hence initiated proceedings before the 1st respondent and sought for declaration of moratorium and appointment of an Interim Resolution Professional (RP for short) under Section 9 of IBC. The 1st respondent thereupon issued Exhibit P1 order admitting the application and prohibiting the institution of suits or continuation of pending suits or proceedings against the CD, including execution of any judgment, decree or order in a Court of Law, Tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the CD any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the CD in respect of its property, including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; and the recovery of any property by an owner or lessor where such properties occupied by or in the possession of the CD. The 2nd respondent was appointed as the RP to carry out the functions under the IBC.

According to the petitioner, the 2nd Committee of Creditors (CoC for short) meeting was convened on 14.01.2020 in the office of the CD and it was noticed that possession of the registered office of the CD and its assets were still with its defunct Directors and that the bank accounts of the CD were still being operated by the said Directors. The petitioner states that they pointed out that the 2nd respondent has failed in his duty by not taking possession of the registered office of the CD and its assets. The 2nd respondent is stated to have said that he has taken symbolic possession and that written instructions have been sent to the different Directors not to operate the bank accounts without permission of the 2nd respondent. It is stated that even though a meeting had been scheduled on 8.2.2020, the 2nd respondent did not turn up and that in the meanwhile the 2nd respondent had filed a report before the 1st respondent raising allegations against the Managing Directors of the petitioner, the authorised representative of the petitioner and the counsel for the petitioner. According to the petitioner, on the basis of the report and without any notice to the petitioner, the 1st respondent issued Exhibit P18 order directing the Managing Director and authorised representative of the petitioner to personally appear before the 1st respondent on 26.02.2020. It is aggrieved by the above order that the petitioner has filed this Writ petition.

The 2nd respondent has filed a counter affidavit, contending that the petitioner has an efficacious statutory remedy under Section 61 of the IBC for filing an appeal before the NCLAT and that the writ petition has been filed suppressing the statutory remedy. The 2nd respondent has also produced Exhibit R2(i) whereby the CoC was reconstituted and the petitioner was replaced by M/s Bajaj Finance Ltd, which is the financial creditor. The order also says that the OC has the right of audience in CoC meetings. It would appear from the pleadings that there are serious differences of opinion between the petitioner and the 2nd respondent.

Heard the counsel for the petitioner and the respondents in detail. Even though several questions of law have been raised, I do not think it is necessary to go into those questions at this stage, particularly since the entire matter is pending before the 1st respondent Tribunal. The short question that has to be answered at this stage is only whether the presence of the Directors and authorised representative of the petitioner, in person, before the Tribunal is required, as directed in Exhibit P18. A reading of Ext.P18 indicates that the purpose of summoning the Directors is to ascertain whether the Board of Directors of the petitioner had permitted the authorised representative to raise allegations against the 2nd respondent and certain other matters relating to the conduct of the authorised representative, as stated in the report of the RP. Admittedly, the petitioner is no longer a member of the CoC and hence there is no requirement for their presence at the CoC, since the financial creditor has taken their place. There is hence no further requirement to call upon the Directors of the petitioner to explain the conduct of their authorised representative before the Tribunal.

A reading of Ext.P18 would show that it has been issued merely on the basis of the Report of the RP. No notice regarding the contents of the report was issued to the petitioner. I am of the opinion that prior to requiring the presence of the Directors of the petitioner, the Tribunal ought to have heard them on the allegations contained in the Report of the RP. Even otherwise, if the intention of requiring the presence of the Directors was in order to decide whether there is any requirement to proceed against them or their authorised representative for contempt, the same could have been done only on the basis of an application for that purpose, on which the petitioners will be able to show cause. Exhibit P18 is hence quashed. However, this will be without prejudice to the right of the respondents to initiate any proceedings against the persons who were directed to be personally present in Ext.P18, if the Tribunal is of the opinion that there is an element of contempt in any of the actions that have been complained of in the report of the resolution professional, but the same shall be in accordance with the procedure prescribed by law.

The writ petition is disposed of as above.