One NCLT Bench cannot act as an appellate authority and stay an order passed by a coordinate Bench of the same tribunal: NCLAT

NCLAT

The order was passed by a two-member Bench of Member (Judicial) Venugopal M and Member (Technial) V. P. Singh

The National Company Law Appellate Tribunal (NCLAT) has affirmed that a Bench of National Company Law Tribunal (NCLT) cannot act as an appellate authority and stay an order passed by a coordinate Bench of the same Tribunal. (Abhijit Guhathakurta, Monitoring Agency of the Corporate Debtor vs Royale Partners Investment Fund Ltd)

The order was passed by a two-member Bench of Member (Judicial) Venugopal M and Member (Techinal) VP Singh.

The Committee of Creditors of the Corporate Debtor had approved the resolution plan of Royale Partners Investment Fund Limited (Successful Resolution Applicant). Subsequently, the Adjudicating Authority/NCLT granted its nod to the decision after an application under Section 30, 31 IBC was filed.

The Monitoring Agency (Appellant) established under the Resolution Plan later moved the NCLT with an application for the implementation of the Resolution Plan on account of deliberate delay and failure on the part of the Successful Resolution Applicant.

The application was heard at length and orders were reserved by the Bench (erstwhile Bench) for January 30.

In the meantime, the Benches of NCLT Mumbai were re-constituted by the NCLT President.

Thereafter, Successful Resolution Applicant moved an application for certain relief in connection with the implementation of the resolution plan and the same got listed before a re-constituted Bench.

The reconstituted Bench heard the Successful Resolution Applicant’s application on February 12 and stayed the proceedings in the Appellant’s application.

The Appellant thus came in appeal before the NCLAT against the February 12 order stating that it was not consistent with ‘Judicial Discipline’ and should thus be set aside, in furtherance of substantial cause of justice.

In spite of the stay order, the erstwhile Bench passed the final orders in the Appellant’s application on February 19 and directed the Successful Resolution Applicant to implement the Resolution Plan within a week. Aggrieved by this order, a separate appeal was preferred by the Successful Resolution Applicant.

In response to the Appellant’s appeal, the Successful Resolution Applicant inter alia submitted that the role of the ‘Monitoring Agency’ was limited to managing the day-to-day affairs of the ‘Corporate Debtor’ and in the present case, the Agency had filed the application before the Adjudicating Authority without permission and sanction of the Steering Committee.

The NCLAT, in its order, noted that it was a matter of fact that in the newly reconstituted Bench, the Members, both Judicial and Technical, were different from the erstwhile Bench.

Thus, after considering the relevant NCTL Rules and the decisions of various courts on judicial discipline, NCLAT observed,’Probity’, ‘Judicial Decorum’, ‘Propriety’ and ‘Comity of Judicial Discipline’ require that a coordinate Bench cannot stay an order which was reserved by another coordinate Bench of the same ‘Tribunal’.NCLAT

It noted that till the erstwhile Bench pronounced the order, it was seized of the matter and retained dominion over the Appellant’s application and the stay order qua the erstwhile Bench’s order while hearing another application by the another party bristled with legal infirmity.

“.. the newly reconstituted Bench of ‘NCLT’ Mumbai, Court No. II cannot make an inroad in respect of a matter viz. MA No. 249/2020 wherein the ‘orders were reserved’ on 30.01.2020 by the erstwhile Bench. In short, the passing an order of stay of all proceedings in MA No. 249/2020 until the next date of hearing (28.02.2020) in MA No. 515/2020 by the newly re-constituted Bench, ‘NCLT’ Mumbai, Court No. II, on 12.02.2020 is perse an illegal, nullity and non-est one, in the eye of Law..”

The newly re-constituted Bench cannot sit in judgement as an ‘Appellate Authority’ in respect of a subject matter, in which an order was reserved by the erstwhile Bench, the NCLAT added.

It observed that the prudent option before the reconstituted Bench was to direct the Registry to place the successful resolution applicant’s application before the President for obtaining necessary orders on its listing before the erstwhile Bench.“Unfortunately, such a proper/traditional recourse, cemented on sound and healthy principle of judicial propriety was not resorted to.. the ‘judicial precedent’ requires that as a ‘rule of practice’, the same cannot be interfered with by the re-constituted Bench on any score. Only if the Members of the Adjudicating Authority(‘NCLT’) do not brush aside the orders passed by a ‘Coordinate Bench’ of the same Tribunal, Certainty and uniformity in ‘Law’ can be achieved and preserved in our administration of justice.”NCLAT

Consequently, with a view to prevent an aberration of justice and to secure the ends of justice, the NCLAT set aside the stay order “with a benign hope and trust that such slipup will not recur again in future“.

As far the contention of the Monitoring Agency not having the locus standing to file an application for the implementation of the resolution plan was concerned, the NCLAT stated that approval order of the Adjudicating Authority itself granted liberty to move applications for the implementation of the Resolution Plan.

“..in ensuring successful implementation of ‘Resolution Plan’, the ‘Monitoring Agency’ and the ‘Resolution Professional’ are to take a lead role in this regard.”, NCLAT said.

Senior Advocate Abhinav Vasisht with Advocates Avinash Subramanian, Aakrshan Sahay, Nakul Sachdeva appeared for the Appellant.

Senior Advocate Sudipto Sarkar with Advocates Kumar Anurag Singh, Naman Joshi appeared for the Successful Resolution Applicant.

Senior Advocate Arun Kathpalia represented Intervenor IDBI Bank.

Published by Sneha Vishwakarma

Advocate, Bombay High court.

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