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2023 Supreme(Del) 2532
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, J.
Pelican Grand Motels Private Limited – Appellant
Versus
Punjab National Bank – Respondent
W.P.(C) 2281 of 2023 and CM APPL. 8627 of 2023, 8628 of 2023
Decided On : 22-02-2023
Mr. Ramesh Kumar, Advocate, for the Petitioner.
Mr S.K. Sharma, Advocate, for the Respondent.
The importance of providing an opportunity to the corporate debtor to file a reply before admitting an application under Section 7 of the IBC.
Headnote:
NCLT - Insolvency and Bankruptcy Code - Section 7, Section 9, Section 10 - The court discussed the implications of the judgments in Swiss Ribbons Pvt. Ltd. & Anr. Vs Union of India & Ors., M/s Surendra Trading Company Vs. M/s Juggilala Kamlapat Jute mills Company and Ors., and Innovative Industries Vs ICICI Bank. The court emphasized the importance of providing an opportunity to the corporate debtor to file a reply before admitting an application under Section 7 of the IBC. The court directed the NCLT to place the petitioner's reply on record and granted the petitioner an opportunity to make submissions in respect of the petition under Section 7 of the IBC.
Fact of the Case:
The petitioner challenged the impugned order of the NCLT, which closed the right to file a reply to the Section 7 petition under the IBC, citing delay and objections.
Finding of the Court:
The court found that the petitioner had filed the reply before the next date of hearing and did not deliberately delay the process. It directed the NCLT to place the petitioner's reply on record and granted the petitioner an opportunity to make submissions.
Issues: Delay in filing the reply, objections raised, and the right to file a reply before the NCLT.
Ratio Decidendi: The court emphasized the importance of providing an opportunity to the corporate debtor to file a reply before admitting an application under Section 7 of the IBC.
Final Decision: The petition, along with pending applications, is disposed of with the direction to place the petitioner's reply on record and grant the petitioner an opportunity to make submissions.
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through hybrid mode.
CM APPL.8627/2023 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
W.P.(C) 2281/2023 & CM APPL.8628/2023
3. The present Petition has been filed by the Petitioner challenging the impugned order of the National Company Law Tribunal (hereinafter `NCLT') dated 6th January, 2023. In view of the fact that the reply of the Petitioner to the Section 7 Petitioner under the IBC, filed by the Respondent, was under objection, the NCLT closed the right to file the reply. On the same day the arguments have been heard and the order has been reserved.
4. Ld. counsel for the Petitioner submits that there was a delay in filing the reply, however, the same is not deliberate as it was only under objections and an opportunity may be given to the Petitioner to plead its case before the NCLT.
5. On behalf of the Bank, it is submitted that the Order dated 6th January, 2023 is an appealable order before the National Company Law Appellate Tribunal (`NCLAT').
6. This Court notices that in this petition, Punjab National Bank (`PNB') had filed a Section 7 petition under the Insolvency and Bankruptcy Code, 2016 (hereinafter `IBC') against the Petitioner - Pelican Grand Motels Private Limited. Notice was issued for the first time on 17th October, 2022 and the Petitioner was called upon to file a reply. The first Order of the NCLT dated 17th October, 2022 reads as under:
"This is a petition filed under Section 7 of the Insolvency & Bankruptcy Code 2016. It is stated by the petitioner that notice in terms of Rule 4 of Adjudicating Authority, IBC Rules, 2016 has already been issued on the Corporate Debtor.
In view of the Judgment passed by the Hon'ble Supreme Court in the case of Swiss Ribbons Pvt. Ltd. & Anr. Vs Union of India & Ors., reported in (2019) 4 SCC 17, the Paragraph 58 reads as follows:
"...A conjoint reading of all these Rules makes it clear that at the stage of the Adjudicating Authority's satisfaction under Section 7(5) of the Code, the corporate debtor is served with a copy of the application filed with the Adjudicating Authority and has the opportunity to file a reply before the said authority and be heard by the said authority before an order is made admitting the said application."
And in the matter of M/s Surendra Trading Company Vs. M/s Juggilala Kamlapat Jute mills Company and Ors. Reported in 2017 SCC Online SC 143, the Paragraph 24 reads as follows:
"Further, we are of the view that the judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible. "
And in the Judgment passed by the Hon'ble NCLA in the matter of Innovative Industries Vs ICICI Bank reported in 2018(1) SCC 407, the Paragraph 64 reads as follows:
"The different decisions of the Hon'ble Supreme Court, as referred to above and exception of principles of natural justice as noticed and summarised in the preceding paragraphs is not applicable to the insolvency resolution process as it is not a case of emergency declared or prejudicial to public interest or that there is a statutory exclusion of rules of natural justice or it is impracticable to hold hearing. It is not the case that no right of any person has been affected, as immediately on appointment of an Interim Resolution Professional, the Board of directors stand superseded. There are other persons who are also affected due to order of moratorium. Therefore, t
