2024 Supreme(Online)(NCLAT) 349
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
BALASORE ALLOYS LIMITED – Appellant
Versus
MSTC Limited – Respondent
498/ND/2024 COMPANY APPEAL(AT)(INS)
Mr. Joy Saha, Sr. Advocate with Mr. Sandeep S. Ladda, Mr. Apoorv Shukla, Mr. Prabhleen A Shukla, Ms. Tanvi Luhariwala, Advocates. Mr. Abhijeet Sinha, Sr. Advocate with Ms. Pallavi Pratap, Ms. Muskan Jain, Mr. Saikat Sarkar, Advocates for R-1.
The court upheld the Adjudicating Authority's dismissal of an application to accept additional documents, emphasizing their irrelevance to ongoing insolvency proceedings.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 8 and Section 9 - Arbitration and Conciliation Act, 1996 - Section 11(6) - Corporate Debtor's appeal against dismissal of application to accept additional documents - The Adjudicating Authority dismissed the application, stating it was not explained how the documents were necessary for the case - The Supreme Court clarified that arbitration proceedings do not affect pending Section 9 applications. (Paras 2, 11, 12, 14)
(B) Adjudicating Authority's discretion - The court should adopt a liberal approach in accepting documents, but must also consider relevance and necessity - The application was deemed unnecessary as the documents emerged after the initiation of the main proceedings. (Paras 12, 13)
Facts of the case:
The Corporate Debtor and Operational Creditor entered into an agreement for procurement. A demand notice was issued for an outstanding amount, leading to a Section 9 application. The Corporate Debtor sought to introduce additional documents related to arbitration proceedings, which were dismissed by the Adjudicating Authority.
Findings of Court:
The Adjudicating Authority's dismissal of the application was upheld, as the additional documents were not relevant to the ongoing proceedings.
Issues: Whether the Adjudicating Authority erred in dismissing the application for additional documents and the relevance of those documents to the Section 9 application.
Ratio Decidendi: The court found no error in the Adjudicating Authority's decision, emphasizing that the additional documents were not necessary for the resolution of the Section 9 application.
Result: Appeal dismissed.
JUDGEMENT
ASHOK BHUSHAN, J. This Appeal has been filed by the Corporate Debtor, challenging order dated 28.02.2024 passed by National Company Law Tribunal, Cuttack Bench, Cuttack by which IA(IB) No.36/CB/2024 filed by the Appellant for accepting two additional documents was dismissed.
Appellant aggrieved by the said order has come up in this Appeal.
2. Brief facts of the case necessary for deciding the Appeal are:
- (i) The Appellant – Corporate Debtor and Respondent – Operational Creditor entered into an Agreement for purchase and sale of various procurement, e.g. like low ash metallurgical coke, HR coil naptha, crude oil, coking coal etc.
- (ii) The Operational Creditor issued a Demand Notice dated 05.05.2022 under Section 8 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “Code”) with respect to outstanding amount of Rs.18,69,06,540/-. The Demand Notice was replied by the Corporate Debtor vide reply dated 16.05.2022. Company Petition – CP(IB) No.36/CB/2022 was filed under Section 9 by the Operational Creditor seeking initiation of CIRP. In Section 9 Application, Corporate Debtor filed its reply on 19.11.2022. (iii) The Appellant issued notice dated 11.04.2023 calling upon the Respondent to pay a sum of Rs.17 crores within a period of 08 days, failing which the said notice be treated as Arbitration notice as per Clause 23 of the Agreement. The Respondent – Operational Creditor sent a reply denying all the allegations.
- It was further stated that outstanding is due on the Corporate Debtor and Section 9 Application is already pending before the Adjudicating Authority.
- (iv) The Corporate Debtor filed Application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 before the High Court of Calcutta seeking appointment of sole Arbitrator. Vide order dated 13.09.2023, the Hon’ble High Court of Calcutta allowed the Application and appointed Arbitrator in the matter.
- The Operational Creditor filed a SLP (C) 25781/2023 challenging order dated 13.09.2023 passed by the High Court. The said SLP was dismissed by the Hon’ble Supreme Court making observation “we make it clear that the impugned order and conformation thereof will not affect the pending proceedings under the Insolvency and Bankruptcy Code, 2016”.
- (v) After the aforesaid order of the Hon’ble Supreme Court, the Corporate Debtor filed an I.A. No.36/CB/2024 before the Adjudicating Authority to bring on record arbitration petition AP/640/2023 and order dated 13.09.2023 passed by the Calcutta High Court. The Corporate Debtor also filed an MA No.107/2024 before the Hon’ble Supreme Court seeking clarification of order dated 28.11.2023, which MA was dismissed by the Hon’ble Supreme Court on 23.01.2024. (vi) The Adjudicating Authority by the impugned order dated 28.02.2024 dismissed IA No.36/CB/2024 observing that it is not explained by the Applicant how the additional documents are just and necessary to arrive conclusion in the C.P. No.36/CB/2022. This Appeal has been filed challenging the order passed by the Adjudicating Authority IA No.36/CB/2024.
3. We have heard Shri Joy Saha, learned Senior Counsel appearing for the Appellant and Shri Abhijeet Sinha, learned Senior Counsel appearing for Respondent.
4. Shri Joy Saha, learned Senior Counsel for the Appellant, challenging the order contends that the Adjudicating Authority in paragraph-7 of the order had made observation that the court should take a lenient view when an application is made for production of the documents, however, dismissed the Application relying on the observation of the order of the Hon’ble Supreme Court dated 28.11.2023. It is submitted that order of Hon’ble Supreme Court dated 28.11.2023 does not preclude the Adjudicating Authority from taking the additional document on record. By dismissing the Application for additional documents, the Adjudicating Authority has completely struck off one of the defence of the Appellant.
Passing of the order by the Hon’ble S
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