Case Law Details
Rajdeep Clothing and Advisory Pvt. Ltd Vs Brijesh Kumar Mishra (NCLT Ahmedabad)
Whether opportunity of hearing to the affected parties is to be given before taking such action?
It is a legitimate expectation, both in equity and in law that person who is going to be punished or again whom some adverse action is being taken or his rights are prejudiced or adversely impacted because of some action of the other person, such affected person should get an opportunity to present his case This principle is called ‘Audi Altrem Partem’ which requires hearing the view point of a person before taking a decision against such person. In the present case, this principle has grossly been violated as evident from the facts and sequence of events narrated hereinbefore and for the sake of brevity, we do not repeat the same.
We have also gone through the communication made by Resolution Professional and it is noted that after initial communication as regard to submission of information and some details, no communication has been made with them as regard to the aspect of related party. Hence, we do not find any merit in the contention of the RP that it conducted the CIRP in most transparent and fair manner rather having regard to the facts stated hereinbefore the picture is otherwise. This aspect has already been considered by us in earlier part of our order and it has been established that the conduct of CIRP is not in accordance with the object and scheme of CODE, Regulations made thereunder. We also find that the news item taken in support by the RP appeared on a web platform on 23.12.2020 much after the exclusion of these parties from COC, hence, such item, on the face of it, does not support the approach of the RP. Further, RP has to conduct CIRP as per provisions of law and is not supposed to form an opinion based upon such news item. Even otherwise, the contents of this news item indicate that it is an instance of sponsored news. Thus, we hold that principles of natural justice have been violated both by RP as well as COC.
In the facts of the case and the manner in which CIRP is being conducted, as evident from the proceedings which have taken place as regard to rejection of claims and re-constitution of COC by excluding the applicants from COC, we are of the considered view that some accountability mechanism for the authorised representatives of members of COC is also required on lines of provisions of Section 70(2) of CODE wherein Insolvency Professional can be questioned for its deliberate contravention of the provisions relating to CIRP/Liquidation of the Corporate Debtor. We also consider it appropriate to mention that principles of natural justice and equal opportunity are cardinal to any process including CIRP which is to be completed in a time-bound manner and any deviation there-from may invite judicial intervention as commercial wisdom of COC is final in respect of certain matters only which have been specifically mentioned in the CODE and the matters as regard to status of a Financial Creditors being a related party and re-constitution of COC, which are under our consideration in the present applications, do not fall into that category. Thus, till such mechanism is brought on the statute or even otherwise, we humbly advise the COC to work in a fashion which meets the objects and scheme of the CODE so that interests of all stakeholders are taken care of.
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