SC refuses to entertain Appeal against NCLAT order remanding Appeal to NCLT

Bank of Baroda (Erstwhile Vijaya Bank) and Others Vs Suchi Paper Mills Ltd and Others ( Supreme Court of India)

The Supreme Court’s recent decision declines to entertain an appeal contesting the National Company Law Appellate Tribunal’s remand of a National Company Law Tribunal order. This case involves Bank of Baroda (Erstwhile Vijaya Bank) and Others versus Suchi Paper Mills Ltd and Others.

The Supreme Court, in its judgment dated October 16, 2023, addressed the National Company Law Appellate Tribunal’s action of setting aside the National Company Law Tribunal’s order from April 1, 2020, which had previously approved the Resolution Plan. The basis for this decision lay in the violation of Section 419(3) of the Companies Act 2013 and the lack of consideration of circumstances mandated under Section 30(2) of the Insolvency and Bankruptcy Code 2016 by the Single Member of the NCLT.

During the proceedings, Mr. Gaurav Agarwal, senior counsel for the appellant, and Mr. R Venkataramani, Attorney General for India representing the fourth respondent (Kendriya Bhandar, the successful Resolution Applicant), presented their arguments. The appellant emphasized the steps taken in compliance with the approval order and the settlement of financial creditors’ dues. However, the Supreme Court refrained from entertaining the appeal, given the nature of the NCLAT’s remand order, preserving the rights of the parties to present their contentions before the NCLT upon remand.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

1. By its order dated 16 October 2023, the National Company Law Appellate Tribunal¹ has set aside the order of the National Company Law Tribunal² dated 1 April 2020 approving the Resolution Plan. The proceedings have been remanded without touching upon the merits of the case.

2. The rationale for the impugned order is that an order approving the Resolution Plan was passed by a Single Member of the NCLT in violation of the provisions of Section 419 (3) of the Companies Act 2013. That apart, the NCLAT has also observed that none of the circumstances which are required to be borne in mind under Section 30(2) of the Insolvency and Bankruptcy Code 2016 have been considered by the Single Member of the NCLT.

3. During the course of the hearing, Mr Gaurav Agarwal, senior counsel appeared on behalf of the appellant. Mr R Venkataramani, Attorney General for India appears on behalf of the fourth respondent (Kendriya Bhandar, who is the successful Resolution Applicant).

4. It has been submitted that substantial steps were taken in pursuance of the order of approval and the dues of the financial creditors were also settled. These are matters which, it is needles to add, would be considered by the NCLT when the proceedings appear before it on remand. We say no more on that aspect.

5. Since the impugned order of the NCLAT is by way of an order of remand, we are not entertaining the appeal at the present stage keeping open all the rights and contentions of the parties to be urged before the NCLT. The parties would be at liberty to approach the NCLT at an early date so that orders can be passed in accordance with the above directions.

6. The appeal is accordingly disposed of.

7. Pending applications, if any, stand disposed of.

Notes:

¹ “NCLAT”

² “NCLT”