Introduction: K. Narayanasamy, the suspended director of M/s GK Steel and Allied Industries Limited, appealed against the order passed by the National Company Law Tribunal (NCLT) in an application (IA No. 693/2020). The NCLT dismissed the application, prompting the appellant to approach the National Company Law Appellate Tribunal (NCLAT) seeking relief under Section 61 of the Insolvency and Bankruptcy Code, 2016.
Analysis: The NCLAT found that the impugned order passed by the NCLT was a non-speaking order, as it did not disclose the reasons for dismissing the application. The appellant’s counsel argued that the order violated the principles of natural justice and that the NCLT erroneously recorded that they did not press for a particular prayer in the application, despite no such submission being made. The counsel for the respondents, on the other hand, had no objections to remanding the matter to the NCLT for fresh adjudication on merits.
Conclusion: Considering the submissions of both parties, the NCLAT concluded that an opportunity should be accorded to the appellant to be heard on the merits of the application. Therefore, the NCLAT set aside the NCLT’s order and remanded the matter back to the NCLT for fresh adjudication. The NCLT is directed to decide the application within four weeks from the date of the NCLAT’s order. It is clarified that the NCLAT has not commented on the merits of the case, and the NCLT should proceed in accordance with the law. All parties are required to appear before the NCLT on the specified date. No costs were awarded, and any connected pending interlocutory applications were closed.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. Aggrieved by the Impugned Order dated 13/01/2023 passed in IA/693/IB/2020 in CP/1006/IB/2018 by National Company Law Tribunal, Chennai Bench, Chennai, K. Narayanaswamy, the Suspended Director of M/s GK Steel and Allied Industries Limited (the ‘Corporate Debtor’), has preferred this ‘Appeal’, under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘the Code’).
3. The ‘Adjudicating Authority’ while dismissing IA No. 693/2020 observed as follows:
i. “Pass an order therey directing the first Respondent Resolution Professional to exclude the amount of interest claimed by the Respondent 2 & 3 towards the outstanding dues of the Corporate Debtor for the period of 01.06.1999 to 3012.2016 as the Corporate Debtor was a sick undertaking and proceedings were pending BIFR as the contract stood suspended under Section 22 of SICA and consequentially declare that the amount claimed by the Financial Creditors before the RP with usurious rate of interest is not valid;
ii. Pass an order thereby directing the first Respondent Resolution Professional exclude claim of the fourth Respodent IARC from the list of the Financial Creditors of the Corporate Debtor and consequentially directing her to declare the fresh list of the Financial Creditor with their revised percent of voting rights in the CoC and for further other reliefs.
iii. Pass such frther or other orders as this Hon’ble Tribunal may deem fit and proper to grant to the Applicants such further relief in the circumstance of this case and in the interest of justice and thus render justice.
The Prayer 1 is not pressed.
The case of the Applicant promoter director is that the RP should not admitted the claim of IARC on the ground that the assignment of the debt from ICICI bank to Standard Chartered Bank and thereafter to IARC is not valid in law to support that the Applicant relies upon the proceedings before the DRT and order of the DRAT dated 09.07.2018.
The Operative Portion order is as follows:
On careful perusal of leadigs of the parties submssions of the Counsel of parties, citations and record, it becomes clear that O.A. is still pending. R1, R2 and R3 Financial Institutions are looking for recovery of money since 1997-98. In the year 2012, Assignment Deed was registered in the State of Tamil Nadu. What would be the consequence of registration of the Assigment Deed of 2006 in Maharashtra has to be examined. In view of the facts and circumstances of this case, on this ground alone, O.A of R3 should not be and cannot be dismissed. Rather, merits of the case has to be examined. However, PO of DRT has directed examine the legality of Assignment Deed of 2006 on merits according to law in final order to be passed in O.A after hearing all the parties.
In view of the above, Appeal stands dismissed. It Is made clear that this Tribunal has expressed no opinion on the legality of Assignment Deed at this stage. This point is kept open for PO of DRT.
Appeal is dismissed.
From this it is evident that onthe issue raised by the Applicant no final order has been passed even by the DRAT or DRT.
Significantly, Prayer (ii) becomes irrelevant and not sustainable.
Accordingly, IA/693/IB/2020 stands dismissed.”
3. It is the case of the Learned Counsel for the ‘Appellant’ that the Impugned Order is a non speaking Order which does not disclose the reasons for the dismissal of the IA No. 693/2020 and is contrary to the ‘Principles of Natural Justice’. It is also submitted by the Counsel that it was wrongly recorded that they did not press for Prayer 1 in the Application, but the Order was passed, despite no such submissions having been made by the Counsel. The Learned Counsel for the ‘Appellant’ sought an opportunity to be heard before the ‘Adjudicating Authority’ on merits of the matter specifically on the ground that the ‘Application’ has raised repeated objections to the Constitution of the CoC. Be that as it may, the Learned Counsels appearing for the Respondents No. 1 & 4 submitted that they do not have any objection if the matter is remanded to the ‘Adjudicating Authority’, for deciding the ‘Application’ on merits.
4. Taking into Consideration, the submissions of both the Parties as well as the facts of the case on hand, this ‘Tribunal’ is of the considered view that in the interest of Justice, an opportunity may be accorded to the ‘Appellant’, herein to be heard on merits, before the ‘Adjudicating Authority’ and therefore, we find it a fit case to remand the matter to the ‘Adjudicating Authority’ and the ‘Adjudicating Authority’ shall decide the ‘Application’ within a period of ‘four weeks’ from the date of this Order. It is made clear that this ‘Tribunal’ has not commented on the merits of the matter and the ‘Adjudicating Authority’ shall proceed in accordance with Law, uninfluenced by any observations in this Order.
5. For the aforenoted reasons, this ‘Appeal’ is allowed and the Order of the Adjudicating Authority in IA No. 693/2020 is set aside and the matter is remanded back to the Adjudicating Authority for fresh adjudication on merits. All parties shall appear before the ‘Adjudicating Authority’ on 15/06/2023. No Costs. The Connected pending Interlocutory Application, if any, are ‘closed’.