IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C) NO. 8257 OF 2021
IDEAL SURGICALS V/SNATIONAL COMPANY LAW TRIBUNAL & ORS.
FACTS OF THE CASE
1) Petitioners are the operational creditors of the 4th respondent i.e., Corporate Debtor, against which Corporate Insolvency Resolution Process (CIRP) was initiated and Resolution Plan was approved by the National Company Law Tribunal (NCLT) i.e. 1st respondent.
2) Petitioners filed an appeal against the NCLT Order approving the Resolution Plan before the National Company Law Appellate Tribunal (NCLAT).
3) Petitioners filed this writ petition on the premise that the NCLAT appeal is not being taken up by the NCLAT.
ISSUE
Whether a writ petition before the HC under article 226 of the Constitution is maintainable against the NCLT order when an alternative remedy of filing an appeal before the NCLAT is available?
ARGUMENTS
#By Petitioners & Respondent No. 4:
1) Counsel for the petitioners submitted that their appeal has been accepted but yet to be posted and numbered for admission.
2) It is contended that if the resolution process is allowed to continue till the appeal is being posted for admission, the appeal will be rendered infructuous.
3) Therefore Hon’ble HC can exercise its jurisdiction under Article 226 to safeguard the interest of the petitioners, till the appeals are taken up for consideration.
4) Learned Counsel for the 4th respondent supported the submissions made on behalf of the petitioners and contended that the NCLT order is patently illegal. That hasty steps are being taken to give effect to the NCLT order and that the implementation of the Resolution Plan will cause serious prejudice to the Corporate Debtor and its Creditors.
#For Respondents:
1) Counsel questions the maintainability of the writ petitions on the ground that the petitioners have an effective alternative remedy of appeal under Section 61 of the Code.
2) Reliance was also placed on the decision of Sulochana Gupta & Ors.
3) According to the learned Senior Counsel, the appeals before the NCLAT are defective and will be taken up only after the defects are cured.
4) It was pointed out that the NCLAT is functioning and the appeals filed by other Operational Creditors against the NCLT order had come up for admission.
5) It was contended that interference by the High Court, in the exercise of jurisdiction under Article 226 of the Constitution, will defeat the very objective of the code.
DECISION
Writ Petition under Article 226 of the constitution is not maintainable when the petitioners are having an alternate remedy to enforce its rights.
RATIONALE
1) HC relying on observed by the Apex Court in M/s. Innoventive Industries Ltd v. ICICI Bank [AIR 2017SC 4084], the IBC, 2016 is a Single Unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time-bound manner.
2) An order passed by the NCLT is appealable to the NCLAT under Section 61 of the Code and the orders of the NCLAT are amenable to the appellate jurisdiction of the Supreme Court under Section 62.
3) In view of the exposition of the Hon’ble Supreme Court regarding the objective of the Code and the authoritative pronouncement of the Division Bench, with which I am in respectful agreement, the writ petitions are dismissed.
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About the Author: The summary of this Order has been composed by Mr. Shikhar Pandey (Research Associate-IBC Law Reporter).
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