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Judgment
O R D E R
21.10.2022 Heard learned Counsel for the Appellant as well as Respondents.
This Appeal has been filed against an order dated 06.04.2022 passed in I.A. No. 1255 of 2020 by which the Adjudicating Authority has imposed a cost of Rs. 1 lakh on the Application for non-compliance of the order of the Bench within usual period. The CIR process was initiated against the Corporate Debtor on 20.02.2020 at the instance of Bank of India.
An application was filed by the Appellant before us being I.A. No. 1255 of 2020, who was Operational Creditor. The Applicant has filed Application in the CIR process of the Corporate Debtor where he has made a prayer for certain equipment. The Adjudicating Authority has passed an order on the said application on 01.02.2021. Paragraph-3 of the order is as follows: …
“3.Both the sides are directed to file Ledger Accounts of each other in their respective books of Accounts as well as the relevant portion of notes to the Accounts and respective schedules of the Balance Sheet where, that particular assets has been explained in their respective Annual Reports.”
Subsequent to passing of the aforesaid order, the Application was again taken up by the Adjudicating Authority on 03.01.2022. Adjudicating Authority while considering the Application No. 1255/2020 passed the following order:
“IA-1255/2020
4.This is an application filed by the Application having a claim on the assets of the3 Corporate Debtor. The Counsel for the Applicant submits that an award has been passed by the Singapore International Arbitration Centre (SIAC). However, the RP present in person and submits that he is yet to finalise the response of the same with respect to further course of the action.”
The Application 1255/2020 was thereafter taken up and the impugned order dated 06.04.2022 was passed in I.A. No. 1255/2020. The Adjudicating Authority has passed the following order:
“10.I.A.-1255/2020: With respect to order dated 01.02.2021 passed by this Bench, both sides, were directed to file Ledger Accounts of each other in their respective Books of Accounts as well as relevant portion of notes to the Accounts and respective schedules of the Balance Sheet where that particular assets have been explained in their respective Annual Reports.
11.It has been observed that the RP has filed a copy of the Ledger Account and relevant details. However, the Application in this IA has failed to submit the same, thought the period of 13 months has already passed.
12.The conduct of the Applicant has been viewed seriously by this Bench and a cost of Rs. 1,00,000/- is imposed on the Applicant for non-compliance of the order of this Bench within a reasonable period. The Applicant is also directed to file the same within 15 days in this IA.”
Learned Counsel for the Appellant, aggrieved by the said order, has come up with the present appeal.
It is submitted by the learned Counsel for the Appellant that subsequent to direction issued by the Court to file the Ledger Account, the Applicant has brought in to the notice of the Adjudicating Authority that International Arbitration Award is in favour the Applicant and taking note of that, Adjudicating Authority has directed the IRP file Status Report and the matter was listed subsequent to the order passed by Adjudicating Authority for Status Report and on that day the order passed by the Adjudicating Authority imposing cost of Rs. 1 lakh. It is submitted that there was no occasion for imposing cost since the Appellant was now claiming the right on the basis of International Arbitration Award.
Learned Counsel for the Respondent submits that when the order was passed by the Adjudicating Authority, both the parties failed to file Ledge Account. The Appellant did not file Ledger Account for 13 months and hence the Adjudicating Authority has rightly imposed the cost.
Learned Counsel for the Respondent further submits that Arbitration Award does not come in the aid of the Appellant since it was passed after moratorium.
We have considered the submissions of the parties. In the Appeal, the Appellant has challenged that part of the order in which cost of Rs. 1 lakh has been imposed. In the facts of the case, when the order was passed by the Adjudicating Authority subsequently on 03.01.2022, after noticing the award by International Arbitration centre and asking Resolution Profession to file Status report, we see no reason to impose cost of 1 lakh on the Appellant by the Adjudicating Authority. In the event, Ledger has not been filed by the parties, it was open to the Adjudicating Authority to take appropriate decision. Hence we are satisfied that imposition of cost was unjustified.
Now, we come to the submission of the Respondent where he was contending that the Award is nullity.
We are of view that for the said issue, the Application filed by the Appellant being I.A. No. 1255/2020 is already pending consideration before the Adjudicating Authority and has not yet been decided on merits, hence it is not necessary for us to make any observation. The contentions of both the parties with regard to the merits of Application No. 1255/2020 are left open and it is open for the parties to make their submissions before the Adjudicating Authority.
The learned Counsel for the Appellant has also contended that in view of the award by Singapore International Arbitration Centre, the Title and Goods is settled and the Adjudicating Authority cannot go with regard to Title of the equipment.
As observed above, we are not required to express any opinion on the contentions of the parties on merit and it is for the Adjudicating Authority to hear the parties and take steps in accordance with law.
In view of the foregoing, we allow this Appeal and set aside the impugned order dated 06.04.2022 imposing a cost of Rs. 1 lakh on the Appellant.
It is open to the Adjudicating Authority to decide the entire issue on merits after considering all the contentions of the parties. Appeal is allowed to the extent as above.