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Judgment
Justice M. Venugopal, Member (Judicial) :
Introduction:
The Appellant / Operational Creditor has preferred the instant Comp. App (AT) (CH) INS. No. 33 of 2022 before this `Appellate Tribunal’, on being dissatisfied with the `impugned order’ dated 02.11.2021 in Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020, passed by the `Adjudicating Authority’ (National Company Law Tribunal `NCLT’), Division Bench - I, Chennai.
Earlier, the `Adjudicating Authority (NCLT), Division Bench - I, Chennai, while passing the `impugned order’ dated 02.11.2021 in Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 had observed the following:
“The Applicant is represented by Mr. Murugesh Kasivel, Advocate and the Respondent is represented by Mr. Ramana Kumar, Advocate through video conferencing platform. This Application is filed for restoration of IBA/358/2020 which was listed for hearing on 01.02.2021. The Learned Counsel on record was not present on that date. Again, the matter was listed on 08.02.2021. Vide order dated 08.02.2021, the Application was dismissed for non-prosecution. Thereafter this Application was filed on 07.04.2021. Today, the Learned Counsel for the Applicant seeks further time for argument. We do not find any merit in this Application. There is no reason also stated for non appearance on 08.02.2021 by the Applicant. Today, Learned Counsel for the Applicant is unable to submit the facts and circumstances of the case. There is no merit in this case.” and ultimately, dismissed the Application, but without costs.
Appellant’s Submissions:
Challenging the `impugned order’ dated 02.11.2021 in Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 passed by the NCLT, Division Bench – I, Chennai, the Leaned Counsel for the Appellant/Operational Creditor contents that the Appellant is an `Operational Creditor’ and the amount due is Rs.13,49,016/-. In this connection, it is represented on behalf of the `Appellant’ that a `Demand Notice’ was issued on 02.04.2019 (under Section 8 of the I & B, Code, 2016) requiring the Respondent/Corporate Debtor to pay the `default sum’. However, the Respondent/Corporate Debtor, despite the receipt of `Notice’ had failed to comply with the `Demand’ made by the `Appellant/Operational Creditor’, indeed, the Respondent/Corporate Debtor had sent a `Reply’ dated 12.04.2019 with `false allegations’.
According to the Appellant, the ICICI Bank initiated CIRP proceedings against the Respondent/Corporate Debtor in CP/541/IB/2018 on the file of the National Company Law Tribunal, Division Bench, Chennai, wherein one Mr. Vasudevan, was appointed as `Interim Resolution Professional’. On 25.06.2019, the claim was submitted to the said `IRP’ and was admitted on 26.09.2019. Subsequently, on 24.10.2019, a mail was received from the `IRP’ that the `Corporate Insolvency Resolution Process’, initiated against the Respondent/Corporate Debtor was withdrawn under Section 12A of the I & B Code, 2016, based on the `Settlement Plan’, submitted by the `Promoters’, being approved by the `Committee of Creditors’ with a majority of more than 95% voting, pursuant to the Order dated 30.09.2019, passed by this `Appellate Tribunal’.
It is the version of the Appellant that the Respondent/Corporate Debtor had failed to pay a sum of Rs.13,49,016/- (outstanding sum only) which was defaulted from June 2018 and still continuing. The interest of 24% per annum is calculated only from the month of `Default’ and the `Claim’ is Rs.18,61,642/- (Rupees Eighteen Lakhs Sixty One Thousand Six Hundred and Forty Two only).
The stand of the Appellant is that the Respondent/Corporate Debtor has committed `Default’ in making payment to it, as per Section 3 (12) of the Code. The Appellant / Operational Creditor has filed Section 9 Application IBA/358/2020 before the `Adjudicating Authority’, NCLT, Division Bench – I, Chennai, on the ground that among other things that the Respondent/Corporate Debtor is unable to pay the `Default’ amount to it. The said Application was `dismissed for default’ on 18.02.2021.
The Learned Counsel for the Appellant brings to the notice of this `Tribunal’ that Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 was filed by the `Appellant/Applicant’ before the `Adjudicating Authority’ which was taken on record and in fact, the absence of the `Appellant/Petitioner’ on the date of hearing on 18.02.2021 before the `Adjudicating Authority’ was because of the reason that the Appellant’s Learned Counsel on record could not attend the hearing because of connectivity issues.
The Learned Counsel for the Appellant adverts to the fact that the Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 was listed before the `Adjudicating Authority’ on 02.11.2021 (vide Ordinary List, Serial No. 305) and the matter reached at about 2.30 P.M. But the Learned Counsel for the `Appellant/Operational Creditor’ was unable to appear because he had a physical hearing before the Madras High Court and the matter was represented by the Junior Counsel who prayed for time for `arguments’ but the Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 came to be dismissed, on the ground that `no reason was assigned by the Appellant/Applicant for its non–appearance, on 18.02.2021’.
The grievance of the Appellant before this `Tribunal’ is that the `impugned order’ dated 02.11.2021, passed by the `Adjudicating Authority’ in Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020 is an erroneous one and the `Adjudicating Authority’ had failed to appreciate the fact that the `Appellant/Applicant’ was prevented by `sufficient cause’ i.e., `Technical Issue / Connectivity Problem’ from appearing when the case was called on for hearing i.e., 18.02.2021’.
The other plea taken on behalf of the Appellant is that the `Adjudicating Authority’ had failed to adhere to the `principles of nature justice’ by ignoring the `valid submissions’ projected on behalf of the `Appellant/Applicant’.
While summing up, the Learned Counsel for the Appellant prays for setting aside the `impugned order’ dated 02.11.2021 in Rest. Appln. / IBC/3/CHE/2021 in IBA/358/2020, passed by the `Adjudicating Authority’ (NCLT, Division Bench – I, Chennai).
Appellant’s Citations:
On behalf of the Appellant, a reliance is placed upon the decision of the Hon’ble Supreme Court in Savitri Amma Seethamma V Artha Karthy, reported in AIR (1983) SC at Page 318, wherein it is held that the non appearance of a Counsel at the time of hearing on account of being occupied in another Court was a `sufficient cause’ to entitle a party for restoration of the proceedings.
The Learned Counsel for the Appellant, refers to the decision of the Hon’ble Supreme Court in Rafiq and Another V Munshilal & Another, reported in AIR (1981) SC at page 1400, wherein it is observed as under:
``We have heard Mr. O. P. Rana, learned counsel for the appellant, and Mr. A.K. Sanghi, learned counsel for the respondent. The High Court disposed of the appeal preferred by the present appellant in the absence of the learned counsel for the appellant. When the appellant became aware of the fact that his appeal had been disposed of in the absence of his advocate, he moved an application in the High Court to recall the order dismissing his appeal and permit him to participate in the hearing of the appeal. This application was rejected by the High Court on the ground that though the application was prepared and drafted and an affidavit was sworn on 29th October, 1980, the same was not presented to the court till November 12, 1980 and that there is no satisfactory explanation for this slackness on the part of the learned advocate who was requested to file the application. The disturbing feature of the case is that under our present adversary legal system where the parties generally appear through their advocates, the obligation of the parties is to select his advocate, brief him, pay the fees demanded by him and then trust the learned advocate to do the rest of the things. The party may be a villager or may belong to a rural area and may have no knowledge of the court's procedure. After engaging a lawyer, the party may remain supremely confident that the lawyer will look after his interest. At the time of the hearing of the appeal, the personal appearance of the party is not only not required but hardly useful. Therefore, the party having done everything in his power to effectively participate in the proceedings can rest assured that he has neither to go to the High Court to inquire as to what is happening in the High Court with regard to his appeal nor is he to act as a watchdog of the advocate that the latter appears in the matter when it is listed. It is no part of his job. Mr. A.K. Sanghi stated that a practice has grown up in the High Court of Allahabad amongst the lawyers that they remain absent when they do not like a particular Bench. Maybe he is better informed on this matter. Ignorance in this behalf is our bliss. Even if we do not put our seal of imprimatur on the alleged practice by dismissing this matter which may discourage such a tendency, would it not bring justice delivery system into disrepute. What is the fault of the party who having done everything in his power and expected of him would suffer because of the default of his advocate. If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. The problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate omission, or misdemeanour of his agent. The answer obviously is in the negative. Maybe that the learned advocate absented himself deliberately or intentionally. We have no material for ascertaining that aspect of the matter. We say nothing more on that aspect of the matter. However, we cannot be a party to an innocent party suffering injustice merely because his chosen advocate defaulted. Therefore, we allow this appeal, set aside the order of the High Court both dismissing the appeal and refusing to recall that order. We direct that the appeal be restored to its original number in the High Court and be disposed of according to law, etc.”
The Learned Counsel for the Appellant refers to the observation of the Hon’ble High Court of Allahabad in Shiv Kumar Pandey V State of Uttar Pradesh, Through Secretary Agriculture & Ors. (Special Appeal Defective No. 417 of 2021) on 26.10.2021, wherein it is held that `A litigant who has done everything in his power expected of him should not suffer for the inaction, deliberate, omission or misdemeanour of his Advocate’.
The Learned Counsel for the Appellant / Operational Creditor adverts to the `Order’ dated 23.05.2022 of the Hon’ble High Court of Delhi in the matter of SH. Panna Lal V Bhagmal Kataria & Anr. (vide CM [M] 475/2022 and CM No. 24439/2022, wherein at paragraph 5, it is observed as under:
5.``In my considered opinion, the learned SCJ could have granted one more opportunity to the petitioner, rather than dismissing the petitioner’s application for restoration. It is well settled that restoration applications are to be dealt with liberally, as the right to represent ones’ cause before a Court is a fundamental right.”
Appellate Tribunal’s Decision:
The Learned Counsel for the Appellant cites the `Order’ of this `Appellate Tribunal’ dated 30.09.2019, in the matter of Mr. G.R.K. Reddy V ICICI Bank Ltd. & Ors. (vide Comp. App (AT) Ins. No. 618 of 2019, wherein at paragraphs 6 to 12, it is observed as under:
6.``Having heard the learned counsel for the parties and taking into consideration the fact that the `Terms of Settlement’ proposed by the `Promoters’ under Section 12A has been accepted by majority voting of 95.96% of the `Committee of Creditors’, we are not deciding the appeal on merit but allow the prayer made by `ICICI Bank Limited’ (Applicant of Section 7 of the I & B Code) to withdraw the petition filed under Section 7 of the I & B Code. 7. In the result, the impugned order dated 28th May, 2019 for initiating the `Corporate Insolvency Resolution Process’ is set aside along with consequential steps taken. The application under Section 7 filed by the `ICICI Bank’ is disposed of as withdrawn.
8.The `Corporate Debtor’ is released from all rigour of law. The `Resolution Professional will handover the assets and documents to the `Corporate Debtor’ through `Promoter’.
9.The `Corporate Debtor’ is directed to pay the stakeholders/creditors in terms of settlement reached under Section 12A within the period as approved by the `Committee of Creditors’ failing which it will be open to the `ICICI Bank’ to file application for recall of this order and revival of `Corporate Insolvency Resolution Process’ against the `Corporate Debtor’.
10.The `Resolution Professional’ will be entitled for fees as per terms of settlement under Section 12A.
11.`SREI Equipment Finance Limited’ and `M/s. Phoenix ARC Limited’ who have intervened, their counsel have taken plea that their claims as `Financial Creditors’ have not been taken care in terms of settlement under Section 12A. We allow `SREI Equipment Finance Limited’ and `M/s. Phoenix ARC Limited’ to negotiate the matter with the `Corporate Debtor’ independently who on collating the claims will grant them the same treatment as given to the other similarly situated `Financial Creditors’ and pay within 2 months from the date they will move before the `Corporate Debtor’, failing which it will be open to these `Financial Creditors’ to move before the appropriate authority/court of law for appropriate orders.
12.The appeal is allowed with aforesaid observations and directions. No costs.”
Respondent’s Submissions:
Conversely, it is the submission of the Learned Counsel for the Respondent/Corporate Debtor that in IBA/358/2020 before the `Adjudicating Authority’, the first hearing was on 22.12.2020 and that the `Appellant/Applicant’ and the `Respondent’ had appeared and time was granted to file `Vakalat’ and `Reply/Response/Counter’. As a matter of fact, on 01.02.2021, when the matter was posted for hearing and disposal, there was no appearance from the `Appellant/Applicant’s side’, but the Respondent had appeared.
According to the Respondent/Corporate Debtor in the Application there were numerous inconsistencies, defects / errors and irregularities which were point out and as such, the Application was not properly served upon the Respondent. Neither the Application nor any of the Annexures were signed and they were incomplete in all aspects, including the calculation of amounts.
The Learned Counsel for the Respondent/Corporate Debtor comes out with a `stands’ in the `Reply’ to the `Demand Notice’, the Respondent had mentioned clearly that the `Invoices’ sent had no signatures of either the Applicant/Appellant or the Respondent and added further, the empty Invoices `without any authentication’ cannot form the basis of a `valid and legal claim’, in terms of the I & B Code, 2016.
Advancing his argument, the Learned Counsel for the Respondent/Corporate Debtor points out that as per the `Demand Notice’, the dues where from 2011 itself and extended up to 2018 and that the claims raised were improper to the extent that the period of limitation applies wherein a number of invoices were time barred, for which, no claims can be raised. In fact, the case was adjourned to 18.02.2021 for `hearing and disposal’ and that the `Applicant/Appellant’ had failed to appear for the purpose of the `Adjudication of the case’. The matter came to be `dismissed for non appearance, among other faults’.
The Learned Counsel for the Respondent brings it to the notice of this `Tribunal’ a Restoration Application was filed on 07.04.2021 and that the case was posted for hearing on 21.04.2021, on which date, the Learned Counsel for the Appellant/Applicant appeared, but failed to make any arguments. However, on behalf of the Respondent side, the argument was made that the Application was defective on `numerous grounds’ and that the Respondent was granted time to file counter. The case was adjourned to 16.07.2021 for the reason that there were defects in the `Application’, such as the fact that the `date of dismissal’ and the CP Number was not mentioned and that the `Applicant/Appellant’ was granted `leave’ to file a `Better Affidavit’, after serving a copy to the Respondent.
It is pointed out on behalf of the Respondent that on 27.08.2021 the case was adjourned for various reasons and when the matter was posted on 24.09.2021, at request of the `Appellant/Applicant’ the matter was once again adjourned to a subsequent date. On 02.11.2021, the case was again posted for `Hearing’ and the `Appellant/Applicant’ again, failed to appear before the `Adjudicating Authority’ and the representing Learned Counsel who sought further time was not granted and that the same was dismissed for repeated adjournments, non appearance, and defects apparent in the `Application’. Hence, the Learned Counsel for the Respondent prays for the dismissal of the instant `Appeal’.
This `Tribunal’ has heard the submissions of the respective Learned Counsels appearing for the `Parties’ and noticed the same.
Analysis:
The stand of the Appellant is that the `Adjudicating Authority’ had failed to consider that the Appellant was prevented by `sufficient cause’ namely `Technical Issue / Connectivity Issue’ at the time of calling the matter in virtual hearing on 18.02.2021.
The other contention advanced on behalf of the Appellant is that the `Adjudicating Authority’ had failed to appreciate the fact that non appearance of the Counsel on Record of the Appellant, on 02.11.2021, since being occupied in another Court was a `sufficient cause’ to enable / entitled a `Party’, an opportunity to be heard again.
Continuing further, the fervent plea made on behalf of the Appellant is that an `Adjudicating Authority’ must be `considerate’ while dealing with an Application for Restoration, if a justifiable cause, for non appearance of the Learned Counsel was made out, the just and simple reason is that, finally, it will be the litigant who is to suffer the `consequences of an `Order’.
In response the stand of the Respondent/Corporate Debtor is that on 01.02.2021, the `Adjudicating Authority’ (NCLT, Division Bench, Court 1) in IBA/358/2020 had passed the following `Order’:
``It is represented that Counter to this Application has been duly filed. Let the matter be posted on 18.02.2021 for the enquiry. Non-apperance of the Petitioner on the said date will result in dismissal of the Petition.’’
It comes to be known that on 18.02.2021, the `Applicant/Appellant’ because of his failure to appear before the `Adjudicating Authority’, the case was dismissed for `Non-Prosecution’. On 07.04.2021, the Restoration Application was filed and that the case was posted for hearing on 21.04.2021, where a Counsel of the `Applicant/Appellant’ appeared and failed to address any argument. But the Respondent made the argument that the `Application’ filed was defective on various grounds and time was granted to the Respondent to file counter.
The matter / case was adjourned to 16.07.2021 for filing a `Better Affidavit’, because there were defects in the `Application’ such as the (i) Date of Dismissal and the C.P.No. was not mentioned and a copy of the `Better Affidavit’ was instructed by the `Adjudicating Authority’ to be served to the Respondents, after clearing all defects.
The case was adjourned from 27.08.2021 to 24.09.2021 at the request of the `Applicant/Appellant’ and the matter was adjourned to a subsequent date. The `Appellant/Applicant’ had failed to advance any argument. On 02.11.2021, when the case was posted for `Hearing’ before the `Adjudicating Authority’ and again, further time was sought for, by the Representing Learned Counsel, which was not accepted and that the matter came to be dismissed for repeated adjournments, non appearance and the apparent defects in respect of the `Application’.
It is significant for this `Appellate Tribunal’ to point out that the Restoration Application is completely mentioned the reason as to why the adjournment was requested on 24.09.2021 and what for, the proceedings before the `Adjudicating Authority’ were not conducted by the `Appellant/Applicant’ on earlier hearings.
The Respondent projects a plea that the total claim of the `Appellant/Applicant’ is less than Rs.1 Crore, threshold limit and the I & B Code, 2016, is utilised as a `Money Recovery Fora’, by the `Applicant/Appellant’ which is impermissible in law.
It is to be pointed out that the plea of `Restoration’/`Condonation of Delay’ is not a matter of right. The term `Sufficient Cause’ is a circumstance to be taken into account in exercising discretion by a `Tribunal’/`Court of Law’. No wonder, the `Tribunal’ cannot determine the aspect of `Sufficiency of Cause’ dehors the facts pleaded and made out by a `Party’. Where `Bonafides’ are absent, there can be no `Sufficient Cause’ for allowing the `Restoration Application’ by the `Tribunal’.
In Law, `Sufficient Cause’ is not different from `Good Cause’. A `Party’ who is not vigilant may not get a second opportunity. Mere absence of the `Learned Counsel’ or a `Pleader’ or that he is engaged elsewhere or he was engaged or in another Court is not a good reason for `Restoration’. Indeed, acceptability of an `Explanation’ is the criteria for allowing a `Restoration Application’ projected by a `Party’. If there is `inaction’, `want of Bonafide’, which is imputable to the `Applicant/Appellant’, then the `Restoration Application’ is not to be allowed by a `Tribunal’ or by a `Court of Law’. Of course, the `Tribunal’ is to decide the `Restoration Application’ on merits. It must be remembered that time is precious and a wasted time will never come back again or revisit in the considered opinion of this `Tribunal.
In the instant case, on behalf of the `Applicant/Appellant’, a `Demand Notice’ dated 02.04.2019 was addressed to the `Respondent’ demanding a sum of Rs.13,49,016/-, being the sum which was the `defaulted one’. Furthermore, the `Debt’ was stated to be pending from the Financial Year 2011-2012 and it is continuing one, according to the `Applicant/Appellant’.
The Respondent through its `Reply’ dated 12.04.2019 had inter alia stated that all the Invoices were legally raised by the `Appellant’ was fully paid and further that none of the Invoices bear the `Signature of the Appellant’s side’. That apart, on behalf of the Respondent a stand is taken that there were no due amounts to be paid. Besides this, the Invoices attached with the `Notice’ of the `Appellant’ dated 02.04.2019 are disputed by the `Respondent’, as they are false.
Be that as it may, on a careful consideration of the arguments advanced on either side, this `Tribunal’ taking note of the fact that the IBA/358/2020 (filed by the `Appellant/Applicant’ was dismissed by the `Adjudicating Authority on 18.02.2021 for the absence of the Petitioner (although the Learned Counsel for the Corporate Debtor Mr. Ramana Kumar was present through Video Conferencing), that the Restoration Application (IBC/3/CHE/2021) was filed by the `Applicant/Appellant’ on 07.04.2021 and that the Learned Counsel for the `Appellant/Applicant’ on 21.04.2021 had failed to address any arguments, but the Respondent made the arguments but was given time to file Counter and even on 16.07.2021 the `Appellant/Applicant’ was granted leave to file `Better Affidavit’, later the case was adjourned to 24.09.2021 from 27.08.2021 and finally on 02.11.2021, when the case was posted for hearing, the Learned Counsel for the `Applicant/Appellant’ was unable to submit the facts and circumstances of the case as observed in the `impugned order’ comes to an irresistible, inescapable, and inevitable conclusion that the `Applicant/Appellant has not shown `Sufficient Cause’ to `allow the Restoration Application (IBC/3/CHE/2021) in IBA/358/2020 and further that, this is not a fit case where this `Appellate Tribunal’ can show `empathy’ and `sympathy’ for allowing the `Restoration Application’, because of the fact that the knowledge of date of hearing was significant and known to the `Applicant/Appellant’s Learned Counsel well in advance and in any event, the reasons ascribed on behalf of the `Applicant/Appellant’ that due to physical hearing in the High Court of Madras, the Learned Counsel for the `Applicant/Appellant’ was unable to appear, etc., are not a fair, just and valid ground for `Restoration’ in the considered opinion of this `Tribunal’. Viewed in that perspective, this `Tribunal’, on the basis of the facts and circumstances of the present case is not inclined to take a liberal approach in allowing the Rst.A/IBC/3/CHE/2021 in IBA/358/2020 on the file of the `Adjudicating Authority’ (National Company Law Tribunal, Chennai Bench) by extending its `Judicial Arm of Generosity’, when `Bonafides’ are very much conspicuously absent. Resultantly, the `Appeal’ sans merits.
Result:
In fine, the Company Appeal (AT) (CH) (INS) No. 33 of 2022 is dismissed.
No costs.