Mr. S. Kiran vs M/s. Dynamic Engineers Limited & Anr.

[Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial)]

This Company Appeal dwells upon very peculiar facts and circumstances, where the Appellant, while preferring the instant Company Appeal, questions the impugned order dated 03.03.2022, that has been passed by the Learned NCLT, Bengaluru Bench in CP(IB) No.119/BB/2020.

The genesis of the proceedings are that a proceeding under Section 9 of the I & B Code, 2016, stood initiated by the Respondent No.1 to the instant Company Appeal, praying for initiation of the CIRP process, as against the present Appellant herein by filing an application for the same before the Tribunal being CP(IB)/119/BB/2020. At the first stage of proceedings when the matter as carried in CP(IB) No.119/BB/2020 was taken up by the Learned NCLT, Ld. NCLT vide its Judgment of 24.02.2021, had closed the Company Petition, in terms of certain directions, to the Respondents to the Company Petition/Appellant herein to settle the claim of the petitioner, to the Company Petition as promised within a period of three months from the date of receipt of the copy of the order dated 24.02.2021, failing which, it was left open for the Applicant to the Company Petition/Respondent herein to resort to the appropriate legal recourses. The relevant operative portion of the order dated 24.02.2021, which is extracted hereunder: -

Aggrieved against this order, an Appeal was preferred by the Applicant to the Section 9 application, that is M/s. Dynamic Engineers Limited. The said Company Appeal was registered before this Appellate Tribunal as Comp App (AT) (CH) (Ins) No.136/2021. It was considered on merits by this Appellate Tribunal, and the Appellate Tribunal had proceeded to pass an order on 07.09.2021 to the following effect: -

This Appellate Tribunal, at that point of time while passing the order on 07.09.2021, after scrutinizing the material on record, had came to the conclusion that the application under Section 9 of I & B Code, filed by Respondent No.1 herein, deserves to be admitted, and accordingly, a positive direction was issued while setting aside the earlier order of 24.02.2021, passed by the Tribunal, directing to initiate CIRP as against M/s. Muhlenbau Equipments Pvt Ltd.

After the passing of the order by this Appellate Tribunal on 07.09.2021, the proceedings of the aforesaid Company Petition were revived back, which has now been adjudicated upon by the impugned order dated 03.03.2022. The Learned Counsel for the Appellant, while challenging the impugned order, submits the controversy from two perspectives: -

The contention being raised by the Learned Counsel for the Appellant in the instant Company Appeal, that the factors that were required to be established prior to initiation of Section 9 of the I & B Code, 2016, were not prevailing at the time when CIRP was commenced, in pursuance to the order of 03.03.2022 of Learned NCLT, would not be a scope, which will now at all be left open for us to be consider at this stage for the reason being that rightly or wrongly this Appellate Tribunal, in the earlier proceedings, which was initiated by the Applicant/Respondent as against the principal order passed by the Learned Adjudicating Authority on 24.02.2021, had already come to a conclusion that, it was a fit case for admission to the CIRP process. Since the determination has already been made by the Appellate Tribunal by the Judgment of 07.09.2021, which has already attained finality, and also because that has not been subjected to challenge by the Appellant, before the Hon’ble Apex Court, we cannot wriggle out from the findings that were recorded by the Appellate Tribunal, while concluding that it was a fit case for the admission of the Appellant to face the CIRP process. Hence, the contention now being raised by the Appellant at this stage, while challenging the impugned order of 03.03.2022, contending that there are no ingredients of Section 9 of the I & B Code, 2016, which stood satisfied to justify the passing of the order directing commencement of CIRP process, is no more open to be judicially scrutinized at this stage of the subsequent Company Appeal, because the findings recorded by this Appellate Tribunal on 07.09.2021 has attained finality, holding that Section 9 of the I & B Code application deserves admission. We now cannot revisit the reasons for admission of Section 9 of the I & B Code.

So far as the second argument is concerned, which has been argued by the Learned Counsel for the Appellant, that he was not noticed and hence he couldn’t have participated in the proceedings, which were held by the Learned NCLT on 03.03.2022, there will be a two-fold answer, which could be extended by us: -

Examining and scrutinizing the aspect pertaining to the non-issuance of the notice to the Appellant, even presuming that, he was not heard before passing of the order dated 03.03.2022, would be an exercise in futility, for the reason being that, the propriety of admission of the application under Section 9 of the I & B Code, had already been adjudicated upon by this Appellate Tribunal by the Judgment of 07.09.2021, and nothing much material was required to be tested by the Learned Adjudicating Authority by revisiting the evidence, and rather they were bound to pass an order of admission of the Appellant into the CIRP process in pursuance to the direction that were issued by the Appellate Tribunal on 07.09.2021, hence even if an opportunity would have been granted, then too it would have been inconsequential because there already stood direction in the judgment of 07.09.2021 to admit the application under Section 9 of the I & B Code, which in the absence of its challenge under Section 62 of the I & B Code, before the Hon’ble Apex Court, had attained finality and could find the Learned Adjudicating Authority, couldn’t have re-tested the ingredients required to be satisfied for invoking Section 9 of the I & B Code.

In these eventualities, so far as the impugned order dated 03.03.2022 is concerned, that is not required to be ventured into by this Appellate Tribunal because of the earlier decision taken by this Appellate Tribunal of admitting the Appellant to face the CIRP process under Section 9 of the I & B Code, particularly when the finding has been recorded by the Appellate Tribunal that there exists a prima facie case establishing the ingredients of Section 9 of the I & B Code. In these eventualities, and for the reasons assigned above, the Comp App (AT) (CH) (Ins) No.119/2022 lacks merit, and the same is accordingly dismissed. All pending interlocutory applications, if any, would stand closed.