AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):
The Appellant, was the Petitioner before the learned NCLT, Bengaluru Bench, in a Company Petition (IB) No. 133 / BB / 2021, wherein the Appellant has prayed for drawing of the proceedings under Section 9 of I & B Code, 2016, as against the `proposed Respondent / Corporate Debtor’. The said application of the Appellant had been rejected by the Impugned Order dated 31.05.2022 which is under challenge.
On the perusal of the entire Judgment, as well as the arguments as pressed, the only controversy, which would be confined to be considered by us is, as to whether it was correct to determine the amount claimed by the Appellant in the Company Petition to be less than Rs. 1 Crore, while deprived the Appellant the opportunity to initiate CIRP proceedings against the Respondent as per the provisions contained under Section 4 of the I & B Code, 2016.
The learned counsel for the Appellant argues that, if the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 which is the foundation of the entire controversy is taken into consideration his claim will be of an amount more than Rs.1 Crore and the embargo of Section 4 of I & B Code, 2016, will not come into play.
At this stage, we are not making any observation on merits of the contents of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 and its possible impact on the determination of the claim of the Appellant qua the conditions laid down under provisions of Section 4 of I & B Code, 2016, which has been taken as a reason for rejection of the Company Petition. However, it is noted that the learned counsel for the Appellant has pleaded in his Memorandum of Appeal, that during the proceedings before the learned NCLT, which was held on 31.05.2022, he has prayed for an adjournment before the learned NCLT, in order to enable them to place the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record, so that it may be better appreciated for the purposes of arriving at a conclusion, as to whether at all, his claimed amount of default by the Respondent satisfies the conditions stipulated under the provisions of Section 4 of I & B Code, 2016, in light of the contents of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021. The said pleading, specifically set down in Ground C is extracted hereunder:-
``c. The Appellant submits that the Ld. NCLT while hearing the Petition on 31/05/2022 through physical mode had sought the ``Deed of Assignment’’ entered into between the operational creditors from the Appellant’s Advocate. Since it was not readily available the Appellant’s Advocate sought a pass over or adjournment, which was denied by the Bench. Thus there was a violation of ``principles of natural justice’’ and on this ground also the impugned order is liable to be set aside.’’
It has been specifically pleaded by the Appellant before this Tribunal that, the request thus made by the Appellant was turned down and the request for an adjournment / pass-over of the proceedings of the Company Petition, to enable him to place the same before learned NCLT was not accepted and the learned Adjudicating Authority has proceeded to decide the matter on its merits on the same day. The Appellant has contended that, the entire decision as above taken by the learned Adjudicating Authority was in violation of the principles of natural justice, because, an opportunity to establish his case in an effective manner was not provided to him by depriving him to place the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record. The above contention of the Appellant is being attempted to be denied in very vague terms by the learned counsel for the Respondent, as can be seen from the contents as raised in Para 8 of his reply / response where he has taken a plea that despite of sufficient opportunity having being granted to the Appellant, by the learned Adjudicating Authority, the Appellant has failed to produce the said ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record.
The above contention of the Respondent that the learned Adjudicating Authority has granted sufficient opportunity to the Appellant to place the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record and that it was not availed by the Appellant, has been refuted by the Appellant, by filing a rejoinder affidavit contending thereof that in fact, it was for the first time that she had sought to place the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record on 31.05.2022 and since, there was a denial by the learned NCLT to accommodate her to enable her to place the said Deed on record, she was deprived to place the same to be read in evidence for the purposes of determination of the amount she claimed to be in default for the purposes of Section 4 of the I & B Code, 2016, which would have made her eligible to file an Application under Section 9 of I & B Code, 2016.
The learned counsel for the Appellant during the course of the Appeal had filed an Application under Order XLI Rule 27 of C.P.C., praying for placing the Assignment Deed on record and the same was permitted to be accepted on record, by an order dated 03.09.2024. By the said order the Assignment Deed was taken on record and the same was directed to be considered at the stage of final hearing.
In view of the finding as recorded in Para 10 of the order passed by us on 03.09.2024, there would be two aspects, which would be required to be considered by us, as to whether even though the Assignment Deed has been permitted to be placed on record before this Appellate Tribunal, whether it would be appropriate for this Tribunal to scrutinize the veracity of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on merits, for the purposes of quantification of the claim and secondly, whether this Tribunal should take up the job of recalculations of the amount claimed to be in default in the context of the limit imposed by Section 4 of I & B Code, 2016, which can have a direct effect on the sustainability of the proceedings under Section 9 application, preferred by the Appellant, which stood rejected by learned NCLT.
There can be another way out by remitting the document back to the learned Adjudicating Authority under Order XLI Rule 27 of the C.P.C., to appreciate the document under law of evidence and to return its finding with regards to the contents of the same for the purposes of quantification. But, in our opinion, remitting the matter back to the learned NCLT under Order XLI Rule 27 of CPC, to appreciate the ``Deed of Assignment of Business Debt’’ dated 03.10.2021, would not be the most suitable option for the reason being that in accordance with the ratio of Judgment propounded by the Hon’ble Apex Court where the Hon’ble Apex Court has held that the best Court available for the purposes of appreciating the contents of a document is the trial court and particularly, when it engages detailed arithmetical calculation for quantification of the claim, the said document and its document will be best appreciated by the learned NCLT, which is the first forum invoked by the Appellant, for initiation of the proceedings under Section 9 of the I & B Code, 2016. There would be yet another reason for remitting the matter back to the learned Adjudicating Authority, to re-decide the matter after taking the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 on record for the reason being that, if this Appellate Forum ventures into the contents of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021, it will yet again be a manifestation of violation of the principles of natural justice because, the Appellant would be deprived of his first opportunity to establish his case based on scrutiny of the contents of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 that he is eligible under Section 4 of the I & B Code, 2016, for the purposes of preferring an application under Section 9 of I & B Code, 2016.
Apart from it, if the Impugned Judgment is taken into consideration, the solitary reason, which has been assigned by learned Adjudicating Authority while coming to a conclusion is that, the quantum of the claim of the Appellant happens to be less than Rs.1 Crore because she has not been able to establish that her claim was of more than Rs.1 Crore and not Rs.54,90,892/-. The said finding as recorded in Para 17 of the Impugned Order has been arrived at, without considering the contents of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021, which Appellant sought to place on record, but could not do so because opportunity was not given to her despite specific pleadings.
It is a settled principle of law that when a material right of a party to the litigation is likely to be affected because of temporary inability to place certain facts based on the contents of a document, which is the foundation of the proceedings on record, all efforts are to be made by the concerned learned Court, which exercises its adjudicatory rights to enable the concerned party to place such facts and documents on record, to scrutinize the same in accordance with law, and then to arrive at a reasoned conclusion. Seen this way, denial to take the said Deed on record, would be amounting to depriving the Appellant of an effective opportunity to establish her case.
Exclusively on this limited ground, without venturing into the merits of the claim raised under Section 9 of the I & B Code, 2016, as instituted by the Appellant herein, the Impugned Order dated 31.05.2022, as rendered in Company Petition (IB) No. 133 / BB / 2021, is hereby quashed and the instant Company Appeal (AT) (CH) (INS) No. 314 / 2022 would stand allowed. The matter is remitted back to the learned NCLT, Bengaluru Bench, to re-decide the Company Petition being CP (IB) No. 133 / BB / 2021 on its merit, after considering the impact of the ``Deed of Assignment of Business Debt’’ dated 03.10.2021 as it has been referred to in the Impugned Order.
We make it clear that we are not curtailing the rights of any of the parties to the Company Petition for presenting evidences in support of their respective contention before the learned Adjudicating Authority. All rights and contentions are still left open to be pressed on the revival of the proceedings before the learned Adjudicating Authority.