Ramji Venkatraman vs M/s. ACI Wonderwood Products & Anr.

Per: R. SUCHARITHA, MEMBER (JUDICIAL)

Under Adjudication is IA/707/CHE/2021 filed under Rule, 49 of the National Company Law Rules, 2016. This Application has been filed by the Applicant herein seeking following reliefs:-

It is averred in the Application that the Respondent Operational creditor was engaged in the business of trading in plywood and teakwood products and the Applicant herein is engaged in the business of setting up exhibition stages.

Further it is submitted that, in the course of business the Applicant issued undated blank cheque to the Respondent No. 1 (R1) and the on receipt of plywood material and after quality check would pay the amount due to R1.

It is averred in the Application that, in the course of business R1 had supplied substandard wood the Applicant and subsequently, the Applicant orally intimated R1 to replace the same immediately and even after repeated remainders R1 failed to replace the product, subsequent to which the Applicant gave instructions to the Bank to stop payments.

The Ld. Counsel submitted that, the Applicant herein had sent a reply notice dated 09/05/2016 to the Legal Notice issued by the R1 dated 15/04/2016 to pay a sum of Rs. 36,55,054/- and interest @ 24% pa from the date of previous communication dated 11/2/2016. Further, the Applicant in Reply notice dated 09/05/2016 that as R1 had supplied sub-standard materials and they could not be used, the material is lying in Bangalore unused as the Respondent had refused to take back the substandard material.

The Ld. Counsel for the Applicant submitted that, in response to the abovementioned the R1 filed complaint against the Applicant in STC No. 498 of 2017 before the Judicial Magistrate, Fast Track Court at Poonamallee under Section 138 of the Negotiable Instruments Act, 1881 and the same is still pending.

It is averred in para 6 of the Application that, the Applicant had shifted his registered office of the Corporate Debtor to Old No.6, New no 13, Balakrishnan Road, Valmiki Nagar, Thiruvanmiyur, Chennai-600 041 from the year 2017 and had instructed the Chartered Accountant (CA) to do the same, and the CA of the Applicant failed to effect the same with the Registrar of Companies.

Thereafter, the Ld. Applicant counsel submitted that, R1 has filed an Application IBA/140/2020 under Section 9 of the IBC, 2016 and same was admitted by the this Tribunal vide order dated 18/1/2021.

The Respondent have filed their Counter/Reply statement in this matter.

The Ld. Counsel for R1 submitted that, this Tribunal ordered notice to the Registered office of Corporate Debtor and the same was returned "Unclaimed" with endorsement on 17.10.2020 and further the no reply was provide to statutory notice by the corporate debtor. The Ld. Counsel further submitted that, this Tribunal admitted the Corporate Debtor to CIRP considering the case on merits vide order dated 18.01.2021 in IBA/140/2021.

Incidentally, Ld. Counsel for R1 submitted that the Application for setting aside the said impugned order dated 18.01.2021 in IBA/140/2021 under Rule49 of the NCLT Rules, 2016 should have been within 30 days in accordance to Section 238A of the IBC, 2016. At this juncture it is relevant to extract the said Section:-

Further, the Ld. Counsel for R1 submitted that, the notice dated 15.04.2016 as averred in para 4 to 7 of the present Application, was sent to the registered office of the Applicant namely “No.41 Thiruvengadam Street, Mandaveli Chennai- 600 028” and thereafter on date of filing IBA/140/2020 the abovementioned address reflected in the records maintained by the Registrar of Companies.

It is averred in the Counter statement filed by the R1 that, the R2, namely the erstwhile IRP had taken control of the affairs of the Corporate Debtor and the Financial Creditor of the Corporate Debtor Punjab National Bank is not adequately secured, due steps are in motion to investigate the assets of the Applicant/ Suspended director for recovery.

In the reply statement filed by Resolution Professional, the following orders of the Hon’ble NCLAT, has been attached in the typeset filed along with the Application, in which the appeals to set aside the orders passed by the adjudicating authority has been dismissed as infructuous and without merit.

Heard the submissions made by the parties. This present Application has been filed for the setting aside of the ex-parte order dated 18.01.2021, in IBA/140/2020 thus admitting the Corporate Debtor Ad Mart Private Limited to CIRP.

The Applicant in this Application is the erstwhile director of the Corporate Debtor and this IA/707 CHE/2021 has been filed for setting aside the above-mentioned impugned order dated 18.10.2021.

This Application has been filed on date 16.08.2021 to set aside the ex-parte order dated 18.01.2021 in IBA/140/2020. Thus it becomes relevant to discuss the proceeding/Orders that were passed by this Tribunal in IBA/140/2020. The said proceedings/orders in IBA/140/2020 before the final order dated 18.01.2021, are listed hereunder:

This present Application has been filed under Rule, 49 of the NCLT Rules. At this juncture, the said Rule is extracted hereunder for discussion:-

Further, from the record of proceedings extracted supra it is seen that, reasonable time and notice had been given to the Applicant herein / the Respondent in the main Company Petition, for adjudication of IBA/140/2020 and also reasonable opportunity was provided to the Corporate Debtor to enter appearance in IBA/140/2020 and arguetheir case.

In Furtherance of the above mentioned, the Ex-parte order of the Tribunal/ Adjudicating authority can be set aside only on the ground of the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing in the proceedings. In the present case, the Corporate Debtor has refused to receive the notice. Hence, that cannot be stated as a sufficient cause for the Corporate Debtor for non-appearance.

On perusal of the averments made by the Applicant in IA/707/2021, this Tribunal finds no sufficient cause/ reason to be stated for non-appearance when the petition/ Application was called for in the hearing of IBA/140/2020. The Applicant has stated in the Application that, merely his Chartered Account had failed to undertake his direction to change the registered office address with the Registrar of Companies, Chennai.

Further, it can be seen from the Reply filed by the Resolution Professional of the Corporate Debtor that the CoC (Consortium of Creditors) has been constituted and the CIRP (Corporate Insolvency Resolution Process) of the Corporate Debtor is proceeding forward with full force and based on this Tribunal's order dated 13.08.2021, in IA 732 and 733 of 2021 the erstwhile RP Ms. Jayshree has been replaced with Mr. S.Kannan (IBBI/PA-001/ IP-P00755/2017-18/11287). This Tribunal being an Insolvency Court, on hearing a petition filed under Rule, 49 of the IBC, feels that it need not go into the merits of the case and hamper the CIRP process that has been set in motion in IBA/140/2020 vide order dated 18/01/2021.

Further in view of the Hon'ble NCLAT judgment in Agarwal Coal Corporation-Vs-Sun Paper Mill Limited[Company Appeal (AT)(Ins.) No.412/2019], it can be concluded that there is no provision in law provided to recall the order passed by the Adjudicating Authority/ Appellate Authority.

It is to be noted, the dictionary meaning of the term 'Review' is the act of looking, offer something again with a view to correction or improvement as the case may be. It must be borne in mind that the "Power of Review" is a creature of Statute and it is not an 'inherent power' as per decision of the Hon'ble Supreme Court in Lily Thomas V. Union of India reported in AIR 2000 Supreme Court Page 1650 at Special Page 1652. In fact, "Review" is not an 'Appeal' in disguise. In “Review” re-appraisal of materials is impermissible as per decision in JiuraOraon V. The State of Jharkhand, 2014 (3)JCR 100 (Jhar).

Resting upon ‘Review’ the ‘Tribunal’ would not rehear the parties on ‘Facts’ and ‘Law’. No wonder, a re-appraisal of evidence on record for unearthing an error will amount to an exercise of ‘Appellate Jurisdiction’ which is not permitted in Law. A ‘Review’ is not to be sought for a ‘Fresh Hearing’ or ‘Arguments’ or ‘Correction of an erroneous view’ taken earlier. To put it precisely, the contentions raised and determined in main proceedings are not to be reopened/re-agitated under the garb of ‘Review Petition’ as per decision Sharada Bai V. Padamlal, 2003 All India High Court Cases 1756 (1757) (Andhra Pradesh). Also for correcting an erroneous decision, ‘Review’ will not lie, as opined by this ‘Tribunal’. Further, the Hon’ble Supreme Court in Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji reported in AIR 1970 Supreme Court 1273 had observed and held that ‘power of Review’ is not an ‘inherent power’.

It is the well laid down proposition of law that ‘in the absence of any power of ‘Review’ or ‘Recall’ vested with the ‘Adjudicating Authority’ – ‘Appellate Authority’, an order/ judgment passed by it cannot be either Reviewed or Recall as opined by this Tribunal.

This Tribunal also places emphasis on the Hon’ble NCLAT order in Ravinder Kumar Karla –Vs- Ricela Health Foods Limited [Company Appeal (AT) (Ins) No.54 of 2020], from which it can be clearly deduced that, the Adjudicating authority is only obligated under law to issue limited notice to the Corporate Debtor in the pre admission stage of the application filed under Section 9 of the IBC, 2016. Further, in the present case notice was sent to the Corporate Debtor to the Registered Office address as per the Master Data available in the MCA portal.

In this regard it is relevant to refer to the decision of the Hon’ble NCLAT in the matter of Shri Bijay Pratap Singh –Vs-Unimax International and another in Company Appeal (AT) (Insolvency) No. 1273 of 2019, wherein at para 37 it has held as follows;

Thus, from the facts and circumstances mentioned above, it is seen that sufficient notice has been served to the Corporate Debtor in the main Company Petition in IBA/140/2020 and this Tribunal feels that no sufficient cause has been shown by the Applicant for his non - appearance before this Tribunal in the main Company Petition and also this Tribunal has decided the case on merits and passed the order by admitting and appointing the IRP in the said matter. Hence for the aforestated reasons, the IA/707(CHE)/2021 stands dismissed.