S. Swarnalatha vs State Bank Of India & Anr.

The Respondent No.1 in the instant Appeal is a Petitioner in Company Petition CP(IB)/45(CHE)/2023, as preferred by Respondent No.1, by invoking the Provisions contained under Section 95 of Insolvency and Bankruptcy Code, 2016, for the purposes of seeking an initiation of an IRP Proceedings. After the exchange of pleadings, the Petition preferred by Respondent No.1 under Section 95 of Insolvency and Bankruptcy Code, has been allowed and the Appellant has been admitted to the IRP Proceedings.

The Appellant has drawn the attention of this Tribunal, that in the proceedings which were held before the Learned Adjudicating Authority, particularly as that on 11^th March 2024, the Learned Adjudicating Authority had granted ‘a last opportunity to the Appellant to file a Reply’, after serving the copy of the same to the Counsel for the Petitioner, failing which the right to file Reply would stand closed. Subsequently, when the proceedings were taken up in the Company Petition on 26^th April 2024, an observation has been made ‘that the Counter has been filed by the Respondent’, to which Petitioner/Respondent herein was granted time to file Rejoinder. Thereafter proceeding was once again taken up on 18^th June 2024 and as a consequence of exchange of pleadings, the arguments were heard and orders were Reserved.

By the aforesaid extraction of the three orders passed in the Company Petition, what is intended to be argued by the Learned Counsel for the Appellant is that as a matter of fact, there was a Counter filed by him, in Objection to the Petition preferred by the Respondent under Section 95 of Insolvency and Bankruptcy Code and as a consequence thereto when the argument was reserved on 18.06.2024, the presumption would be that the Learned Adjudicating Authority, must have had heard the Appellant’s arguments given in his Counter and in his pleading as raised in the Company Petition, strongly objecting to the Application under Section 95 of Insolvency and Bankruptcy Code for initiation of the CIRP proceedings and its content.

Despite of the aforesaid status of pleadings in the proceedings as referred above, the Company Petition CP(IB)/45(CHE)/2023 has been allowed by virtue of the impugned Judgment dated 9^th July 2024, which is presently under challenge.

Before venturing to take this Tribunal on the judicial veracity of the Judgment, the Learned Counsel for the Appellant has drawn the attention of this Tribunal to the objections made by him in his Counter Affidavit, particularly in relation to the determination which has been made by the Resolution Professional, in his Report, which has constituted as to be the basis for passing of the Impugned Order dated 9^th July 2024, directing for initiation of the IRP Proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. What the appellant intends to argue from the contents of the Counter Affidavit that, as a matter of fact, if the Counter affidavit is taken into consideration, in its entirety, particularly the references which he has made to the contents of para 19 onwards of his Counter affidavit, he intends to convey, that in opposition to the contents of the report submitted by the Resolution Professional, he has specifically raised objections pertaining to the quantifications / configurations of the liability, which was to be fastened up and the interest, which was liable to be payable on it. Hence, he submits that, in fact, his Counter Affidavit by way of specific objection was raised to the report submitted by the Resolution Professional. Ultimately, the Learned Counsel for the Appellant argues, that if the Impugned Judgment is scrutinized in its entirety particularly by the observations made in Para 24, the Learned Adjudicating Authority has made the following observations:

The observation made in the impugned judgment which has been extracted above herein, appears to convey as if the Adjudicating Authority has proceeded to decide the application under Section 95 of Insolvency and Bankruptcy Code, on a premise that the Appellant has not filed any Objection/Counter Affidavit, rebutting the recommendations made by the Resolution Professional in his report. In fact, the said observation and the findings which has been made subsequently, it has been argued that it is perverse owing to the specific pleadings which has been raised by the Appellant in the Counter Affidavit, in which he has particularly raised his objection on the Report of Resolution Professional, which has been exclusively taken as to be the foundation for considering the Application under Section 95 of Insolvency and Bankruptcy Code, 2016.

On this short premise itself, the Learned Counsel for the Respondent was called upon to answer, the arguments of appellant on perversity. as to whether the Learned Adjudicating Authority, has dealt with the Pleading raised by the Petitioner, as against the Report of the Resolution Professional, which has been taken, as to be the basis for passing the impugned Judgment dated 9^th July 2024. He submitted that, if the Judgment in its entirety is taken into consideration, the aspect as argued by the Learned Counsel for the Appellant may not be sustained because the Judgment in its entirety is based on the basis of the report of a Resolution Professional. We after having gone through the records and particularly the observations which has been made in the Impugned Order, we are of the view that since no specific findings has been recorded by the Learned Adjudicating Authority while passing the impugned Judgment, with regards to the contents of the Counter Affidavit filed by the Appellant, raising his Objection against the contents of the Report of the Resolution Professional, which has constituted as to the sole basis for passing Impugned Judgment on 9^th July 2024, on this apparent short comings itself, the Judgment is liable to be perverse, on grounds of non-consideration of the respective pleadings raised by the parties and particularly when it is taken as to be a foundation for passing a Judgment for initiation of Section 95 Proceedings, as it would definitely prejudice the rights of the present Appellant, when his Objections are not taken care of or considered and rather a contrary observation has been made that the Appellant has not filed his reply on the Report of the Resolution Professional.

On this simpliciter ground itself, the parties have arrived at unanimity, that if Judgment itself of 9^th July 2024, is set aside and matter is remitted back to National Company Law Tribunal, Chennai Bench, to re-adjudicate the Company Petition CP(IB)/45(CHE)/2023, itself, based upon the pleadings already exchanged and on record, within a time limit, they will not have any grudges as such. On that premise the impugned Judgment of 9^th July 2024 is hereby quashed and the matter is remitted back to the Learned Adjudicating Authority, to re-adjudicate the Company Petition itself on its merit after considering the respective contentions raised by the parties in their pleading.

It is hoped and trusted, and the Learned Adjudicating Authority is requested to decide the Company Petition itself, as expeditiously as possible, preferably within a period of two months from the date of production of certified copy of the Judgment.