Srigopal Choudhary vs SREI Equipment Finance Limited & Ors.

Ashok Bhushan, J.

This Appeal has been filed against the order dated 12.12.2023 passed by National Company Law Tribunal, New Delhi, Court-III, by which order IA No.3216 of 2023 filed by the Appellant to recall order dated 07.06.2023 was rejected.

Brief facts of the case necessary to be noticed for deciding this Appeal are:

We have heard Shri Abhishek Anand learned Counsel appearing for the Appellant; Shri Anirban Bhattacharya appearing for Respondent No.1 and Shri Ranjan Chakraborti, learned Counsel appearing for RP.

Shri Abhishek Anand learned Counsel for the Appellant submits that Appellant in his Application – IA No.3216 of 2023 has shown cause for recall of the order dated 07.06.2023, which was ex-parte to the Appellant. It is submitted that Rule 49 of the NCLT Rules clearly contemplates recall of such order, which has been passed ex-parte. It is submitted that IA No.2121 of 2023 had been filed not in accordance with Section 27 of the Code, there being no resolution of the CoC and the Application having been filed only by one Financial Creditor, could not have been entertained. It is submitted that Counsel for the Appellant wrongly noted the date as 08.06.2023 in place of 07.06.2023, due to which no one could appear on 07.06.2023. It is submitted that the Appellant came to know about the order dated 25.04.2021 regarding filing of reply by the Appellant and the reply was being prepared, but before it could be filed, the order was passed. It is submitted that the Adjudicating Authority committed error in rejecting IA No.3216 of 2023.

The learned Counsel appearing for Respondent refuting the submissions of learned Counsel for the Appellant contends that the Application filed by the Appellant under Rule 49 of the NCLT Rules was not maintainable and only remedy available to the Appellant was to file an Appeal against the order dated 07.06.2023. The order dated 07.06.2023 removing the Appellant as RP has become final. The Appellant having not filed the Appeal against the said order, he cannot be allowed to challenge the order dated 07.06.2023. It is submitted that no sufficient cause was made out in the Application – IA No.3216 of 2023. The Appellant was duly served with the notice of the Application and was well aware of the order dated 25.04.2023. The Appellant having appeared on 12.05.2023, the mentioning of the date 03.05.2023 in the Notice becomes insignificant. The present Appeal is not maintainable under Section 61, since Section 61 contemplate the Code only for a mechanism to challenge the order passed by the Adjudicating Authority under Part II of the Code. The order passed by the Adjudicating Authority under Rule 49, is not an order passed under Part II, hence, the order is not appealable under Section 61, sub-section (1) of the Code. It is submitted that the Appellant does not have any vested right to continue as RP of the Corporate Debtor.

We have considered the submissions of learned Counsel for the parties and have perused the record.

The IA No.2121 of 2023 was filed by the Financial Creditor (Respondent No.1) seeking removal of the Appellant as RP. Copy of the Application has been brought on record by the Appellant at page 67 of the Appeal paper book. The Appellant has stated in the Application that the Financial Creditor/ Respondent No.1 has sent an email dated 10.08.2021 to RP to convene the Meeting and again on 18.10.2021, a request was made to convene the Meeting of the CoC. Another Financial Creditor – Karnataka Bank has also sent an email dated 10.08.2021 for convening a meeting, which was replied by the RP on 11.08.2021. The reply of the RP has been quoted in paragraph 14 of the Application, which is to the following effect:

The Financial Creditor has filed the Application on the ground that RP in spite of request has not convened the meeting, hence he may be removed. The RP has also relied on order passed by this Tribunal in Company Appeal (AT) (Ins.) No.1443 of 2022 – Srigopal Choudary vs. SREI Equipment Finance Ltd. dated 10.01.2023, which order was with regard to another Corporate Debtor and had upheld the removal of Appellant on an Application filed by Financial Creditor.

The Application- IA No.3216 of 2023 was filed by the Appellant under Rule 49 of the NCLT Rules, 2016. Rule 49 delas with ‘Ex-parte Hearing and disposal’, which is as follows:

Rule 49, sub-rule (2) entitles the Respondent to apply to the Tribunal for an order to set aside the order of ex-parte hearing, if such Respondent satisfies the Tribunal that the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing, the Tribunal may make an order setting aside the ex-parte hearing against him or them, upon such terms as it thinks fit. Although, submissions have been advanced by the Respondent that no Application could have been filed for recall of the order dated 07.06.2023, by which order Adjudicating Authority proceeded ex-parte against the Appellant and passed the order of removal, for the purpose of this case, we need not enter into the said issue and the further submission of the Respondent that Appeal against the order dated 12.12.2023 is not maintainable needs no consideration in facts of the present case.

When we look into Rule 49, sub-rule (2), it is clear that ex-parte order can be recalled on two grounds, firstly, when notice was not served or that the Respondent/ Applicant was prevented by any sufficient cause from appearing when the Application was called for hearing. The Adjudicating Authority in the impugned order, rejected the Recall Application holding that no sufficient case was shown for exercising the power under Rule 49 of the NCLT Rules, 2016. In paragraphs 23 and 24 of the order, following have been held:

We need to consider, as to whether the reasons given by the Adjudicating Authority for rejecting the Application can be sustained. For the purpose of this case, we need not enter into other issues raised by the learned Counsel for the Respondent that Application under Rule 49 of the NCLT Rules, 2016 was not maintainable and even this Appeal also is not maintainable against the order dated 12.12.2023.

The Adjudicating Authority on Application filed by Respondent No.1 being IA No.2121 of 2023 issued notice on 25.04.2023 and granted 10 days’ time to file reply. The order dated 25.04.2023 is as follows:

The notice which is sent to the Appellant mentions about the order passed on 25.04.2023. According to the Appellant the said notice wrongly mentions that the case is listed on 03.05.2023, whereas the case was not listed on 03.05.2023. The Appellant has annexed the copy of the cause list, which indicates that case was not listed on 03.05.2023. The Appellant’s case is that on 12.05.2023, which was the date as fixed by order dated 25.04.2023, he entered appearance through Counsel through video conferencing. In paragraph 7 of the Application, following has been stated:

From the above, it is clear that the Appellant was well aware that case was listed for hearing on 12.05.2023 and he entered appearance through Counsel, who inspite of entering his attendance in chat box, is not shown to be present. The relevant fact to be noticed is that the Appellant was well aware of the date 12.05.2023. On 12.05.2023, according to the Appellant himself, the case could not be taken up due to paucity of time and next date was fixed. The Appellant’s case is that his Counsel wrongly noted the date as 08.06.2023 instead of 07.06.2023, hence, on 07.06.2023, he could not appear and the order was passed ex-parte against him.

When a party appears on a date which is fixed before the Court, it is presumed that the party is well aware of the proceedings, which was taken up by the Court on the said date. On 12.05.2023, the next date fixed was 07.06.2023.

We may also notice the fact that Appellant was well aware that he has to file reply in IA No.2121 of 20223. In paragraph 8 of the Application, the Appellant has also stated that he commenced preparation of the reply, but he could not file the reply in time. In paragraph 8 of the Application, following has been stated:

The fact that reply could not be filed even before 08.06.2023, indicates that the Appellant was not in compliance of the order dated 25.04.2023 and the Appellant filed the Application on next day, i.e., 08.06.2023, taking the pretext that his Counsel has wrongly noted the date as 08.06.2023. The Adjudicating Authority has not accepted the cause shown by the Appellant for non-appearance on 07.06.2023. The observation of the Adjudicating Authority that no sufficient cause to exercise the jurisdiction under Rule 49, is a decision taken by the Adjudicating Authority, which is based on relevant materials and facts brought before it, which does not suffer from any error warranting interference by this Appellate Tribunal in this Appeal.

In the present case, the Appellant is not denying that he was not served with the copy of the IA No.2121 of 2023, nor he denies the service of copy of Application. The fact remains that he did not file reply within the time allowed and also did not appear on 07.06.2023, when the case was taken up. We are of the considered view that Adjudicating Authority did not commit any error in rejecting IA No.3216 of 2023. The Adjudicating Authority being satisfied that no sufficient cause has been shown for non-appearance passed the impugned order dated 12.12.2023.

We do not find any good ground or reasons to interfere with the impugned order in this Appeal. The appeal is dismissed. No order as to costs.