State Bank Of India vs Mr. Potluri Mohana Murali Krishna & Anr.

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

These are two Company Appeals which engage consideration of an almost similar question of fact.

Company Appeal (AT) (CH) (Ins) No. 363/2025, is accompanied with a Condone Delay application, where the Appellant has sought a condonation of 11 days of delay that has chanced in preferring the appeal. The appeal itself was e-filed on 03.06.2025, and as per the explanation given in para 3(d) the delay in filing of the appeal has chanced because of the fact that the Appellant has filed Application seeking recall of the order dated 23.04.2025 which later on stood rejected by an order of 06.05.2025. Taking the aforesaid reasons to be reasonable, the Condone Delay application, being IA No. 1090/2025 is allowed and the 11 days delay would stand ‘condoned’.

The Company Appeal in CA (AT) (CH) (Ins) No. 364/2025, too is accompanied with the Condone Delay application, being IA No.1092/2025, where the Appellant has sought a condonation of 11 days of delay, almost on the same grounds, as it has been taken for seeking condonation of delay in IA No. 1090/2025. Since the reason being similar in nature, the delay condonation application would stand allowed and the delay of 11 days would stand ‘condoned’.

Heard counsel for the Appellant on merits of both the appeals. The proceedings which were instituted before the learned adjudicating authority under Section 95 of I & B Code, 2016, were registered as CP (IB)/12/95/AMR/2023 and CP (IB)/14/95/AMR/2023, respectively. The Tribunal, by virtue of the Order dated 23.04.2025, while giving certain directions, had proceeded to make certain adverse remarks as against the counsel who was conducting the case on behalf of the Appellant, as well as against the officials of the bank also, who were supposed to discharge the responsibilities in respect of conduct of the proceedings before the learned NCLT.

The matter relates to submission of certain documents, which according to the Tribunal, were required to be submitted within a reasonable time frame and which was not done. The Tribunal, while making the aforesaid adverse observation against the conduct of the counsel, as well as the officials of the bank, had proceeded to grant one week’s time to file the documents showing invocation of the bank guarantee and all the relevant supporting documents, as it was required. At the same time, it had proceeded to impose a cost of Rs. 50,000 to be deposited by the Financial Creditor (FC) with the Prime Minister's relief fund and had also issued direction that, the order thus passed by the Tribunal was also to be communicated by the Registry of NCLT to the Chairperson and the Managing Director of The State Bank of India and the General Manager of the Stressed Asset Management Branch (SAMB), so as to ensure proper supervision and compliance in the conduct of proceedings before the learned NCLT.

Heard counsel for the Appellant. So far, as the issue pertaining to the adverse remarks made as against the counsel and the officials of the bank who were conducting the proceedings before the learned NCLT is concerned, we are of the view that before any stigmatic remark is made as against the professionals i.e. the counsel or the officials, which can affect their professional career and may cause a future impediment in the career progression ample opportunity will have to be provided to the affected persons to raise the defence, as to under what unforeseen circumstances the alleged negligence has chanced. In the absence of there being any such exercise undertaken by the Tribunal of having provided an effective opportunity to the counsel and to the officials of the bank to defend themselves in the face of accusation of negligence. The observation of the Tribunal made therein in the Order, since being stigmatic in nature, ought not to have been made. Hence, as far as the observation made in para 2 of the impugned order is concerned, the same would stand ‘expunged’.

The Tribunal, by virtue of the impugned order, had granted a week's time to the Appellant to comply with the directions as contained therein to file the details of invocation of the guarantee and all other related documents. The said time period has already lapsed. Since the learned counsel for the Appellant makes the statement that, the directions given for furnishing of the relevant document has already been complied with, no further time is required to be granted. As far as the imposition of cost is concerned, since it has got a direct nexus with regards to the observations made regarding the functioning of the officials of the bank, we do not see any justification as of now to impose the cost of Rs. 50,000. The same would also stand ‘expunged’.

So far as the directions to communicate the order of Tribunal to the Chairman/ Managing Director of The State Bank of India and General Manager of the Stressed Asset Management Branch is concerned, we modify the said directions to the extent that the copy of today's order passed by us would be sent to the aforesaid two officials with an observation that, they will ensure that, the subordinates working under them would be diligently and promptly assisting learned NCLT, Amaravati in the proceedings that are to be conducted before it henceforth. Subject to aforesaid modification granted by us, the two company appeals would stand ‘partially allowed’.

Pending interlocutory applications, if any, will stand ‘closed’.