Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.1929 OF 2019
JAI BALAJI INDUSTRIES LIMITED … APPELLANT
ERSUS
V
STATE BANK OF INDIA & ORS. … RESPONDENTS
J U D G M E N T
N.V. R AMANA J.
This appeal is directed against order dated 08.02.2019,
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passed by the National Company Law Appellate Tribunal, New
Delhi [“the NCLAT”], in Company Appeal (AT) (Insolvency) No.788
of 2018, whereby the order of the National Company Law
Tribunal, Calcutta [“the NCLT”] dated 10.10.2018 was set aside
and the NCLT was directed to admit the application filed by
Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2019.03.11
15:43:51 IST
Reason:
respondent no.1 against the appellant under Section 7, IBC.
2. Aggrieved by the said order, the appellant has preferred the
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instant appeal.
Mr. Kapil Sibal, learned senior counsel appearing on behalf
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of the appellant, assiduously urged that the appellant’s right to
be heard, audi alteram partem, one of the principles of natural
justice, has been violated in as much as the appellant has
neither been served with notice of appeal before the NCLAT nor
been given a hearing before it. The learned senior counsel
further submitted that the impugned order passed by the NCLAT
is contrary to law as it failed to comply with the procedure laid
down under the NCLAT Rules, 2016 [“NCLAT Rules”], specifically
Rule 48, which clearly provides that pursuant to issuance of
notice by the NCLAT, the copy of the appeal and documents filed
therewith, if any, shall be served along with the notice on the
other side. He further submitted that though notice was
directed to be issued by the NCLAT, the same was never received
by the appellant herein and the NCLAT passed order without
hearing the appellant, erroneously noting that it has heard all
the parties.
4. On the other hand, Mr. Mukul Rohatgi, learned senior
counsel appearing on behalf of respondent No.1, vehemently
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contested the abovementioned submissions of appellant. He
submitted that the advance copy of the appeal paperbook filed
by respondent no.1 in NCLAT was duly delivered by post at the
registered office of the appellant, wherein it showed intent to
challenge the order of the NCLT. Despite this, the counsel for the
appellant did not appear before the NCLAT. He referred to the
proceedings before the Calcutta High Court to show that the
appellant has been employing delay tactics to stall the
insolvency proceedings, which assertion was denied by the
learned senior counsel for the appellant.
5. Having heard the learned senior counsel for the parties, we
have also perused the materials placed before us. We find that in
the instant case, the NCLAT, vide order dated 02.01.2019,
issued notice both on the question of limitation as well as on the
merit of the appeal. Subsequently, judgment was reserved vide
order dated 08.01.2019. On 08.02.2019, the judgment was
pronounced noting:
“ 17. For the reasons aforesaid, we set aside the
impugned order dated 10th October, 2018 and
remit the matter to the Adjudicating Authority,
Kolkata Bench, Kolkata with direction to admit the
application under Section 7. Before such
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admission, intimation to be given to the
‘Corporate Debtor’, but no further hearing is
required to be given to any person, this
Appellate Tribunal having heard all the
parties and having held that it is a fit case
for admission .”
(emphasis supplied)
6. It is to be noted that in the rejoinder affidavit before us the
appellant has submitted that, pursuant to issuance of notice
vide order dated 02.01.2019, neither did respondent no. 1 file
process fee for issuance of summons in terms of the said order,
nor was the same served upon the appellant. Thus the judgment
which was reserved on 08.01.2019 by the NCLAT, and
consequently pronounced, was done without hearing the
appellant and the observation of the NCLAT that all the parties
were heard is erroneous. In fact, even the impugned order does
not note the appearance of the counsels on behalf of appellant
herein.
7. While the respondent no. 1 has submitted that an
advanced copy of the appeal was served on the appellant, the
same cannot be treated as service of notice as stipulated under
Rule 48 of the NCLAT Rules which, inter alia , provides:
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“ 48. Issue of notice
(1) Where notice of an appeal or petition or
interlocutory application is issued by the Appellate
Tribunal, copies of the same, the affidavit in
support thereof and if so ordered by the Appellate
Tribunal the copy of other documents filed
therewith, if any, shall be served along with the
notice on the other side .”
Rule 48 of the NCLAT Rules clearly stipulates service of
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notice on the other side, pursuant to issuance of notice by the
NCLAT in the appeal, regardless of supply of advance copy of
appeal paperbook prior to the issuance of notice by NCLAT.
9. Further, Rule 52 of the NCLAT Rules categorically states
that the judicial section of the registry of the NCLAT shall record,
in the “ Notes of the Registry ” column in the order sheet, the
details regarding completion of service of notice on the
respondents. It notes:
“ 52. Entries regarding service of notice or process.
The Judicial Section of the Registry shall record in
the column in the order sheet ‘Notes of the
Registry’, the details regarding completion of
service of notice on the respondents, such as date
of issue of notice, date of service, date of return of
notice, if unserved, steps taken for issuing fresh
notice and date of completion of services etc .”
10. However, it is pertinent to note that the material placed
before us do not indicate that the aforementioned stipulation
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has been complied with. As per the rejoinder affidavit filed on
behalf of the appellant, the counsel for the appellant had
undertaken a search of the register of process fee and summons,
and the concerned file in the office of the NCLAT on 28.02.2019.
However, no record of respondent no. 1 having paid the process
fee for issuance and service of notice to the appellant was found.
11. Thus, in view of the above position, it is abundantly clear
that no notice was served upon the appellant before the NCLAT
as stipulated under the rules, and the right of the appellant to
be heard, audi alteram partem , has been violated [ See:
v. , 2018
Ghaziabad Development Authority Machhla Devi
SCC OnLine SC 2178 ].
In the facts and circumstances of the case, we are of the
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considered opinion that the instant appeal can be disposed of by
setting aside the order of NCLAT and remanding the matter back
to the NCLAT for fresh consideration. Accordingly, we set aside
the impugned order dated 08.02.2019 passed by the NCLAT and
remand the matter back to NCLAT with a direction to dispose of
the matter as expeditiously as possible after affording an
opportunity of hearing to the parties.
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The appellant and the respondents are also directed to
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approach the NCLAT on March 13, 2019 with a prayer for early
listing of the matter. It is clarified that there is no necessity for
the NCLAT to issue any fresh notice to the appellant herein.
14. Before parting with the matter, we make it clear that we
have not expressed any opinion on the merits of the case.
Needless to say, the NCLAT will adjudicate the matter on its own
merits uninfluenced by any of the observations made
hereinabove.
15. The appeal stands disposed of in the above terms. Pending
applications, if any, shall also stand disposed of. No costs.
..............................................J.
(N.V. RAMANA)
..............................................J.
(MOHAN M. SHANTANAGOUDAR)
NEW DELHI;
MARCH 08, 2019.
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