Hon'ble Ravindra Nath Kakkar,J.
Heard Sri W.H. Khan, Senior counsel assisted by Sri Gulrej Khan, learned counsel for the petitioner. Sri Sandeep Kumar Singh, learned counsel has appeared for respondent no. 5 Bank of Baroda.
The petitioner, a Firm through its proprietor has invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India for quashing the impugned orders dated 29.8.2018 and 10.5.2018 passed by respondent no. 1 National Company Law Tribunal, Allahabad (NCLT).
Respondent no. 2 Aryan Traders, one of the creditors of respondent no. 3 R.B. Rice Mills Private Limited initiated proceedings for Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2010 (IBC) against respondent no. 3.
The above petition has been admitted and a moratorium has been declared against respondent no. 3 w.e.f. 9th May 2018 till completion of the Corporate Insolvency Resolution Process vide order dated 10.5.2018. At the same time Interim Resolution Professional (IRP) has been appointed with the direction to proceed in accordance with Section 15 of IBC.
The petitioner on acquiring knowledge of the aforesaid order preferred application for recall of the same on the ground that it has been obtained by respondents no. 2 and 3 collusively. The said application has been rejected vide order dated 29.8.2018 passed by the NCLT inter alia for the reason that it has no power to recall the order of admission of the petition filed under Section 9 of the Act in view of the decision of the National Company Law Appellate Tribunal (NCLAT) dated 30.11.2017 passed in Company Appeal (AT) (Insolvency) No. 296 of 2017 (Anant Kajare Vs. Eknath Aher and others).
In challenging the above orders the submission of Sri Khan, Senior counsel is that every Court or authority has inherent power to recall its order if it has been obtained fraudulently or collusively by the parties. He also submits that the petitioner in e-auction held on 1.5.2018 had offered the highest bid of Rs. 2 crore 16 lakhs for purchase of plant and machinery to respondent no. 3. The bid was accepted and confirmed by the competent authority on 2.5.2018 in respect whereof a letter was also issued on 7.5.2018 from the Bank of Baroda on whose behest the auction had taken place for realization of the dues.
The averments made in the writ petition reveals that the Debt Recovery Tribunal had stayed the issuance of sale certificate in favour of the petitioner. The bid of the petitioner was confirmed subject to deposit of the remaining amount of Rs. 1 crore 62 lakhs within 15 days and it was made clear that on deposit of the balance amount only the sale certificate shall be issued to the petitioner.
The petitioner has not deposited the entire bid amount of Rs. 2 crore 16 lakhs. He has only deposited the earnest money of Rs. 21, 60,000/- and a sum of Rs. 32,40,000/-; total Rs. 54,00,000/- and was required to deposit the balance amount of Rs. 1 crore 62 lakhs within 15 days from the date of auction and for deposit of the same he had applied for extension of 45 days time which had been extended from time to time but has not deposited the entire amount.
It is admitted that there is no provision in IBC for review of the order admitting a petition filed under Section 9 of the IBC. It is also not disputed in law that the power to review can not be exercised unless there is specific provision for the same.
As far as power to recall an order is concerned, it is nothing but a procedural review which can be availed only if there is any procedural defect in passing the order or the order has been obtained by playing fraud in any manner. There is hardly any procedural defect pointed out in admitting the petition filed under Section 9 of IBC. The said order of admission is self explanatory and conforms to all the requirements necessary for admitting a petition filed under Section 9 of the IBC. Merely for the reason that it was not contested by respondent no. 3, it can not be said that it was a collusive petition or that the order of admission was obtained by collusion between respondents no. 2 and 3.
In view of the above, prima-facie the order of admission of the petition filed under Section 9 IBC does not appear to be collusive which may warrant recall of the order in exercise of procedural review.
Section 65 of IBC deals with the fraudulent and malicious initiation of proceedings and provide that if any person initiates the Insolvency Resolution Process or liquidation proceeding fraudulently or with malicious intent, the adjudicating authority ie. NCLT may impose upon such person a penalty which shall not be less than 1 lakh and may extend to one crore rupees.
In view of the above provision, if the petitioner feels that the petition under Section 9 of IBC for Corporate Insolvency Resolution Process has been initiated by respondent no. 2 fraudulently in collusion with respondent no. 3, it may take recourse to proceedings under Section 65 of IBC.
At the same time if the petitioner feels that it has perfected its right over the plant and machinery on the basis of e-auction, it may apply to the NCLT for excluding the assets which it has purchased in the e-auction ie. plant and machinery from the ambit of the Corporate Insolvency Resolution Process.
In either case, if the NCLT is so approached, the request of the petitioner shall be duly considered by the NCLT in accordance with law but we find no error or illegality on part of the NCLT in either admitting the petition under Section 9 of the Act or in rejecting the application of the petitioner for recall of the order of admission.
The discipline of IBC also contemplates minimum of interference on the judicial side in the proceedings pending before it. Accordingly, we do not deem it necessary to exercise our discretion in the matter so as to interfere with the proceedings before the NCLT or with any of the two orders so passed by it.
The writ petition is dismissed with the above observation as made above with liberty to the petitioner to take recourse to appropriate remedy as may be advised to it in law.
Order Date :- 27.9.2018 SKS