SREE METALIKS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner assails the vires of Sec. 7 of the Insolvency and Bankruptcy Code, 2016 and the relevant Rules under the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. The challenge is premised upon and revolves around the contention that the Code of 2016 does not afford any opportunity of hearing to a corporate debtor in a petition filed under Sec. 7 of the Code of 2016.

(2.) The learned senior advocate appearing for the petitioner submits that, the first petitioner had received a notice from a firm of Company Secretaries dated Jan. 21, 2017 intimating that, an application under section 7 of the Code of 2016 read with Rule 4 of the Rules of 2016 had been filed before the National Company Law Tribunal, (NCLT) Kolkata Bench. He submits that, the letter does not inform the petitioners about the date when such application would be taken up for consideration by the (NCLT). He submits that, the NCLT had registered such application as Company Petition No. 16 of 2017. An order dated Jan. 30, 2017 was passed on a hearing conducted on such Company Petition on January 25, 2017. The order was passed ex parte. The petitioner was not informed of the date of hearing. The petitioner was not afforded an opportunity of hearing by the NCLT prior to the passing of such order of administration of the petitioner and appointment of Interim Resolution Professional. The petitioner had preferred an appeal from such order. Such appeal being Company Appeals (AT) (Insolvency) No. 3 of 2017 was disposed of by an order dated Feb. 21, 2017. He submits that, pursuant to the disposal of the appeal, proceedings have taken place in the Company Petition. At no stage has the petitioner been heard by the NCLT. He submits that, the petitioner is entitled to a right of hearing under the principles of natural justice. He submits that, the Code of 2016 is silent as to the grant of hearing by the NCLT. In such circumstances, the right of hearing, on the principles of natural justice, has to be read into such Statute. He submits that, the claim of the respondent under the Company Petition is not such that the Bankruptcy Code of 2016 can be invoked. The NCLT has assumed jurisdiction under the Code of 2016 where none exists.

(3.) The learned advocate appearing for the respondent no. 2 submits that, the respondent no.2 is an award holder. The award remains unsatisfied. The respondent no. 2 was advised to invoke the provisions of Code of 2016. The respondent no. 2 had filed a petition being Company Petition no. 16, 2017 under the provisions of Sec. 7 of the Code of 2016 read with Rule 4 of the Rules of 2016. An order dated Jan. 30, 2017 was passed by the NCLT. The petitioner being aggrieved had preferred an appeal therefrom before the National Company Law Appellate Tribunal (NCLAT). In such appeal the first petitioner had submitted that, the first petitioner had no objection to the admission of the insolvency petition but objects to the appointment of the Interim Resolution Professional (IRP) under the Code of 2016. The first petitioner, therefore, cannot canvass, breach of principles of natural justice by NCLT. Such appeal was disposed of by replacing the IRP appointed by the order dated Jan. 30, 2017. He submits that, the challenge to the vires of the Code of 2016 and the Rules of 2016 are misplaced as the application under Sec. 7 of the Code of 2016 is required to be heard by the NCLT established under the provisions of the Companies Act, 201 He refers to Sec. 424 of the Act of 2013 and submits that, NCLT is required to follow the principles of natural justice in deciding an application taken up for consideration by it. Therefore, the challenge to the vires must fail. In the factual matrix of the present case, in spite of notice, the first petitioner did not appear before the NCLT. The first petitioner had preferred an appeal against the order dated Jan. 30, 2017 before the NCLAT. Such appeal has since been disposed of. It did not press such point in the appeal. Therefore, it cannot be said that there is a breach of principles of natural justice.