Arcelormittal Nippon Steel India Ltd vs M/S Palco Recycle Industries Ltd & Ors

IN THE MATTER OF: Arcelormittal Nippon Steel India Ltd. ...Appellant

Versus

Palco Recycle Industries Ltd. & Ors. ...Respondents

Present: For Appellant: Mr. Mukul Rohtagi and Mr. Mihir Thakare, Sr. Advocates with Ruby Singh Ahuja, Mr. Abhishek Swaroop, Mr. Vishal Gehrana, Mr. Anupam Prakash, Ms. Bhawana Sharma, Ms. Akriti Vohra and Mr. Ashim Sood, Advocates

For Respondents: Mr. Saurabh Soparkar, Sr. Advocate with Mr. Parth Gokhale and Mr. Prithviraj Oberoi, Advocates for R3, 6, 21 & 23.

ORDER

ASHOK BHUSHAN, J.

1. This Appeal has been filed against an Order dated 09.01.2024 passed

by National Company Law Tribunal, Ahmedabad, Division Bench, Court I with

respect to various applications in CP(IB)40/AHD/2017.

2. Brief background facts giving rise to the Appeal need to be noted.

 On an application filed by Standard Chartered Bank and State Bank of

India under Section 7 of the Code, Corporate Insolvency Resolution

Process (CIRP in short) commenced against Essar Steel India Limited by

Order dated 02.08.2017.

 The Appellant filed the Resolution Plan in the CIRP of Essar Steel India

Limited which plan was approved by the Order of the Adjudicating

Authority dated 08.03.2019. The approval of the Resolution Plan of

Cont'd.../ -2-

Essar Steel India Limited was subject matter before the Hon'ble

Supreme Court and the Hon'ble Supreme Court of India vide order and

Judgment dated 15.11.2019 approved the Resolution Plan, judgment is

reported as Committee of Creditors of Essar Steel India Limited though

its authorised signatory Vs. Satish Kumar Gupta & Ors., (2020) 8 SCC

531.

 Between 05.09.2022 to 05.01.2024, several petitions and applications

have been filed before the Adjudicating Authority in relation to approval

of the Resolution Plan of Essar Steel India Limited dated 02.08.2017 by

the Adjudicating Authority. The Respondent No. 1 and 2 in the Appeal

have also filed several applications. There have been series of litigation

subsequent to filing of the Applications in September, 2022, the

Contempt Applications were also filed by the Gujarat Operational

Creditor Association (of which Respondent No. 1 is a member) and

Respondent No. 2 alleging contempt of order dated 08.03.2017. The

Contempt Applications were heard by Division Bench, Court I of the

NCLT, Ahmedabad and by Order dated 08.01.2024, contempt

Applications were rejected with cost of 25,000/- on each of the petition.

 On 08.01.2024, the Adjudicating Authority conducted a detailed hearing

on numerous applications (approximately 36 pending applications) and

fixed 26.02.2024 as a next date of hearing after conclusion of the

hearing on 08.01.2024.

 Learned Counsel for the contesting respondent sent an email dated

08.01.2024 marked to the Register with heading "for kind attention Ld.

Company Appeal (AT) (Insolvency) No. 274 of 2024 -3-

Member Judicial - head of the office". The email was addressed to Ld.

Judicial Member, NCLT, Ahmedabad with copy to Hon'ble President,

NCLT, Delhi. The email was sent on 08.01.2024 at 2:31 PM by Deepak

Khosla, Advocate appearing for contesting respondent.

 On 09.01.2024, the Adjudicating Authority passed following order:

"IN THE NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD DIVISION BENCH COURT - 1 ITEM No. 221 - Cont. P/5(AHM) ITEM No. 240 - IA/117(AHM) 2023 2022 in IA 419 of 2017 ITEM No. 241 - IA/252(AHM) 2023 ITEM No. 222 - IA/757(AHM) 2022 ITEM No. 242 - IA/284(AHM) 2023 in Cont. P/5(AHM) 2022 in IA 419 ITEM No. 245 - IA/288(AHM) 2023 of 2017 ITEM No. 244 - IA/305(AHM) 2023 ITEM No. 223 - IA/758(AHM) 2022 ITEM No. 245 - IA/991(AHM) 2023 in Cont. P/5(AHM) 2022 in IA 419 in IA/874(AHM) 2022 ITEM No. of 2017 246 - IA/992(AHM) 2023 in ITEM No. 224 - IA/760(AHM) 2022 IA/758(AHM) 2022 ITEM No. 247 -

in Cont. P/5(AHM) 2022 in IA 419 IA/994(AHM) 2023 in of 2017 IA/873(AHM) 2022 ITEM No. 248 - ITEM No. 225 - IA/794(AHM) 2022 IA/996(AHM) 2023 in

in Cont. P/5(AHM) 2022 in IA 419 IA/757(AHM) 2022 ITEM No. 249 -

of 2017 IA/1282(AHM) 2023 ITEM No. 250 ITEM No. 226 - IA/795(AHM) 2022 - IA/1283(AHM) 2023 ITEM No. in Cont. P/5(AHM) 2022 in IA 419 251 - IA/1352(AHM) 2023 ITEM of 2017 No. 252 - Cont. P/16(AHM) 2023 ITEM No. 227 - IA/855(AHM) 2022 ITEM No. 253 - Cont. P/17(AHM) in IA/832(AHM) 2022 2023 ITEM No. 254 - Cont. ITEM No. 228 - IA/873(AHM) 2022 P/18(AHM) 2023 ITEM No. 255 - in Cont. P/5(AHM) 2022 IA/1386(AHM) 2023 in

Company Appeal (AT) (Insolvency) No. 274 of 2024 -4-

ITEM No. 229 - IA/866(AHM) 2022 IA/1282(AHM) 2023 ITEM No. 256 ITEM No. 230 - IA/867(AHM) 2022 - IA/1387(AHM) 2023 in ITEM No. 231 - IA/874(AHM) 2022 IA/1283(AHM) 2023 ITEM No. 257 ITEM No. 232 - IA/1075(AHM) - IA/1388(AHM) 2023 2022 ITEM No. 233 - IA/1107(AHM) 2022 ITEM No. 234 - IA/1143(AHM) 2022 ITEM No. 235 - IA/15(AHM) 2023 ITEM No. 236 - IA/54(AHM) 2023 ITEM No. 237 - IA/110(AHM) 2023 in IA/832(AHM) 2022 ITEM No. 238 - IA/111(AHM) 2023 in Cont. P/01(AHM) 2023 in IA 419 of 2017 ITEM No. 239 - Cont.

P/01(AHM) 2023 in IA 419 of 2017

In C.P. (IB) 40 of 2017 Proceedings under Section 7 IBC IN THE MATTER OF:

State Bank of India ........Applicant V/s Essar Steels Ltd. .......Respondent Order delivered on: 09/01/2024 Coram:

Mr. Shammi Khan, Hon'ble Member(J) Mr. Sameer Kakar, Hon'ble Member(T) PRESENT:

For the Applicant : Mr. Monaal Davawala, Ld. Adv.

Mr. Deepak Khosla, Ld. Adv.

Company Appeal (AT) (Insolvency) No. 274 of 2024 -5-

For the SBI & IDBI : Mr. Saurabh Soparkar, Ld. Sr. Adv. a. w. Mr. Parth Gokhle, Ld. Adv., Mr. Shalin Jani, Ld. Adv. & Ms. Moulshree, Ld. Adv. I/b. Shardul Amarchand Mangaldas

For the Arcelor Mittal : Mr. Mihir Thakore, Sr. Adv. a/w. Mr. Nirag Pathak, Adv. :Ms. Ruby Singh, Adv. Ms. Manisha Narsinghani, Adv. :Mr. Vishal Gehrana, Adv. Mr. Varun Khanna, Adv. :Mr. Aakriti Vohra, Adv. & Mr. Raheel Patel, Adv.

ORDER Both the Members recuse themselves from these matters. The Joint Registrar is directed to place these matters before the Hon'ble Principal Bench for Administrative order in these matters.

-Sd- -Sd- SAMEER KAKAR SHAMMI KHAN

MEMBER (JUDICIAL) MEMBER (TECHNICAL)"

3. Aggrieved by the Order dated 09.01.2024, this Appeal has been filed.

4. In the synopsis of the Appeal, Appellant states as follows:

"SYNOPSIS The present Appeal is being filed by the Appellant under Section 61 (1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code") challenging the Order dated 09.01.2024 (hereinafter referred to as the "Impugned Order") passed by the Hon'ble National Company Law Tribunal, Ahmedabad Bench Court-I (hereinafter referred to as the "Ld. Adjudicating Authority"), and the consequential orders/ actions taken in furtherance thereof. Vide the Impugned Order, the Ld. Members (Judicial and Technical) of the Ld. Adjudicating Authority have recused themselves Company Appeal (AT) (Insolvency) No. 274 of 2024 -6-

from I.A. No. 1283 of 2023 which was filed by the Contesting Respondents herein, who are rank strangers and third parties, in a disposed of Company Petition No. 40 of 2017 (hereinafter referred to as the "Company Petition") The present case is a text-book case of a dissatisfied litigant, acting through its counsel, indulging in the illegal, unethical and deplorable act(s) of indulging in bench- hunting by issuing highly scandalous, rather contumacious, communication directly to the Ld. Member (Judicial) with a copy marked to the Hon'ble President, National Company Law Tribunal, Principal Bench, New Delhi casting baseless aspersions and absolutely frivolous allegations against the Ld. Members of the Ld. Adjudicating Authority. In fact, the Respondent No. 2 (and the Respondent No. 1 through an Association of which it is allegedly a member) has also been pursuing a transfer petition before the Principal Bench of the Hon'ble National Company Law Tribunal, New Delhi, seeking transfer of the numerous applications and petitions that are pending before the Ld. Adjudicating Authority in the disposed of Company Petition.

The conduct and actions of the contesting Respondents herein i.e., Respondent No. 1 and Respondent No. 2 (and certain other parties) through its Counsel have sought to browbeat the Ld. Members of the Adjudicating Authority and thereby compelling them to recuse themselves from hearing the Interlocutory Applications which were pending adjudication before them. The Counsel representing the Contesting Respondents (and certain other parties) after the conclusion of hearing on 08.01.2024, in a manner completely unknown to law, ostensibly acting "as an officer of the court", addressed an email to the Ld. Member (Judicial), Ld. Adjudicating Authority. A bare perusal of the email, which is filed along with this Appeal, ex-facie Company Appeal (AT) (Insolvency) No. 274 of 2024 -7-

demonstrates the calculated psychological offensive sought to be deployed by the Counsel representing the Contesting Respondents in order to put pressure on the Ld. Members to get them to somehow to recuse themselves from the matter. The Impugned Order, followed by the consequential directions dated 17.01.2024 by Hon'ble President, NCLT, of transferring the matters from Court No. 1 to Court No. 2 of the Ld. Adjudicating Authority has created an unfortunate and a dangerous precedent.

The conduct of the Contesting Respondents (and certain other parties) as well as its Counsel, appears to deliberately prejudice the judicial proceedings and cause mala fide interference with the administration of justice and unfair prejudice to the judicial proceedings. The actions are nothing but an act of bench hunting and forum shopping. Therefore, it is in the fitness of things that this Hon'ble Appellate Tribunal must deprecate the said action and set aside the Impugned Order of recusal so that majesty of Courts is protected and such litigants who indulge in such blatant and brazen bench hunting and/ or forum shopping may be restrained from doing so. Hence, the present Appeal."

5. Mr. Mukul Rohtagi, Learned Sr. Counsel appearing on behalf of the

Appellant submits that the Division Bench, Court I hearing different

application recused themselves due to the email dated 08.01.2024 sent

at 2:31PM by the Learned Counsel for the Respondent making various

unfounded and incorrect allegations. It is submitted that no counsel

has any right to communicate with the Court except by filing

appropriate application(s) and affidavit(s) in the proceeding pending

before the Court. The Act of Counsel appearing on behalf of Respondent

Company Appeal (AT) (Insolvency) No. 274 of 2024 -8-

writing email to the Judicial Member is highly objectionable and is

interference with the judicial proceedings pending in the Court. Mr.

Rohtagi submits that the President of NCLT by an Order dated

17.01.2024 has transferred all I.A.s in CP(IB)/40/2017 to Court II of

NCLT, Ahmedabad Bench.

6. The Order passed by the President dated 17.01.2024 is as follows:

"1. The following matter is pending before NCLT Ahmedabad- Court No. I presided by Hon'ble Member (J) Shri Shammi Khan and Hon'ble Member (T) Shri Sameer Kakar. Hon'ble Members have recused themselves from hearing the same:

s. C.P. No. & Title No. No. 1 C.P. No. (IB) 40 of 2017(with all IAs): State Bank of India Vs. Essar Steels Ltd. 2. Hon'ble President under section 419 of

Companies Act, 2013 read with rule 62 of NCLT Rules, 2016 is pleased to transfer the aforementioned matter with immediate effect to NCLT Ahmedabad bench headed by Hon'ble Member (J) Mrs Chitra Ram Hankare & Hon'ble Member (T) Dr. Velamur Govindan Venkata Chalapathy in Court no. II.

3. Henceforth above matter shall be listed before Court No. II.

4. This issues with the approval ofHon'ble President, NCLT."

Company Appeal (AT) (Insolvency) No. 274 of 2024 -9-

7. We have Considered the submission of Learned Counsel for the

Appellant and perused the record.

8. The Hon'ble Supreme Court in its Judgment in "O.P. Sharma & Ors.

Vs. High Court of Punjab and Haryana" reported in (2011) 6 SCC 86

had quoted Bar Council of India Rules which contains a duty to the

Court by a professional. One of the rule 3 of Section 1 under heading

"duty to the court" is relevant. We can extract paragraph 13 of the

Judgment of the Hon'ble Supreme Court where relevant rules have been

quoted which is as follows:

"13. Section I of Chapter -II, Part VI titled "Standards of Professional Conduct and Etiquette" of the Bar Council of India Rules specifies the duties of an advocate towards the Court which reads as under:

Section I - Duty to the Court ......

3. An advocate shall not influence the decision of a court by any illegal or improper means. Private communications with a judge relating to a pending case are forbidden."

9. The proceeding before a Court or a Tribunal between the parties are

proceeding which are conducted in the open court in a transparent

manner. Both the parties are fully entitled to make their respective

submissions, file their pleadings after serving the copy of the pleadings

to other side. Justice P.B. Gajendragadkar, C.J. speaking on behalf of

Constitution Bench in AIR 1967 SC 1, "Naresh Shridhar Mirjakar and

Ors Vs. State of Maharashtra and Ors." had emphasised that it is well

Company Appeal (AT) (Insolvency) No. 274 of 2024 -10-

settled that in general all cases brought before the Courts whether Civil,

Criminal or other must be heard in open court. In paragraph 20 of the

Judgment, following has been laid down:

"20. Before dealing with this question, it is necessary to refer to one incidental aspect of the matter. It is well- settled that in general, all cases brought before the Courts, whether civil, criminal, or others, must be heard in open court.

Public trial in open court is undoubtedly essential for the healthy, objective and fair administration of justice. Trial held subject to the public scrutiny and gaze naturally acts as a check against judicial caprice or vagaries, and serves as a powerful instrument for creating confidence of the public in the fairness, objectivity, and impartiality of the administration of justice. Public confidence in the administration of justice is of such great significance that there can be no two opinions on the broad proposition that in discharging their functions as judicial tribunals, courts must generally hear causes in open and must permit the public admission to the court room. As Bentham has observed:

"In the darkness of secrecy sinister interest, and evil in every shape, have full swing. Only in proportion as publicity has place can any of the checks applicable to judicial injustice operate. Where there is no publicity there is no justice. Publicity is the very soul of justice. It is the keenest spur to exertion, and surest of all guards against improbity. It keeps the judge himself while trying under trial ( in the sense that) the security of securities is publicity". (Scott v. Scott) All.E.R. 1,30)"

Company Appeal (AT) (Insolvency) No. 274 of 2024 -11-

10. All proceedings have to be conducted before a Court or judicial

tribunal, in open court which serves transparency and create

confidence in public in the fairness, objectivity and impartiality of the

justice as has been laid down by Supreme Court in the above case. It is

due to above principal that private communication with the Judge by

litigants or their advocates is forbidden. All the submissions,

applications and affidavits and proceedings have to be filed in the Court

for consideration of Court and no litigant or counsel is entitled to send

any separate communication.

11. A perusal of the email dated 08.01.2024 which is filed along with

Appeal as Annexure A-18 clearly indicates that the said email is not

part of any proceeding or any application or affidavit filed in the Court.

The email has been directly sent by the counsel to the Registrar of

NCLT, Ahmedabad for attention of Ld. Judicial Member especially when

08.01.2024 was a date on which the Adjudicating Authority heard the

parties and passed an order fixing 26.02.2024 as next date. Any request

or application ought to have been made to the Court not by sending an

email to Ld. Judicial Member.

12. The Order impugned is an order by which both the Members

recused themselves from the matters. The Order dated 09.01.2024

recusing by both the members is subject matter of the Appeal. We after

perusing the order dated 09.01.2024 are of the view that the decision

taken by both the members to recuse themselves from the matter

cannot be interfered with in exercise of our appellate jurisdiction.

Company Appeal (AT) (Insolvency) No. 274 of 2024 -12-

Members having been recused themselves, we are unable to grant any

relief to the Appellant as against the order dated 09.012024.

13. We further notice that by a subsequent order passed by the

President dated 17.01.2024 as extracted above, the matter has already

been transferred to Court II of the NCLT, Ahmedabad.

14. Under the NCLT Rules, 2016, the powers and functions of the

President are enumerated. Rule 16 of NCLT Rules, 2016 provides as

follows:

"16. Functions of the President.- In addition to the general powers provided in the Act and in these rules the President shall exercise the following powers, namely:-

(a) preside over the consideration of cases by the Tribunal;

(b) direct the Registry in the performance of its functions;

(c) prepare an annual report on the activities of the Tribunal;

(d) transfer any case from one Bench to other Bench when the circumstances so warrant;

(e) to withdraw the work or case from the court of a member.

(f) perform the functions entrusted to the President under these rules and such other powers as may be relevant to carry out his duties as head of the Tribunal while exercising the general superintendence and control over the administrative functions of the Members, Registrar, Secretary and other staff of the Tribunal."

15. The President of the NCLT is master of roster. All administrative

powers are vested with the President. It is always open for the Appellant Company Appeal (AT) (Insolvency) No. 274 of 2024 -13-

or any aggrieved party to bring into the notice of the President on the

administrative side to take appropriate measures with regard to the

matter in question or for considering issuance of such order or direction

as the President may deem fit and proper in accordance with law.

16. In view of the facts and circumstances of the present case as

noticed above, we are of the view that no purpose shall be served in

entertaining this Appeal. In result, the Appeal is dismissed subject to

observations as made above.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI 12th February, 2024

Basant B.

Company Appeal (AT) (Insolvency) No. 274 of 2024