Jord Engineers (I) Ltd. vs Valia & Co., (2022) 232 Comp Cas 218

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7281 OF 2018

JORD ENGINEERS INDIA LTD. ….. APPELLANT(S) THROUGH ITS SIGNATORY

VERSUS

VALIA AND CO. (D) THR. LRS ….. RESPONDENT(S)

JUDGMENT

Dinesh Maheshwari, J.

Having heard learned counsel for the parties and having perused

the material placed on record, we are clearly of the view that the

impugned order dated 09.07.2018 passed by the National Company Law

Appellate Tribunal, New Delhi (‘the Appellate Tribunal’) in Company

Appeal (AT) (Insolvency) No. 158 of 2017 cannot be sustained, for the

appellant having been deprived of a reasonable opportunity of hearing

and the order having been passed in its absence after remand by this

Court.

The matter relates to an application under Section 9 of the

Insolvency and Bankruptcy Code, 2016 filed by the respondent, said to

be an operational creditor, alleging default in payment of a sum of Rs. Signature Not Verified 4.72 crores against the goods supplied in the year 2012. The application Digitally signed by Dr. Mukesh Nasa Date: 2022.03.29 17:37:27 IST

was admitted by the National Company Law Tribunal, Mumbai Bench Reason:

(‘the Tribunal’) by its order dated 31.07.2017. However, the said order 2

was set aside by the Appellate Tribunal on 13.10.2017, essentially on the

ground that the demand notice was served by an advocate holding no

position with or in relation to the operational creditor.

The respondent-operational creditor questioned the said order by

way of a petition for special leave to appeal in this Court, being SLP(C)

No. 8145 of 2018. In the petition so filed by the operational creditor, a

Division Bench of this Court, in its order dated 02.04.2018, considered it

proper to remand the matter to the Appellate Tribunal in view of the

decision in the case of Macquarie Bank Limited v. Shilpi Cable

Technologies Limited: (2018) 2 SCC 674, wherein it was held that a

notice on behalf of the operational creditor by a lawyer would be in

order. However, fact of the matter remains that the said order dated

02.04.2018 was passed without notice to the other side; and it was also

provided therein that the respondent would be at liberty to move the

Court, if aggrieved. It was further enjoined upon the petitioner before

this Court i.e., the operational creditor, to put the respondent to notice

of the order and to file proof thereof before the Appellate Tribunal.

As per observations of the Appellate Tribunal in opening

paragraph of the impugned order, the registry was directed to serve

notice on the parties and in response thereof, respondent of the appeal

appeared but nobody appeared on behalf of the appellant. Fresh notice

was issued on which, the Appellate Tribunal received postal

endorsement to the effect that the appellant had ‘left’ the given address.

Thus, notice could not be delivered to the appellant. 3

However, the Appellate Tribunal chose to examine the matter with

reference to the said decision in Macquarie Bank Limited and held that

the petition filed by the operational creditor was within limitation.

Several grounds are urged in challenge to the order aforesaid but

the fundamental factor remains that the appellant was not present

before the Appellate Tribunal; and it is difficult to impute knowledge in

the appellant about the order passed by this Court on 02.04.2018

without notice and then, about revival of the proceedings before the

Appellate Tribunal.

The appellant has attempted to put forward several contentions

on merits, including the one that it was a case of pre-existing dispute.

We are not commenting on the merits of the case either way but, so far

as initiation of corporate insolvency resolution process at the instance

of respondent-operational creditor is concerned, the relevant facts and

factors, including the question of pre-existing dispute, deserve due and

adequate consideration by the Appellate Tribunal.

In view of the above, it appears just and proper that while setting

aside the impugned order dated 09.07.2018, the matter be again restored

to the file of the Appellate Tribunal for decision afresh and on merits.

Before closing this matter, we also deem it appropriate to

observe that in this appeal, this Court, by the order dated 06.08.2018,

had stayed the proceedings before the Tribunal but then, by another

order dated 16.04.2019, it was made clear that the said stay order would

not stand in the way of other creditors in proceeding in accordance with 4

law, subject to the objections.

In continuity with the orders aforesaid, it is provided that further

proceedings before the Tribunal shall remain stayed until final decision

of appeal by the Appellate Tribunal but, neither pendency of the said

appeal nor any observations made in these proceedings shall be of any

effect on other proceedings, if taken up by other creditors, financial or

operational, which may be dealt with on their own merits.

Accordingly, this appeal is allowed to the extent and in the

manner indicated above; the impugned order dated 09.07.2018 passed

by the Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 158

of 2017 is set aside; and the said appeal is restored for reconsideration

of the Appellate Tribunal. The parties present before us shall be stand at

notice to appear before the Appellate Tribunal at the first instance on

18.04.2022.

We would request the Appellate Tribunal to assign a reasonable

priority to this matter and to proceed expeditiously.

…………………………….J. (DINESH MAHESHWARI)

…………………………….J. (ANIRUDDHA BOSE)

New Delhi;

March 28, 2022.