M/S. Hotel Gaudavan Pvt. Ltd. & Ors vs Alchemist Asset Reconstruction Co. ...
- CitationCompany Appeal (AT) (Insol.) No. 134 of 2017
Ratio decidendi
The rule this decision rests on
The appeals were dismissed on the strength of the Supreme Court's order, which the Tribunal treated as binding and final. The reasoning the Tribunal itself gives is limited to that. Where the Supreme Court has, on an appeal from an order under the Insolvency and Bankruptcy Code, 2016, set aside a District Court's order and held that an arbitration commenced after the admission of an insolvency petition and the consequent imposition of moratorium under Section 14(1)(a) is non est in law, that holding is binding on the Appellate Tribunal and an appeal premised on the same proceedings cannot be sustained in the face of it. Where the Supreme Court has directed that the steps to be taken under the Insolvency Code continue unimpeded by any order of any other court, a subsequent appeal seeking to challenge the Adjudicating Authority's orders in the same insolvency proceedings, which the appellants do not pursue at the hearing, may be dismissed without consideration of the merits.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order dated 25th July, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Special Bench in Company Petition No. (IB)-23(PB)/2017]
M/s. Hotel Gaudavan Pvt. Ltd. & Ors. ...Appellants Vs. Alchemist Asset Reconstruction Co. Ltd. & Anr. ...Respondents
Along with Company Appeal (AT) (Insol.) No. 163 of 2017
[Arising out of Order dated 16th August, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)-23(PB)/2017]
IN THE MATTER OF:
Harendra Singh Rathore ...Appellant Vs. Arunava Sikdar & Anr. ...Respondents
And Company Appeal (AT) (Insol.) No. 166 of 2017
[Arising out of Order dated 29th August, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)-23(PB)/2017]
M/s. Hotel Gaudavan Pvt. Ltd. ...Appellant Vs. Alchemist Asset Reconstruction Co. Ltd. & Anr. ...Respondents
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 2
Present: For Appellants:- None.
For Respondents:- Mr. Amit Singh Chadha, Senior Advocate with Mr. Abhirup Dasupta and Ms. Swati Sharma, Advocates. Mr. Krishnendu Datta and Mr. Ashu Bansal, Advocates for Resolution Professional.
JUDGMENT
SUDHANSU JYOTI MUKHOPADHAYA, J.
All these appeals arise out of common 'Corporate Insolvency
Resolution Process' initiated against M/s. Hotel Gaudavan Private
Limited & Ors ('Corporate Debtor').
2. The brief facts of the case are that the Respondents- M/s.
Alchemist Asset Reconstruction Company Limited & Anr. filed an
application under Section 7 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as "I&B Code") against M/s. Hotel Gaudavan
Private Limited & Ors ('Corporate Debtor').
3. On 31st March, 2017, the Adjudicating Authority (National
Company Law Tribunal), Special Bench, New Delhi admitted the
application, passed order of moratorium and appointed an 'Interim
Resolution Professional' with certain directions.
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 3
4. It appears that the 'Corporate Debtor' thereafter, along with
another shareholder filed a Writ Petition before the Hon'ble High Court of
Rajasthan, challenging the order passed by the Adjudicating Authority.
However, the Hon'ble High Court refused to look into the merits of the
order dated 31st March, 2017 and left it open to be examined by this
Appellate Tribunal.
5. Thereafter, the 'Corporate Debtor' along with another shareholder
moved before the Hon'ble Supreme Court in SLP(C) No.12606-12707 of
2017 against different orders passed by Adjudicating Authority which
were also dismissed on 26th April, 2017. The 'Corporate Debtor' and
Another thereafter preferred appeal before this Appellate Tribunal on 2nd
May, 2017, which was subsequently withdrawn on 17th July, 2017.
6. The 'Corporate Debtor' thereafter moved before the Arbitral
Tribunal and against such action the 'Insolvency Resolution Professional'
moved before the Adjudicating Authority which decided the matter
against the 'Corporate Debtor' on 31st May, 2017.
7. In the meantime, as the Board of Directors refused to comply with
the order of the Adjudicating Authority, the 'Interim Resolution
Professional' filed Contempt Petition (CA No. 183(PB)/2017) before the
Adjudicating Authority against the Directors, in which an adverse order
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 4
was passed on 29th June, 2017 by the Adjudicating Authority against the
Directors.
8. As noticed above, the 'Corporate Debtor' had filed an application
under Section 8 of the Arbitration and Conciliation Act, 1996 wherein
certain orders were passed against which the Appellant(s) preferred the
appeal before the District Judge, Jaisalmer, who admitted the appeal,
issued notice to the Respondents and passed interim orders. Against the
said order, the 'Financial Creditor' moved before the Hon'ble Supreme
Court in Civil Appeal No. 16929 of 2017 (arising out of S.L.P. (C) No.
18195/2017) wherein following order was passed: -
"ORDER
1) Leave granted.
2) Heard the learned Senior
Counsel/Counsel appearing for the parties.
3) The facts of the present case disclose a
very sorry state of affairs. Several proceedings
had been taken and ultimately a petition filed
under the Insolvency and Bankruptcy Code,
2016 was admitted on 31.03.2017 by the
National Company Law Tribunal, Principal
Bench, New Delhi. As a result, the moratorium
that is imposed by Section 14 came into effect Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 5
on that date and Respondent No.3 has been
appointed as the Interim Resolution
Professional (IRP). A Writ Petition was filed
against this order, which was admitted only to
the extent of the challenge to the vires of the
Insolvency Code, is pending. A Special Leave
Petition against this order was dismissed on
26.04.2017. Meanwhile, despite the
moratorium, a letter was issued by Respondent
No. 1 to Respondent No. 2 invoking the
arbitration clause between the parties and Shri
Pankaj Garg, an Advocate, was appointed as
Sole Arbitrator. Shri Garg entered upon the
reference. In an other order dated 31.05.2017,
the National Company Law Tribunal, Principal
Bench, New Delhi referred to Section 14 (1) (a)
of the Insolvency Code and stated that given
the moratorium that is imposed, no arbitration
proceedings could go on. A notice was issued
on 29.06.2017 by the National Company Law
Tribunal, Principal Bench, New Delhi in C.A. No.
186 (PB) of 2017.
4) A First Appeal was filed before the
District Judge, Jaisalmer, Rajasthan under
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 6 Section 37 of the Arbitration and Conciliation
Act, 1996 and by the impugned order dated
06.07.2017, the appeal was asked to be
registered and notice was issued awaiting a
reply.
5) The mandate of the new Insolvency Code
is that the moment an insolvency petition is
admitted, the moratorium that comes into effect
under Section 14 (1) (a) expressly interdicts
institution or continuation of pending suits or
proceedings against Corporate Debtors.
6) This being the case, we are surprised
that an arbitration proceeding has been
purported to be started after the imposition of
the said moratorium and appeal under Section
37 of the Arbitration Act are being entertained.
Therefore, we set aside the order of the District
Judge dated 06.07.2017 and further state that
the effect of Section 14 (1) (a) is that the
arbitration that has been instituted after the
aforesaid moratorium is non est in law.
7) Mr. Jayant Bhushan, learned Senior
Counsel, also informs us that criminal
proceeding being F.I.R. No. 0605 dated
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 7
06.08.2017 has been taken in a desperate
attempt to see that the IRP does not continue
with the proceedings under the Insolvency
Code which are strictly time bound. We quash
this proceeding.
8) As a result, the appeal is allowed and
the steps that have to be taken under the
Insolvency Code will continue unimpeded by
any order of any other Court."
9. The aforesaid fact discloses not only very sorry state of affairs and
its legal action on the part of the Director(s) of the 'Corporate Debtor(s)'
which has also been noticed by Hon'ble Supreme Court in the order
aforesaid.
10. In this Appellate Tribunal three appeals have been preferred. Two
appeals by 'Corporate Debtor'-M/s. Hotel Gaudavan Pvt. Ltd. and another
by Mr. Harendra Singh Rathore but against three different orders arising
out of same Insolvency Proceedings. All the cases were listed but since
the initial date either on the ground of casualty in the family of the
counsel for the Appellant(s) and illness of the counsel for the Appellant(s)
or any other ground, the Appellant(s) sought for adjournments since
August, 2017, which were allowed.
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017 8
11. On 8th November, 2017, when all the three appeals were taken up
for hearing, nobody appeared for the Appellant(s). Learned counsel
brought to the notice of this Appellate Tribunal the order passed by the
Hon'ble Supreme Court, as recorded above, which is final.
12. In the facts and circumstances, we have no other option but to
dismiss all the three appeals with cost of Rs. 25,000/- imposed on each
Appellant(s) namely, Mr. Harendra Singh Rathore, Mr. Lokendra Singh
Rathore, Mr. Deependra Singh Rathore and Ms. Mohan Kanwar, to be
paid by Bank Draft in favour of the Registrar, National Company Law
Appellate Tribunal within thirty days from the receipt of this order.
Let copy of this order be forwarded to the Appellant(s) aforesaid at
their respective addresses. Learned counsel for the Respondent(s) will
also serve a copy of this order on the Directors/shareholders named
above.
(Justice S.J. Mukhopadhaya) Chairperson
(Justice A.I.S. Cheema) (Balvinder Singh) Member (Judicial) Member(Technical)
NEW DELHI 30th November, 2017
AR
Company Appeals (AT) (Insolvency) Nos. 134, 163 & 166 of 2017
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free