Manoj Aggarwal vs Karnataka Bank Limited

[Arising out of the Impugned Order dated 08.10.2024 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi in C.P. (IB) No. 347 (ND)/2024] In the matter of: MR. MANOJ AGGARWAL House No. A-35, Block-A, Beside Shiv Ram Park, Uttam Nagar, West Delhi- 110059 ...Appellant Versus

KARNATAKA BANK LIMITED Asset Recovery Management Branch Plot No. 8, First Floor, Rajendra Park Pusa Road, New Delhi-110060 ...Respondent Present: For Appellant : Mr. Gulshan Kr. Sachdeva, Advocate. For Respondent : Mr. Gautam K. Singhal, Ms. Anjali Maurya, Ms. Aastha Vishnoi, Ms. Swaksha Mandhyan, Mr. Rajat Chaudhary, Advocates.

WITH Company Appeal (AT) (Insolvency) No. 2027 of 2024 [Arising out of the Impugned Order dated 24.09.2024 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi in C.P. (IB) No. 380 (ND)/2024] In the matter of: MRS. VIMLA DEVI House No. A-35, Block-A, Beside Shiv Ram Park Uttam Nagar West, Delhi-110059 MR. MANISH JAIN Insolvency Professional IBBI/IPA-001/IP-P00874/2017-2018/11472 Shop No. 3, Ist Floor, Kailash Tower, Opp. Income Tax Office Court Road, Saharanpur, Utter Pradesh - 247001 ...Appellant Versus

KARNATAKA BANK LIMITED Asset Recovery Management Branch Plot No. 8, First Floor, Rajendra Park Pusa Road, New Delhi-110060 ...Respondent Present: For Appellant : Mr. Gulshan Kr. Sachdeva, Advocate. For Respondent : Mr. Gautam K. Singhal, Ms. Anjali Maurya, Ms. Aastha Vishnoi, Ms. Swaksha Mandhyan, Mr. Rajat Chaudhary, Advocates.

ORDER

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

Present is a set of two Appeals filed by two Appellants who are related

to each other as mother and son and happen to be co-guarantors qua liability

to the same Corporate Debtor. Both the Appellants had filed Section 94

petition which had been dismissed by the Adjudicating Authority (National

Company Law Tribunal, New Delhi, Bench-III) by separate orders dated

24.09.2024 and 08.10.2024.

2. Though the subject matter and cause of action in both the Appeals are

more or less identical, however, since the impugned orders are different, we

propose to consider the Appeals separately hereunder.

Company Appeal (AT) (Insolvency) No. 2027 of 2024

3. We will first deal with Company Appeal (AT) (Insolvency) No. 2027 of

2024 which has been filed by Smt. Vimla Devi-Appellant. This Appeal filed

under Section 61 of Insolvency and Bankruptcy Code 2016 ('IBC' in short) by

Page 2 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 the Appellant arises out of the Order dated 24.09.2024 (hereinafter referred to

as 'Impugned Order') passed by the Adjudicating Authority (National

Company Law Tribunal, New Delhi, Bench-III) in C.P.(IB)No.380(ND)/2024. By

the impugned order, the Adjudicating Authority has rejected the restoration

application No. 380 of 2024. Aggrieved by the impugned order, the present

appeal has been preferred by the Appellant.

4. Coming to the brief facts of the case, M/s MMR Agro Foods Pvt. Ltd.-

Corporate Debtor had obtained credit facilities from the Respondent-

Karnataka Bank. The present Appellant-Smt. Vimla Devi stood as a personal

guarantor of the Corporate Debtor. The account of the Corporate Debtor was

declared as NPA on 30.11.2022 following which a Section 13(2) Notice under

SARFAESI Act was issued on 26.12.2022 on the principal borrower and the

guarantors. On 26.05.2023, Possession Notice was sent to the guarantor by

the Court Receiver for taking possession of her property on 17.06.2023. On

16.06.2023, which happened to be one day prior to taking the possession of

the mortgaged property, the Appellant filed Petition No. 455 of 2023 under

Section 94 of the IBC which was dismissed for non-prosecution on 01.04.2024

after several adjournments. Possession Notice was issued again on

09.05.2024 for taking possession of the mortgaged property on 30.05.2024.

Thereafter, on 29.05.2024, the Appellant filed the second Section 94

application bearing Petition No. 380 of 2024 which happened to be

coincidentally one day prior to the date when Court Receiver was to again take

possession of the mortgaged property. The second Section 94 application also

came to be dismissed for non-prosecution on 10.07.2024. Since the Petition

Page 3 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 No. 380 of 2024 was dismissed on ground of non-prosecution, a restoration

application vide Application No. New Rest.A-100/2024 was filed seeking

restoration of Petition No. 380 of 2024. This restoration application was listed

for hearing on 24.09.2024 on which date it was dismissed by the Adjudicating

Authority for want of satisfactory explanation. Aggrieved by the impugned

order, the present appeal has been preferred by the Appellant.

5. It is the case of the Appellant that the Adjudicating Authority had erred

in dismissing the restoration application. It is a well settled principle that

restoration application should be determined based on reasons of non-

appearance. It was asserted that though the reasons for non-appearance in

the present case was genuine, the Adjudicating Authority had dismissed the

restoration application without allowing an opportunity to explain the reasons

leading to the non-appearance during the hearing of Petition No. 380 of 2024.

Submission was pressed that when Petition No. 380 of 2024 was listed before

the Adjudicating Authority for hearing on 10.07.2024, the counsel could not

make an effective appearance due to a technical glitch. Thus, this absence

was not intentional in nature nor occasioned by negligence or lack of diligence.

Yet the Adjudicating Authority did not adjudicate on the tenability of the

reasons for non-appearance of the Appellant.

6. It was also added that the Appellant is a senior citizen suffering from

multiple ailments and diagnosed with cancer and due to her serious medical

condition, she could not pursue the case properly. Being an elderly citizen

suffering from health challenges she faced challenges in navigating legal

proceedings and had to rely on legal counsel for representation. The counsel

Page 4 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 had admittedly failed to follow up on the court proceedings in Petition No. 455

of 2023 for which lapse the Appellant cannot be held responsible. Being an

elderly litigant, the Appellant should not be put to prejudice because of

inaction on the part of the counsel. The Appellant having limited knowledge of

court processes had no other choice but to rely on her counsel. Moreover, as

she was suffering from bad health she could not participate in person before

the court. Therefore, there was no deliberate or intentional omission on the

part of the Appellant and hence she deserved a fair hearing on her restoration

application. It was therefore urged that the restoration explanation should

have been considered with leniency so that the Section 94 application could

have been considered on merits to secure the ends of justice.

7. Repelling the arguments made by the Appellant, the Ld. Counsel for the

Respondent Bank submitted that the Appellant has been misusing the process

of law with malafide intention to defeat the recovery proceedings initiated by

the Respondent Bank by seeking refuge of moratorium. The Adjudicating

Authority had correctly held that the Appellant had failed to adduce

satisfactory explanation for having filed the second Section 94 application vide

Petition No. 380 of 2024 when their first Petition vide No.455 of 2023 had

already been dismissed for non-prosecution. It was vehemently contended

that the conduct of the Appellant was consistently dubious as she was always

seeking adjournments so that the recovery proceedings would keep on getting

stretched as they had no valid defence otherwise. It was also asserted that

neither the Appellant nor her Counsel had ever informed the Adjudicating

Authority about her illness and medical prescriptions have been placed before

Page 5 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 this Tribunal for the first time which cannot be looked into at the appeal stage.

It was contended that the Adjudicating Authority had taken into cognisance

all antecedent facts and court proceedings before dismissing the restoration

application after rightly noting that sufficient reasons have not been offered to

justify admission of the prayer for restoration.

8. We have duly considered the arguments advanced by the Learned

Counsel for the parties and perused the records carefully.

9. To arrive at our analysis and findings, it would be appropriate to

chronologically sequence the court proceedings leading to the dismissal of the

restoration application.

10. After the first Section 94 petition vide No. 455 of 2023 was filed, we

notice that the matter was listed for hearing on 09.08.2023, 29.08.2023,

09.10.2023, 08.11.2023, 12.12.2023, 19.01.2024, 28.02.2024 and

01.04.2024. On six out of eight times that the matter was listed for hearing,

the Appellant had sought time or adjournment from Adjudicating Authority.

It would be useful to notice the six occasions on which the adjournments were

sought and the relevant orders passed by the Adjudicating Authority.

ORDER (09.08.2023)

As prayed by Ms. Nistha Rastogi, Proxy Counsel, matter is adjourned to 29.08.2023.

ORDER (Dated 09.10.2023)

This is a petition under Section 94 of the IBC, 2016.

Proxy Counsel on behalf of the Petitioner present and submitted that the arguing counsel is not available today and therefore

Page 6 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 sought adjournment. In view of this, list the matter on 08.11.2023. Ld. Counsel on behalf of the Respondent is also present.

ORDER (Dated 12.12.2023)

Proxy Counsel on behalf of the Petitioner is present and submitted that the main Counsel is not available today. Ld. Counsel on behalf of the Respondent/Karnataka Bank is also present. List the matter on 19.01.2024.

ORDER (Dated 19.01.2024)

Ld. counsel on behalf of the petitioner is present and sought time to file AFA as it exists now of the proposed IRP. Ld. Counsel for the Respondent is also present. List the matter on 28.02.2024.

ORDER (Dated 28.02.2024) This is a Section 94 Petition. An Authorized Representative C.A. Rakesh Jindal appears on behalf of the Petitioner and submitted that they have no further instructions from their client, and therefore they could not file valid AFA of the proposed IRP as it exist now. In view of this, the Personal Guarantor is directed to appear in person· on the next date of hearing and explain his case, failing which the matter will be dismissed for non- prosecution. List the matter on 01.04.2024.

ORDER (Dated 01.04.2024) None appeared on behalf of the Petitioner at the time of hearing of the matter. As mentioned in the order dated 28.02.2024 the Authorized Representatives on behalf of the Petitioner had appeared and submitted that they had no further instructions from their client. Personal Guarantor was directed to appear in person on the next date of hearing. None appeared on behalf of the Personal Guarantor today. Therefore, this petition is dismissed for non-prosecution.

(Emphasis supplied)

Page 7 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024

11. From a reading of the above orders, it is clearly borne out that the

Adjudicating Authority had given ample opportunity to the Appellant to make

good their appearance to protect their interest. However, the Counsel on one

pretext or the other did not appear. Furthermore, we also notice that on

28.02.2024, the Adjudicating Authority had clearly directed the Personal

Guarantor to appear in person on the next date of hearing and had also

allowed sufficient time-gap for the next hearing which was scheduled after a

period of one month on 01.04.2024. Thus, the Adjudicating Authority had

shown due deference to the principles of natural justice and accorded fair

opportunity to the Personal Guarantor for personal appearance. We therefore

find that the Adjudicating Authority had given ample opportunity to the

Appellant to be heard. The Adjudicating Authority had also very clearly stated

its mind that in the event of non-appearance of the Personal Guarantor, the

mater will be dismissed for non-prosecution. Inspite of this clear warning, the

Appellant failed to mark presence either in person or through the Counsel

leading to dismissal of Petition No. 455 of 2023.

12. When petition No. 455 of 2023 was dismissed for non-prosecution, the

Appellant did not challenge the dismissal of this petition. Instead, the

Appellant once again slipped into the dormant mode until the Respondent

once again initiated steps to take physical possession of the mortgaged

property. We notice that when the mortgaged property was to be again taken

over on 30.05.2024, the Appellant filed the second Section 94 petition vide No.

380 of 2024. Curiously, the date of filing of the first and second Section 94

petitions was always one day prior to the date fixed by the Court Receiver to

Page 8 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 take over possession of the mortgage property. This timing cannot be treated

as a simple case of accidental coincidence but signifies the ulterior motive of

the Appellant taking refuge of moratorium under Section 96 of the IBC and to

hinder and delay the recovery proceedings as and when initiated by the

Respondent Bank.

13. This now brings us to the second Section 94 petition bearing No. 380 of

2024 and see how it was dealt by the Adjudicating Authority. We find that the

petition was dismissed on grounds of non- prosecution again. At this stage it

may be useful to notice the orders of the Adjudicating Authority which reads

as under:

ORDER (Dated 10.07.2024)

This matter was passed over in the first call. No one has appeared even on the second call.

IB-380(ND)/2024 dismissed for non-prosecution.

14. When we look at the above order it is clear that the Appellant did not

appear either on the first or the second revised call and hence the matter was

dismissed for non-prosecution. It clearly shows that the Appellant was not

serious of defending her case but was dragging the matter. When the Section

94 petition had already been dismissed once earlier, any vigilant litigant would

not be as lackadaisical the second time. The same conduct of the Appellant of

non-appearance on the dates of hearing had continued even after filing of the

second section 94 petition. We are not persuaded to believe that technical

malfunction as stated by the Appellant prevented the appearance especially

when the matter was again taken up on revised call and the Appellant went

Page 9 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 unrepresented. We also do not find that the Adjudicating Authority upto this

stage was ever informed about the alleged adverse medical condition of the

Appellant. The medical prescriptions have been placed before this Tribunal

for the first time and hence we wish to refrain from making any observations

on the illness of the Personal Guarantor. The conduct of the litigant is clearly

dubious and it clearly appears that the Appellant was more interested in

delaying the proceedings by absenting themselves from appearing before the

Adjudicating Authority when the matter was listed for hearing. The intention

of the Appellant was to buy more time so as to avoid the execution of the

Possession Notice and avail the benefit of moratorium under Section 96 of IBC.

15. At this juncture, it would be pertinent to deal with the contention of the

Respondent Bank that the Appellant had mischievously not disclosed while

filing the second Section 94 petition vide No. 380 of 2024 that their first

Section 94 petition had already been dismissed. It is also their contention that

when the first order of 01.04.2024 dismissing the Section 94 petition was

never challenged nor was any liberty granted to file a second Section 94

petition, the second Section 94 application could not have been filed. In their

defence, it was submitted by the Appellant that there is no provision under

the IBC or NCLT Rules, 2016 which bars the filing of a second petition after

dismissal for non-prosecution and in support of their contention adverted to

the judgment of this Tribunal in Venus Sugar Ltd. Vs SASF in CA(AT)(Ins)

No. 1517 of 2019. However, the facts of that case are clearly distinguishable.

In that case, even though the party had failed to appear before the

Adjudicating Authority when the matter was called for hearing but they later

Page 10 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 registered their appearance on the same date and explained the reason to the

Adjudicating Authority as to why they were not present when the matter was

called in the first go. In that case the order for dismissal on grounds of non-

prosecution was not passed unlike in the present case when the Appellant not

only did not appear on the first call but continued to remain absent even on

the revised call leading to the dismissal order on grounds of non-prosecution.

16. This brings us to the restoration application No. 100 of 2024 which was

dismissed by the Adjudicating Authority. To find out the grounds as to why

the Adjudicating Authority came to the conclusion that there was insufficient

cause for the matter to be restored, we would like to reproduce the order which

is as under:

ORDER (Dated 24.09.2024) New Rest.A-100/2024 This application has been filed seeking to restore the IB380(ND) / 2024 which was dismissed for non-prosecution by this Adjudicating Authority vide order dated 10.07.2024. We find from the records that a similar application i.e. IB455(ND)/2023 filed between same parties "Mrs. Vimla Devi Versus Karnataka Bank Limited" under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 has been dismissed for non-prosecution on 01.04.2024 by Court No. VI. Ld. Counsel for the Applicant submitted that IB455(ND)/2023 was dismissed for non-prosecution and therefore, the Applicant has filed IB-380(ND)/2024. The explanation given by the Ld. Counsel for filing the second application i.e. IB- 380{ND)/2024 after dismissal of IB-455(ND)/2023 is not satisfactory. We take a serious view of the matter and dismiss the present application with costs of Rs. 20,000 /- {Rupees Twenty Thousand) to be deposited in Prime Minister's National Relief Fund by Applicant and file proof of deposit of cost. RA-100/2024 dismissed.

Page 11 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024

17. When we look at the above order, it becomes clear that what seems to

heavily weighed on the minds of the Adjudicating Authority to dismiss the

restoration application was that even before the dismissal of Petition No. 380

of 2024, a similar Section 94 petition vide No. 455 of 2023 had been already

dismissed by the Adjudicating Authority earlier. This led the Adjudicating

Authority to seek an explanation from the Appellant for refiling of another

Section 94 petition. However, the Adjudicating Authority observed that the

explanation offered was not satisfactory and therefore was constrained to take

a serious view impelling the dismissal of the restoration application. When we

look at the sequence of events, we have no doubts that the Appellant had

preferred the second Section 94 petition on the same facts and for the same

cause of action as the first petition though no such liberty was granted for

filing a fresh Section 94 petition. It is also an indisputable fact that the

Appellant did not disclose to the Adjudicating Authority about the dismissal

of their first Section 94 application. We also notice that the Appellant did not

present themselves before the Adjudicating Authority during the hearing of

the second Section 94 application even during the revised call. Hence it was

only reasonable on the part of the Adjudicating Authority to ascertain the

reasons from the Appellant as to why they had filed the Section 94 petition

again when it had already been dismissed earlier and not finding their

explanation satisfactory, disallowed the restoration application.

18. In the given backdrop, we find that the Appellant was persistently not

appearing after filing the Section 94 applications without sufficient cause or

explanation. This is a clear case of the Appellant resorting to repeat litigations

Page 12 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 for the same cause of action thus abusing the process of law and wasting the

valuable time of the Adjudicating Tribunal. It would not be far from truth to

infer that the underlying intent of the Appellant was to prevent the Respondent

from taking legal action for the recovery of its outstanding dues against the

Appellants including enforcement actions undertaken under SARFAESI Act.

We have no reasons to disagree with the Adjudicating Authority that it did not

find any satisfactory basis for allowing the restoration application. We are of

the considered view that the dismissal of the restoration application is not for

unjustified reasons. The Adjudicating Authority cannot be faulted for rejecting

the restoration application.

Company Appeal (AT) (Insolvency) No. 04 of 2025

19. We will now deal with Company Appeal (AT) (Insolvency) No. 04 of 2025

which has been filed by Shri Manoj Aggarwal-Appellant. This Appeal filed

under Section 61 of IBC by the Appellant arises out of the Order dated

08.10.2024 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench-

III) in C.P.(IB)No.347(ND)/2024. By the impugned order, the Adjudicating

Authority has dismissed the Section 94 application filed by the Appellant.

Aggrieved by the impugned order, the present appeal has been preferred by

the Appellant seeking restoration of the Section 94 petition.

20. Coming to the brief facts of the case, M/s MMR Agro Foods Pvt. Ltd.-

Corporate Debtor had obtained credit facilities from the Respondent-

Karnataka Bank. The present Appellant-Shri Manoj Aggarwal who is the son

of Smt. Vimla Devi and both had stood as personal guarantors of the Corporate

Page 13 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 Debtor. As already noticed, after the account of the Corporate Debtor was

declared as NPA, Section 13(2) Notice under SARFAESI Act was issued on

26.12.2022 on both the guarantors including the present Appellant. On

26.05.2023, Possession Notice was sent to the guarantor by the Court Receiver

for taking possession of his property on 17.06.2023. On 16.06.2023, which

happened to be one day prior to taking the possession of the mortgaged

property, the Appellant filed Petition No. 364 of 2023 under Section 94 of the

IBC which was dismissed for non-prosecution on 10.01.2024 after several

adjournments. Possession Notice was issued again on 09.05.2024 for taking

possession of the mortgaged property on 30.05.2024. Thereafter, on

24.06.2024, the Appellant filed the second Section 94 application bearing

Petition No. 347 of 2024. The second Section 94 application also came to be

dismissed for non-prosecution on 08.10.2024. Aggrieved by the impugned

order, the present appeal has been preferred by the Appellant.

21. It is the case of the Appellant that he was dependent on his counsel who

had admittedly failed to follow up on the court proceedings in Petition No. 364

of 2023 leading to dismissal of the same. The Appellant having limited

knowledge of court proceedings had no other choice but to rely on a counsel

to defend his interest. On dismissal of CP No. 364 of 2023, a fresh Section 94

Petition was filed by the Appellant with the same counsel who this time

assured diligent handling of the matter. However, the counsel admittedly

failed in pursuing the matter in serious earnest and this resulted in the

Adjudicating Authority issuing a Show Cause Notice on 08.08.2024 seeking

an explanation within 10 days on the failure on the part of the Appellant to

Page 14 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 disclose that they had already filed a Section 94 petition which had already

been dismissed. However, when the matter was heard on 08.10.2024, the

Adjudicating Authority remained dissatisfied with the explanation offered in

the Affidavit for non-disclosure of dismissal of the first Section 94 petition and

dismissed the Section 94 petition. It was submitted that since the existing

counsel was not dealing with the court proceedings properly, as a remedial

measure, he had already changed the counsel and engaged a new one who

prayed for adjournment on the date of hearing i.e. 08.10.2024. The

Adjudicating Authority however declined the prayer of the new counsel seeking

adjournment. It is the contention of the Appellant that both himself and his

mother were faced by serious medical handicap which prevented them from

following the court proceedings. The Adjudicating Authority by not considering

the submissions made by the new counsel while passing the impugned order

did not act in conformity with the principles of natural justice. This had

deprived the Appellant an opportunity of being heard causing miscarriage of

justice. It was also pointed out the Adjudicating Authority had dismissed this

Section 94 application keeping in mind that the earlier Section 94 application

of the Appellant had already been dismissed once for non-prosecution. Even

if the earlier petition was dismissed it had not acquired finality as it had been

dismissed for non-prosecution. Hence the Appellant was well within his rights

to file the second Section 94 petition.

22. Repelling the arguments made by the Appellant, the Ld. Counsel for the

Respondent Bank submitted that the Appellant has been misusing the process

of law with malafide intention to defeat the recovery proceedings initiated by

Page 15 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 the Respondent Bank by seeking refuge of moratorium. The Adjudicating

Authority had correctly held that the Appellant had failed to adduce

satisfactory explanation for filing the second Section 94 petition when their

first Section 94 petition vide No.364 of 2023 had already been dismissed for

non-prosecution. It was vehemently contended that the conduct of the

Appellant was not bonafide. The Appellant was not interested in pursuing the

Section 94 application but was seeking to avail the benefits of moratorium to

prevent the recovery proceedings. The bogey of illness of the Appellant and his

mother was contrived as an afterthought to justify the repeated adjournment

which were being sought to protract the Court proceedings. It was contended

that the Adjudicating Authority had rightly taken into cognisance of the

unbecoming and contumacious conduct of the Appellant seeking repeated

adjournments for no justifiable reason while dismissing the second Section 94

petition.

23. We have duly considered the arguments advanced by the Learned

Counsel for the parties and perused the records carefully.

24. To arrive at our analysis and findings, it would be appropriate to

chronologically sequence the court proceedings leading to the dismissal of the

restoration application.

25. After the first Section 94 petition vide No. 364 of 2023 was filed, we

notice that the matter was listed for hearing on 05.07.2023, 18.08.2023,

15.09.2023, 31.10.2023, 13.12.2023 and 10.01.2024. Three out of six times

that the matter was listed for hearing, the Appellant had either sought time or

Page 16 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 prayed for adjournment from Adjudicating Authority. It would be useful to

notice the dates on which the adjournments were sought and the relevant

orders passed by the Adjudicating Authority.

ORDER (Dated 05.07.2023) As prayed for by Ld. Proxy Counsel appearing for the Applicant, the matter is adjourned to 18.08.2023.

ORDER (Dated 13.12.2023) On the request made by Proxy Counsel appearing for the Applicant, the matter is adjourned to 10.01.2024.

ORDER (Dated 10.01.2024) Mr. Narendra Singh, Proxy Counsel appearing on behalf of the Applicant seeks an adjournment. We have noticed from the records that on 05.07.2023 and 13.12.2023 a Proxy Counsel appearing for the Applicant sought adjournments and the matter was adjourned. It appears that the Applicant is not interested in pursuing the matter and taking advantage of the moratorium.

Therefore, the application is dismissed for non-prosecution.

26. From a reading of the above orders, it is clearly borne out that the

Adjudicating Authority had given enough opportunity to the Appellant to be

heard. However, the Counsel on one pretext or the other did not appear

whenever the matter was not getting adjourned on its own steam due to

paucity of time. Thus, facts on records show that the Adjudicating Authority

having given sufficient opportunity and latitude to the Appellant to defend his

interest cannot be said to have violated the principles of natural justice.

27. When petition No. 364 of 2023 was dismissed for non-prosecution, we

find that the Appellant did not challenge the dismissal of this petition. Instead,

Page 17 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 the Appellant remained quiet and stirred into action on realising that the

Respondent had re-initiated steps to take physical possession of the

mortgaged property and Possession Notice was sent by the Court Receiver for

taking over mortgaged property on 30.05.2024. As noticed in the other

connected matter where the Appellants' mother is the co-personal guarantor,

qua the same facility, a second Section 94 petition already been filed by her

on 29.05.2024 and moratorium stood invoked. Soon thereafter, the present

Appellant also filed the second Section 94 petition vide No. 347 of 2024 which

clearly signifies the ulterior motive of both the Appellant and her mother trying

to take refuge of moratorium under Section 96 of the IBC with the overall

design to drag the recovery proceedings by the Respondent Bank.

28. At this juncture, it would be pertinent to deal with the contention of the

Respondent Bank that the Appellant had deliberately not disclosed while filing

the second Section 94 petition vide No. 347 of 2024 that their first Section 94

petition had already been dismissed. It is also their contention that when the

first order of 10.01.2024 dismissing the Section 94 petition was never

challenged nor was any liberty granted to file a second Section 94 petition, the

second Section 94 application could not have been filed.

29. At this stage it may be useful to notice the orders of the Adjudicating

Authority how it dealt with the second Section 94 petition bearing No. 347 of

2024. The relevant orders are sequentially reproduced as under:

ORDER (Dated 03.07.2024) Proxy Counsel appearing on behalf of Ms. Bharti Hemant Nawlani, main counsel for Applicant seeks an adjournment. List the matter on 23.07.2024.

Page 18 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 ORDER (Dated 08.08.2024) This application has been filed by Mr. Manoj Aggarwal, Personal Guarantor of M/s MMR Agro Foods Private Limited, seeking initiation of Insolvency Resolution Process against the Respondents namely Karnataka Bank for the alleged default of Rs. 3,68,00,383/- as on 26.12.2022, M/s. Moneywise Financial Services Private Limited for the alleged default of Rs. 8,13,308/- as on 14.12.2022 and Unity Small Finance Private Limited for the alleged default of Rs.

17,79,354/- as on 14.11.2022.

Mr. Gautam Singhal, Learned Counsel, during the course of the augments submitted that the same Personal Guarantor had earlier filed IB364/2023, through the same Counsel, Mr. Narendra Singh, with respect to the same subject matter which was dismissed for non- prosecution on 10.01.2024. He, therefore, submitted that the present application is not maintainable.

We find that the Applicant has failed to disclose the above facts in the present application and filed second application under Section 94 of IBC, arising out of the same subject matter and transaction, which according to our considered view, the amounts grows abuse of process of law. We therefore, issue show-cause notice to the Applicant, Mr. Narendra Singh, Learned Counsel who has filed the present application and Vakalatnama and Mr. Rakesh Jindal, Chartered Accountant, who has appeared today, and directed them to file an affidavit explaining the conduct within ten days. List the matter on 04.09.2024.

ORDER (Dated 08.10.2024) Mr. Gulshan Kumar Sachdev, Ld. Counsel appearing on behalf of Applicant seeks adjournment.

We may note that this matter was listed for the first time on 03.07.2024 and was adjourned on the request made on behalf of Ld. Counsel for Applicant.

On 08.08.2024, during the course of the arguments, it was revealed that the same Personal Guarantor had filed IB-364 (ND) /2023, through the same Counsel namely Mr. Narendra Singh, with respect to the same subject matter and the said matter was dismissed for non-prosecution 10.01.2024. This Adjudicating Authority directed Mr. Narendra Singh, Ld. Counsel who had filed the said application and Vakalatnama, and Mr. Rajesh Jindal, Chartered Accountant, who

Page 19 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 appeared on behalf of Applicant on 08.08.2024 to file an affidavit explaining the conduct.

On 04.09.2024, the matter was adjourned to enable Mr. Rakesh Jindal, Chartered Accountant and Mr. Narendra Singh Ld. Counsel to bring the affidavits on record.

We have perused the affidavit filed by Mr. Rakesh Jindal, Chartered Accountant and Mr. Narendra Singh Ld. Counsel. We are not satisfied with the explanation given in the said affidavits. We are also not inclined to give any adjournment as prayed for by Mr. Gulshan Kumar Sachdev, Ld. Counsel Appearing today for Applicant. We are of the view that filing of the present application particularly after dismissal of IB-364(ND)/2023 by the same party for the same subject matter amounts to gross abuse of process of law.

IB-347(ND)/2024 dismissed accordingly.

30. When we look at the above orders, it is clear that when the matter was

listed for hearing the first time on 05.07.2023 the Appellant prayed for

adjournment which was allowed. Thereafter when the matter came up for

hearing on 08.08.2024, the Adjudicating Authority observed that the

Appellant had failed to disclose that a Section 94 petition had been filed in

respect of the same subject matter which had already been dismissed. The

Adjudicating Authority observed that filing of second Section 94 petition in the

given circumstances was an abuse of the process of law. It however desired to

appreciate the reasons for filing of second Section 94 petition and hence

directed the Applicant to file an Affidavit explaining their conduct within 10

days. The Adjudicating Authority fixed the next hearing on 04.09.2024.

31. When we look at the sequence of events, we have no doubts that the

Appellant had preferred the second Section 94 petition on the same facts and

for the same cause of action as the first petition though no such liberty was

granted for filing a fresh Section 94 petition. It is also an indisputable fact that

Page 20 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 the Appellant did not disclose to the Adjudicating Authority about the

dismissal of their first Section 94 application. We therefore do not find

anything unusual or unreasonable on the part of the Adjudicating Authority

to ascertain the reasons from the Appellant as to why they had filed Section

94 petition again when it had already been dismissed earlier. We also notice

that the Adjudicating Authority in the order dated 08.10.2024 which has

already been reproduced above has clearly stated that it perused the affidavit

by which explanation had been offered but was not satisfied with the

explanation given.

32. Likewise, as in the Restoration Application filed by the present

Appellants' mother, even in this appeal it is contended by the Appellant that

there is no provision under the IBC or NCLT Rules, 2016 which bars the filing

of a second petition after dismissal for non-prosecution by relying on the

judgment of this Tribunal in Venus Sugar judgment supra. However, we

have already noticed at para 15 above that the facts of Venus Sugar judgment

supra was specific to that case and hence this judgment does not help the

present Appellant either.

33. It has been contended by the Appellant that for the fault of the counsel,

the Appellant cannot be made to suffer and in support of their contention has

relied on the judgment of the Hon'ble Supreme Court in Ashok Kumar Vs

New India Assurance Company in CP No. 4758 of 2023 in which the

Hon'ble Supreme Court had held that for the fault of the Advocate,

complainant cannot be made to suffer. It was also pointed out by the Appellant

that corrective action of engaging a substitute counsel had also been taken.

Page 21 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024

34. We have no quarrel with the justice-oriented approach that for

negligence of lawyers, litigants cannot be made to suffer so that substantive

justice is not denied to a serious litigant. Be that as it may, while adopting a

liberal approach, we cannot afford to overlook that IBC is a special legislation

designed to resolve insolvency and bankruptcy cases in a timely and efficient

manner. Adherence to timelines enjoys a special place in the scheme of IBC

as it imparts certainty and predictability to the resolution framework. For the

process of resolution to remain efficient and effective, the Adjudicating

Authority is required to act against unjustified delays caused by repeated and

unnecessary adjournments. We are therefore of the considered view that

Adjudicating Authority was not precluded from scrutinizing the tenability,

reasonability and bonafide of the grounds on which the second Section 94

petition was filed when the first petition had already been dismissed.

35. When we look at the order of the Adjudicating Authority of 08.10.2024,

we notice that even though the Adjudicating Authority had given a months'

time to the Appellant to file reply to explain their conduct, the lethargy and

inertia on the part of the Appellant persisted. When the Section 94 petition

had already been dismissed once earlier, any vigilant litigant would have taken

care not to be lackadaisical again. However, even the newly engaged counsel

also sought adjournment. This clearly shows that Appellant and the new

counsel was still non-serious in pursuing the matter on merits. The same

elusive conduct of the Appellant of non-appearance or seeking of adjournment

on the dates of hearing clearly continued. The conduct of the litigant is clearly

dubious and the Appellant was still interested in pushing the strategy of

Page 22 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024 delaying the proceedings as the intention of the Appellant was clearly to buy

time so as to avoid execution of the Possession Notice and avail the benefit of

moratorium under Section 96 of IBC. Putting the entire blame upon the earlier

set of counsel to wriggle out of their own lack of bonafide does not meet our

countenance. The lack of due diligence and proper care on the part of the

litigant is writ large.

36. We are therefore, of the considered view that the dismissal of the second

Section 94 petition of this Appellant by the Adjudicating Authority was made

on cogent grounds.

ORDERS

37. Having heard the parties and carefully considered all material facts in

both the Appeals, we do not find any merit in these two Appeals. The Appeals

are dismissed. We do not find any good ground to interfere with the order of

the Adjudicating Authority including imposition of cost of Rs 20,000/- (Rupees

Twenty Thousand Only) on Smt. Vimla Devi to be deposited in the Prime

Minister's Relief Fund.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 02.09.2025 Harleen/Abdul Page 23 of 23 Company Appeal (AT) (Insolvency) Nos. 4 of 2025 & 2027 of 2024