Karnataka High Court: P.S. Dinesh Kumar, J., rejects the petition seeking the writ of certiorari against the order of NCLT imposing heavy costs.
The petitioner company availed a loan from the Bank of Maharashtra towards its infrastructure development and various other works. Upon delay in payment of interest, the bank issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Sale notice and public notice were subsequently published. By an interim order passed by the present court, the Bank was allowed to proceed with the auction provided it shall not confirm the sale.
Subsequently, the respondent also moved to the NCLT under Section 7 of the Insolvency and the Bankruptcy Code, 2016 wherein the tribunal appointed an Insolvency Resolution Professional (IRP) to facilitate the process. Noticeably, while the case was before NCLT, the petitioner sought time for settling the issue and submitting its objections on several occasions through as many as thirteen adjournment orders.
It was submitted by the counsel for the petitioner, Vivek Holla, that despite sincere attempts, the interest amount could not be deposited either before the NCLT or the present Court. Further, no adequate opportunity of filing the counter was provided at the hearing before NCLT. Lastly, the tribunal was devoid of any jurisdiction upon the instant matter as on the date of application under Section 7, the debt was time-barred.
The counsel for the respondent, M. Jagadeesh submitted that the petition by an erstwhile Director of the Company is not maintainable and further the conduct of the petitioner also disentitles him from any other discretionary relief. The counsel relying on the case of Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, contended that once IRP is appointed, the erstwhile directors who are no longer in management cannot stand in appeal.
The Court rejected the present petition recognizing several reasons. Firstly, the petitioner company is represented by its erstwhile director, secondly, the petitioner company has willfully defaulted on several occasions, giving false assurances with regards to the settlement before the NCLT and thirdly, the impugned order is an appealable order. With respect to the court order and an undertaking, the court remarked, ‘An assurance is a promise and stands on a higher footing than an order passed by Tribunals or Courts because promises or undertakings are given voluntarily whereas orders are imposed by an authority.’ Further relying on the judgment of Prestige Lights Ltd. v. State Bank of India, (2007) 8 SCC 449, it was held that an order passed by a competent court, interim or final, has to be obeyed without reservation.[Alpine Wineries (P) Ltd. v. Pridhvi Asset Reconstruction Company, WP No. 1631 of 2020, decided on 04-09-2020]