Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): Justice Bansi Lal Bhat and Balvinder Singh, Members (Judicial) held that the application filed by the appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 was not maintainable as it was based on a foreign decree passed ex-parte and not on merits, and until the judicial proceedings regarding execution of the same pending before the Indian Courts fructify in a decree favouring the appellant, the claim of the appellant could not be held to have crystallized into a “debt payable in law”.

The appellant worked for the respondent, KEC International Ltd., in the Democratic Republic of Congo. He raised certain disputes regarding his employment and termination thereof, whereupon the Labour Court of Congo awarded a decree in favour of the appellant. However, KEC International did not comply with the same. The appellant returned to India and filed a suit before the Bombay High Court under Section 13 CPC. During the pendency of the said suit, the appellant filed an application against KEC International for initiation of corporate insolvency resolution process under Section 9 IBC. The said application was declined to be admitted by the National Company Law Tribunal, Mumbai, on the ground that there was a dispute as to the existence of an operational debt, since the foreign decree which was the basis of the appellant’s claim was a matter of pending adjudication before the Bombay High Court. Aggrieved by the said order, the appellant approached the Appellate Tribunal.

The appellant was represented before the Appellate Tribunal by K.S. IIangovan and P. Jegan, Advocates. Per contra, K. Datta, Shakunt Sumitra and Pallavi Srivastava represented KEC International.

The issue requiring determination was whether, in absence of adjudication of the foreign decree passed by a court in a non-reciprocating territory, which was relied upon by the appellant, he was legally justified in seeking initiation of corporate insolvency resolution process under Section 9 IBC against KEC International.

The Appellate Tribunal noted that in Congo, the suit was decreed in appellant’s favour in ex-parte, on account of non-appearance of KEC International. It was not disputed that such ex-parte decree of a foreign court would not be executable in India until adjudicated upon by a Civil Court in India within the ambit of Section 13 CPC and having regard for the same, the appellant chose to file suit before Bombay High Court, which was still sub-judice. Upon the decretal amount was adjudicated upon by the High Court as a legally payable claim, the same would not constitute a “Debt” in the hands of the appellant and unless the debt was crystallised as payable in law, the issue of default would not be attracted.

The Appellate Tribunal was of the opinion: “the adjudication initiated by the appellant before Bombay High Court wherein adjudication is sought in regard to foreign decree obtained ex-parte falls within the purview of a pre-existing dispute placing an embargo on the powers of Adjudicating Authority to initiate corporate insolvency resolution process at the instance of a corporate debtor. This is apart from the fact that until such adjudication fructify in a decree favouring the appellant, the claim of the appellant cannot be held to have crystallized into a debt payable in law.”

Thus, finding no scope to interfere with the order of the NCLT, the appeal was dismissed for being devoid of merits. [Peter Jhonson John v. KEC International Ltd., 2019 SCC OnLine NCLAT 375, decided on 03-07-2019]

Case BriefsHigh Courts

Uttaranchal High Court: Lok Pal Singh, J. dismissed a writ petition where mandamus was sought to direct the Principal Judge of Family Court to decide the matter of petitioner under Section 13-B of Hindu Marriage Act, 1955 and grant a decree of divorce based on mutual consent.

The factual matrix of the case was the petitioner and respondent both filed a joint petition in the Family Court for divorce by mutual consent. The petitioner contended that on the first date of hearing in Family Court both parties appeared and a due date after six months was fixed for the appearance. But on subsequent dates the respondent-wife was absent, hence he had no knowledge that whether the case is pending or divorce had been granted.

Learned counsel for the petitioner, Karan Anand, relied on a judgment in Suman v. Surendra Kumar, 2002 SCC OnLine Raj 111, where Rajasthan High Court decided a similar matter where the respondent was the husband and he absented himself from the Court hearing, in such case the Court had held, “This is a case of total silence on the part of the husband on the question of consent at the stage of the second motion. Should we infer the negative from silence? We are of the view that if the husband wanted to withdraw his consent he should have taken a positive stand for that purpose. There was nothing which prevented him from informing the Court that he was withdrawing his consent for decree of divorce by mutual consent. When the husband has himself left the matter for inference, the inference ought to be drawn in favor of consent rather than for absence of consent. The husband had already given his consent for the decree of divorce at the time of the first motion and he alone could withdraw the consent by a positive act, otherwise, the inference would be that the consent which was initially given continues.” Thus, the Court granted a divorce by mutual consent ex-parte.

The Court observed that case referred by the learned counsel for petitioner i.e. Suman v. Surendra, 2002 SCC OnLine Raj 111,, initially the appeal filed by the wife against the decision of the Family Court rejecting an application under Section 13-B of Act, 1955 was dismissed by the Rajasthan High Court. Subsequently, on the review application, a decree of divorce was granted on the basis of mutual consent thereby dissolving the marriage between the parties under Section 13-B of the Act, whereas, in the present case, there is no such order of the Family Court, on record, rejecting or allowing the petition under Section 13-B. Court further noted that although petitioner filed an order sheet stating that respondent was absent on several dates and in the interest of justice adjournments were made, the fact that whether the initial divorce petition is decided by the Court in any form is still a question which was not known to the Court. Based on aforementioned observations Court held that “direction sought by the petitioner is not legally maintainable as no higher court can issue a direction to a subordinate court to pass judgment or decree in favour of either of the parties.”[Rajeev Mandrawal v. Renu Mandrawal, 2019 SCC OnLine Utt 442, decided on 10-05-2019]

Case BriefsHigh Courts

Calcutta High Court: Tapabrata Chakraborty, J. dismissed a writ petition filed by the petitioner, Dr Kashninath Ghosh Hazra, under Article 226 of the Constitution of India.

The petitioner claimed to be the owner of an un-partitioned land at plot nos. 4933, 4934, 4935 and 4936 of Mouza Sadpur, Block- Kandi, Khatian No. 714, P.O. & P.S. Kandi, Pin 742 137, District- Murshidabad, West Bengal. On 10-02-2019 the petitioner came to learn that the private respondents were demolishing the structures existing on the said property. The petitioner maintained that without taking steps towards the partition of the said property and without obtaining any appropriate sanction plan from the municipal authorities, the private respondents had started raising unauthorized construction including a boundary wall. Aggrieved thereby, this petition was filed.

The Court had passed an interim order on 26-02-2019 restraining the private respondent’s 14 to 20 from demolishing any structure existing on the said property and from raising any fresh construction till the end of April, 2019 or until further orders.

Respondent 14 by filing an affidavit-in-opposition and a vacating application stated that a partition suit pertaining to the said property, being T.S. No. 38 of 2003, was initially filed by Amala Bala Ghosh impleading the petitioner herein. The final decree was passed on 17-01-2014. The said decree was executed and the 3 parties obtained possession of the decretal property in the year 2014. Thereafter, the names of the respondent’s 14 and 15 were mutated and some portions of the said property had also been sold to third parties.

In reply, the petitioner submitted that he had no knowledge about the institution of the said partition suit and the preliminary decree and the final decree were passed ex parte.

The Court, in view of the arguments made by the parties, held that the said property had already been partitioned and hence no direction could be passed in the present writ petition. The Court observed that the grievance of the petitioner was that he was not given appropriate notice for which he could not appear and contest the partition suit. It was opined that such grievance ought to have been ventilated by the petitioner before the competent civil forum. But without taking such steps the petitioner had preferred the present writ petition involving the municipal authorities. In view thereof, the petition was dismissed.[Dr Kashinath Ghosh Hazra v. State of West Bengal, An application under Article 226 of the Constitution of India filed on 19-02-2019, In re, 2019 SCC OnLine Cal 655, decided on 15-05-2019]

Case BriefsHigh Courts

Meghalaya High Court: This petition was filed before a Single Judge Bench comprising of Mohammad Yaqoob Mir, CJ, under Article 227 of the Constitution of India.

Facts of the case were that an application was filed by the petitioner before the Trial Court seeking interim relief. An ex parte interim relief was granted directing status quo regarding subject matter to be maintained. Respondent submitted the existence of two title suits. It was submitted before Trial Court that preliminary decree was still operative not challenged by anyone and suit property was the same. Court observed that interim order cannot be extended beyond the date already mentioned by the court. Petitioner was aggrieved by the above order and thus filed petition before the High Court where petition’s maintainability was challenged as the petitioner had two alternate remedies available i.e. application for modification of interim relief under O. 39 R. 4 CPC and the second to file an appeal under O. 43 CPC. Respondent relied on the case of State Bank of Travancore v. Mathew K.C. (2018) 3 SCC 85 where it was observed that relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person.

High Court was of the view that respondents have not yet filed objections before the court. After the respondent file their objection the trial court ought to hear both parties in few weeks and then decide the matter. The petition was thus dismissed. [Md. Saquib v. Md. Ilyas,2018 SCC OnLine Megh 177, order dated 28-09-2018]