Madras High Declines To Assist National Company Law Tribunal

Madras High Declines To Assist National Company Law Tribunal

The Court observed that the parties could not be asked to approach the High Court to handhold the NCLT and guide it through its proceedings

The Madras High Court has declined to extend any assistance to the National Company Law Tribunal (NCLT) by noting that the parties could not be asked to approach the High Court to handhold the NCLT and guide it through its proceedings.

The Division Bench of the High Court of Madras, comprising Chief Justice Sanjib Banerjee and Justice P.D. Audikesavalu, dealt with the matter titled M/s Kotak Mahindra Bank Ltd v K.Bharathi & Ors.

The matter involved the insolvency proceedings taking place before the National Company Law Tribunal. The Petitioner – Bank was a financial creditor of the Corporate Debtor in the NCLT proceedings and there was a dispute between the Petitioner and the Respondent.

A charge created in respect of a property in favour of the Petitioner – Bank by the Corporate Debtor, was called into question and some observations were made by a single-judge bench of this Court, despite the Petitioner not being a party in that proceeding. Therefore, this present matter had been placed before the division bench.

The Respondent submitted that if the National Company Law Tribunal decided the matter, based on the observations of the single-judge bench, the Respondent would be seriously prejudiced.

The Court went through the order of the National Company Law Tribunal wherein it was stated that the pending litigation in various courts was causing impediment in conducting the Corporate Insolvency Resolution Process (CIRP) and, therefore, the Tribunal directed the parties to place the matter before the High Court for further direction to confirm whether the NCLT could proceed as per Insolvency and Bankruptcy Code (IBC) Rules and Regulations.

The Court observed that the parties could not be asked to approach the High Court to handhold the NCLT and guide it through its proceedings. It further noted that there was total non-application of mind while passing the order by observing the following:

"Indeed, the order and the part thereof extracted above betrays the total non-application of mind in that all the parties before the NCLT were not, and could not have been, parties to the proceedings pending before the Division Bench of this Court and, to such extent, the parties before the NCLT, who are not parties to the proceedings pending in this court, could not have been left to the vagaries of a matter to which they were not parties."

The Court directed the National Company Law Tribunal to confine itself to its area of specialisation and deal with the matter in accordance with the law without any assistance from this Court.

Therefore, the petition was disposed of since the Court was not obliged to extend its assistance to the NCLT.