NCLT Hyderabad Invokes Inherent Power under Rule 153 of NCLT Rules Permits Financial Creditor to File Rejoinder Post Closure

NCLT Hyderabad Invokes Inherent Power under Rule 153 of NCLT Rules Permits Financial Creditor to File Rejoinder Post Closure

The Hyderabad bench National Company Law Tribunal (NCLT), comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), invoked its inherent powers under Rule 153 of the NCLT Rules and permitted the Financial Creditor to file its Rejoinder, even after the opportunity to do so stood closed by an earlier order of NCLT.

State Bank of India ("Financial Creditor") filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against India Power Corporation Limited ("Corporate Debtor").

After the Corporate Debtor filed its reply on 22nd November, 2021, the Adjudicating Authority on 03.12.2021 granted two weeks' time to Financial Creditor for filing its Rejoinder, or otherwise the right would stand closed. The Financial Creditor filed its rejoinder on 13th June, 2022.

The Corporate Debtor opposed to the Rejoinder being taken on record while contending that no application for condonation of delay was filed along the Rejoinder. The Financial Creditor filed an application under Rule 11 of NCLT Rules, 2016 before Adjudicating Authority, seeking condonation of delay in filing of Rejoinder. The Corporate Debtor opposed the application while submitting that such application would be in nature of 'review' of the order dated 3rd December, 2021 and the Adjudicating Authority is not empowered to review.

The primary issue that came before the NCLT was whether the present application to condone the delay and to receive the Rejoinder filed post closure of opportunity is in the nature of Review Application and as such not maintainable? If no, whether the application can be considered under any other applicable provision of law or rules?

The Tribunal was of the view that the application for condonation of delay, after the right to file rejoinder stood closed, is not in the nature of Review of the earlier orders of the Tribunal.

The bench observed, "Rule 153 categorically confirms that where any period is fixed by or under these rules or granted by the Tribunal for doing an act or filing of any document or representation, discretionary power is conferred on the Tribunal to extend the same in the interest of justice even though the period fixed by or under the rules or granted by this Tribunal may have expired."

The Tribunal reckoned to treat the application as an application for condonation of delay. It was opined that under Section 5 of Limitation Act the onus is on the Applicant to satisfy the court on there being sufficient cause for condonation of the delay. Whereas under Rule 153 of NCLT Rules enjoins a duty on the Tribunal alone, to examine whether in the interest of justice time extension should be given for doing an act, the fixed time for which has expired.

The bench held, "there is a basic difference between Section 5 of the limitation Act and Rule 153 of NCLT Rules, as for exercise of power under Section 5 of the Limitation Act, the onus, is on the applicant to satisfy the court that there was sufficient cause for condonation of the delay, whereas Rule 153 of NCLT Rules enjoins a duty on the Tribunal only to examine whether it is expedient in the interests of justice to extend the time for doing an act even though the time fixed for doing the act may have expired or refuse extension of time."

The Tribunal lastly ordered, that the Application can be allowed by enlarging the time that has expired for filing the Rejoinder. The Application was allowed and Financial Creditor has been granted 7 days' time to file its brief additional pleadings. Upon failure of which, the liberty shall stand revoked automatically. Nonetheless, the facts that were not pleaded in the main petition but form a part of the Rejoinder will not be considered, stated the bench.