EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. V. STATE OF KARNATAKA AND ORS. MANU/SC/1661/2019

EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. V. STATE OF KARNATAKA AND ORS. MANU/SC/1661/2019

 

FACTS

• M/s.Udhyaman Investments Pvt. Ltd. (The twelfth Respondent), claiming to be a Financial Creditor, moved an application before the NCLT Chennai, under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor (M/s.Tiffins Barytes Asbestos & Paints Ltd.).
• The Corporate Debtor held a mining lease granted by the Government of Karnataka, which was to expire by 25.05.2018. The Interim Resolution Professional filed a writ petition in WP No. 23075 of 2018 on the file of the High Court of Karnataka, seeking a declaration that the mining lease should be deemed to be valid upto 31.03.2020 in terms of Section 8A(6) of the MMDR Act, 1957.
• The Tribunal directed the Government of Karnataka to execute Supplement Lease Deeds in favour of the Corporate Debtor for the period upto 31.03.2020.
• The High Court set aside the Order of the NCLT and remanded the matter back to NCLT for a fresh consideration of the Miscellaneous Application No.632 of 2018. The High Court granted a stay of operation of the direction contained in the impugned Order of the Tribunal.

 

ISSUE

• Whether the High Court can interfere, under Article 226/227 of the Constitution, with an Order passed by the National Company Law Tribunal in a proceeding under the Insolvency and Bankruptcy Code, 2016, ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal and if so, under what circumstances?
• Whether questions of fraud can be inquired into by the NCLT/NCLAT in the proceedings initiated under the Insolvency and Bankruptcy Code, 2016?

 

HELD
The High Court was justified in entertaining the writ petition and therefore the Supreme Court did not see any reason to interfere with the decision of the High Court. Therefore, the appeals were dismissed.

• The learned counsel argued that the Order of the High Court should be set aside on the ground of lack of jurisdiction. The IBC, 2016 is a complete Code in itself.
• The remedies provided under Article 226 are public law remedies, which stand in contrast to the remedies available in private law.
• The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action.
• The jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. The High Court was justified in entertaining the writ petition and we see no reason to interfere with the decision of the High Court.