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2025 (6) TMI 1097 - AT - IBCDismissal of Interlocutory Applications under Sections 60(5) and 33(3) of the I B Code - issuance of directions to make 50 percent of payment as a mandatory condition of pre-deposit in order to entertain the Appeal - Section 18 of the SARFAESI Act 2022 - HELD THAT - The Learned Tribunal while dealing with the Company Petition by the judgment of the 11.08.2023 found that the conduct of the Appellant was dubious and thereby dismiss the Interlocutory Applications on a payment of cost of Rs. 1, 00, 000/-. The Appellant thereafter has filed a Memorandum of Withdrawal of the Appeal but however it carries a rider that the Appellant may be permitted to take a necessary legal action in the manner known to law only against Respondent Nos. 1 4 7 8 . This exception sought for in a Memorandum of Withdrawal of Appeal is being vehemently opposed by the Respondents who have filed the objection and particularly the reference may be have to the contents of the Para-5 6 7 on which the Learned Counsel for the Respondent has heavily harped upon that though the withdrawal can be permitted but the liberty as prayed for to resort to recourse known to law may not be left open as an issue based on judicial dictum as it stands affirmed qua the confirmation of sale of the property by the judgment of the Honourable Apex Court in GBJ HOTELS PRIVATE LIMITED VERSUS SRIHARAN SRIPATHMANATHAN ORS. 2025 (5) TMI 46 - SUPREME COURT . Conclusion - The argument in the objection as raised by the Respondent seems to be reasonable and justified. Hence the Memorandum of Withdrawal of Appeal would stand allowed and the Appeal would stand dismissed as withdrawn simplicitor without any liberty being reserved for the Appellant as sought for leaving a leverage to resort to any other remedy for the same subject of dispute as prayed for in the Memorandum of Appeal which would stand denied. The Withdrawal Memo is allowed the Company Appeal is permitted to be dismissed as withdrawn.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Dismissal of Interlocutory Applications under Sections 60(5) and 33(3) of the I&B Code Legal Framework and Precedents: The I&B Code provides a framework for insolvency resolution and liquidation of companies. Section 60(5) empowers the Tribunal to pass necessary orders or directions to secure the assets and interests involved during insolvency proceedings. Section 33(3) relates to the liquidation process. Rule 11 of the NCLT Rules, 2016, governs the procedure for interlocutory applications. Precedents emphasize that such applications must be supported by cogent reasons and good faith conduct. Court's Interpretation and Reasoning: The NCLT Chennai Bench dismissed the interlocutory applications with costs, observing the appellant's conduct as dubious. Although the Appellate Tribunal did not delve deeply into the reasoning of the NCLT at this stage, the dismissal was upheld implicitly by allowing the withdrawal of appeal without interference on this point. Key Evidence and Findings: The Tribunal noted the appellant's dubious conduct, though specific evidence was not elaborated in the appellate order. The imposition of costs of Rs. 1,00,000/- indicated the Tribunal's disapproval of the appellant's approach. Application of Law to Facts: The Tribunal found the interlocutory applications lacked merit or were not pursued in good faith, justifying dismissal and cost imposition under the procedural rules. Treatment of Competing Arguments: The appellant challenged the dismissal, but the Tribunal did not find sufficient grounds to interfere, especially in light of subsequent developments and withdrawal of appeal. Conclusion: The dismissal of interlocutory applications was affirmed indirectly by the Tribunal's refusal to entertain the appeal substantively and by allowing withdrawal without liberty for further proceedings on the same issues. Issue 2: Challenge to Pre-deposit Requirement under Section 18 of the SARFAESI Act before the Debt Recovery Appellate Tribunal Legal Framework and Precedents: Section 18 of the SARFAESI Act mandates a pre-deposit by the appellant to entertain an appeal before the Debt Recovery Appellate Tribunal. Judicial precedents have consistently upheld this requirement as a condition precedent to maintain the sanctity of secured creditors' rights and to deter frivolous appeals. Court's Interpretation and Reasoning: The appellant sought a writ of mandamus to reduce the pre-deposit to 50% and to waive the balance, arguing hardship and fairness. The High Court of Madras, however, disposed of the writ petition on the basis of the appellant's statement that the offer made by GRT Hotels and Resorts Pvt. Ltd. was acceptable and that the appeal would not be pursued. The Apex Court's judgment later confirmed the sale and left other issues open for adjudication before appropriate forums. Key Evidence and Findings: The appellant's willingness to not pursue the appeal before the DRAT was a critical factor in the High Court's disposal of the writ petition. The Apex Court's confirmation of the sale certificate and directions for possession reinforced the finality of the sale process. Application of Law to Facts: The Tribunal recognized the effect of the Apex Court's judgment as confirming the sale and thus rendering the pre-deposit challenge and related appeals moot. Treatment of Competing Arguments: The appellant's plea for reduced pre-deposit was countered by respondents relying on statutory requirements and judicial precedents. The courts favored enforcement of the pre-deposit rule to uphold creditor rights. Conclusion: The challenge to the pre-deposit requirement was effectively negated by the appellant's own concession and the Apex Court's confirmation of the sale, thereby validating the statutory mandate under Section 18. Issue 3: Effect of Apex Court Judgment on the Subject Matter of the Appeal Legal Framework and Precedents: The Apex Court's orders confirming sale certificates and possession are binding and final unless set aside. Paragraph 19 of the Apex Court judgment explicitly left all questions except the sale open for future adjudication, thereby confirming the sale conclusively. Court's Interpretation and Reasoning: The Tribunal took judicial notice of the Apex Court's judgment dated 28.04.2025, which confirmed the sale of the property that was the subject matter of the Company Appeal. This confirmation effectively rendered the appeal infructuous. Key Evidence and Findings: The sale certificate issuance and directions for possession by Edelweiss ARCL in favor of GRT Hotels were central to the confirmation. The Apex Court's directions to release deposited funds further cemented the finality of the transaction. Application of Law to Facts: The Tribunal applied the principle of finality of judicial decisions, holding that the appeal challenging the underlying transactions or sale could not be entertained post confirmation by the Apex Court. Treatment of Competing Arguments: The appellant's attempt to continue litigation despite the Apex Court's order was rejected in light of the binding nature of the Supreme Court's pronouncement. Conclusion: The Apex Court's judgment conclusively settled the fate of the property and related claims, precluding further appellate interference on the same subject. Issue 4: Appellant's Conduct and Dismissal with Costs Legal Framework and Precedents: Courts have inherent powers to impose costs and dismiss applications where parties act in a manner that is vexatious, frivolous, or lacking bona fides. The principle of cost imposition serves as a deterrent against misuse of judicial process. Court's Interpretation and Reasoning: The NCLT found the appellant's conduct dubious, warranting dismissal of interlocutory applications and imposition of costs. The Appellate Tribunal did not disturb this finding. Key Evidence and Findings: While specific instances of dubious conduct were not detailed in the appellate order, the cost imposition and dismissal reflect the Tribunal's disapproval of the appellant's procedural approach. Application of Law to Facts: The Tribunal upheld the principle that litigants must act in good faith and that abuse of process attracts costs and dismissal. Treatment of Competing Arguments: The appellant's challenge to the cost order was not entertained given the overall context and subsequent developments. Conclusion: The cost imposition and dismissal of interlocutory applications were justified and maintained. Issue 5: Permissibility of Reserving Liberty to Initiate Further Legal Action upon Withdrawal of Appeal Legal Framework and Precedents: Generally, withdrawal of an appeal results in dismissal without prejudice to the parties' rights unless the court specifically grants liberty to initiate further proceedings. However, where a final adjudication has been rendered on the subject matter, courts may refuse to grant such liberty to prevent multiplicity of litigation. Court's Interpretation and Reasoning: The appellant sought to withdraw the appeal but requested liberty to initiate legal action against certain respondents. The respondents opposed this, citing the finality of the Apex Court's order confirming the sale and the settled position of law. Key Evidence and Findings: The Tribunal found the respondents' objection reasonable and justified, noting that the Apex Court's confirmation of sale precluded further litigation on the same subject. Application of Law to Facts: The Tribunal allowed the withdrawal of the appeal but denied the appellant's request for liberty to pursue further legal remedies concerning the same dispute. Treatment of Competing Arguments: The appellant's plea for liberty was rejected to uphold judicial finality and prevent abuse of process. The respondents' contention that the matter was conclusively settled prevailed. Conclusion: The appeal was dismissed as withdrawn simpliciter without any liberty reserved for further action on the same subject matter. 3. SIGNIFICANT HOLDINGS The Tribunal held: "The Withdrawal Memo is allowed, the Company Appeal is permitted to be dismissed as withdrawn." It further held that the appellant's request for liberty to initiate further legal action against respondents was denied, emphasizing the binding nature of the Apex Court's confirmation of sale and the need to uphold finality in litigation.
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