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TMI Blog2020 (4) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... rward to file this writ petition by making a challenge to the common order passed by the National Company Law Tribunal, Chennai dated 20.01.2020 made in MA/780/2019 and MA/1250/2019 of CP/280/IB/2018. 2. The petitioner, in the affidavit filed in support of this writ petition, would aver among other things that a petition in CP/280/IB/2018 under Section 7 of the Insolvency and Bankruptcy Code, 2016 [in short "IBC"] was filed by the 4th respondent, namely Union Bank of India (petitioning creditor) before the National Company Law Tribunal [in short "NCLT"] at Chennai. The petitioner would state that pendency of the said petition, a sum of Rs. 50 lakhs was paid to the 4th respondent on 27.08.2018 and a further sum of Rs. 50 lakhs was paid on 19.09.2018 and thereby reducing the total outstanding due with accumulated interest to a sum of Rs. 9,18,20,789/- and it was also followed by very many requests to the 4th respondent to restructure the said debt. 3. NCLT, Chennai, vide order dated 01.11.2018 in CP/280/IB/2018 had initiated Corporate Insolvency Resolution Process in respect of the said company and moratorium was declared and an Interim Resolution Professional [IRP] was appointed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /780/2019, praying for approval of the Resolution Plan submitted by the 3rd party, namely the 10th respondent. 6. The order of NCLT, Chennai dated 29.07.2019 referred to supra was put to challenge by way of appeal before the NCLAT and vide order dated 06.09.2019 made in CA(AT)(Insolvency) No.921 of 2019, liberty was granted to the petitioner to move an application under Section 12A of IBC for settling the claims of all the creditors including guarantors, and NCLAT also taken note of the fact as to the settlement of claims of some financial creditors. 7. In the appeal filed by the petitioner in C.A.No.7581 / 2019, the Hon'ble Supreme Court of India had initially granted an order of Status Quo on 04.10.2019 and subsequently, the appeal came to be dismissed, vide order dated 18.10.2019 by extended the time granted by NCLAT for a period of two weeks from 18.10.2019. The petitioner, along with M/s.Empee Holdings Limited, had submitted a Settlement Plan to the 4th respondent on 30.10.2019 in terms of Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. 8. It is the claim of the petitioner that the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019 and the NCLT, Chennai had reserved orders in both the applications on that date. Written submissions were also filed by the petitioner. 12. The petitioner would further state that the Bench which heard both the applications consisted of Mr.B.S.V..Prakash Kumar (Member Judicial) and Mr.S.Vijayaraghavan (Member Technical). The 1st respondent, vide notification in S.O.72(E) dated 08.01.2020 had notified that Mr.B.S.V. Prakash Kumar, being the seniormost member of NCLT shall act as President, NCLT in terms of Section 415 of the Companies Act, 2013 for a period of 3 years with effect from 05.01.2020 or until a regular President is appointed or until further orders, whichever is earlier. Accordingly, the Principal Bench of NCLT, New Delhi was reconstituted, which include Mr.B.S.V..Prakash Kumar as Acting President and Mr.S.K.Mohapatra as Member Technical. 13. The petitioner has also invited the attention of this Court to the various notification issued by NCLT at New Delhi and stated that, vide order dated 07.01.2020 signed by the Registrar of NCLT, Principal Bench at NCLT, New Delhi was reconstituted comprising of Mr.B.S.V. Prakash Kumar (Member Judicial) and Ms.Sumita Purkayast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent, shall make and pronounce an order either at once or, as soon as thereafter as may be practicable but not later than thirty days from the final hearing and as per Sub-Rule (4) of Rule 152, if the order cannot be signed by reason of death, retirement or resignation or for any other reason by anyone of the Members of the Bench who heard the case, it shall be deemed to have been released from part-heard and listed afresh for hearing. ✔ In the light of the fact that the Cause List as to the pronouncement of the orders in MA/1250/2019 have not been pre-published or uploaded in the website coupled with the fact that in the Additional Cause List there was no indication as to the pronouncement of the orders in MA/1250/2019 and in the Cause List neither the name of the applicant nor his Counsel has been indicated and that the orders came to be pronounced nearly two months from the date of reserving orders and therefore, prayed for setting aside the common order dated 20.01.2020 with a further direction for listing and hearing of the matter afresh. ✔ Attention of this Court was also invited to various notifications issued by the Registrar of NCLT, Principal Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue as to the prejudice caused to the petitioner on account of the alleged non-compliance of the procedure contemplated by the NCLT Rules. The learned counsel appearing for the petitioner, in support of his submissions, has placed heavy reliance upon the Division Bench decision of the Bombay High Court in Kamal K.Singh v. Union of India and Others [2019 SCC OnLine Bom 5609] and also the judgments in Pushpa Singh v.Union of India and Others [2019 SCC OnLine Bom 2385] and Arcelormittal India Private Limited v. Satish Kumar Gupta and Others [(2019) 2 SCC 1]. 16. Mr.K.Ramanamoorthy, learned Central Government Standing Counsel appearing for the 2nd respondent has drawn the attention of this Court to the affidavit of the 2nd respondent and the typed set of documents and would submit that on 07.01.2020, four orders were passed by the Registrar, NCLT, New Delhi under directions from the Acting President, which include constitution of a Special Bench for NCLT, Chennai, Court II for pronouncements of orders, comprising of Mr.B.S.V. Prakash Kumar, Acting President and Mr.S.Vijayaraghavan, Member (Technical) for 20.01.2020 only and the two orders for reconstitution of bench i.e., Sl.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng for the 3rd respondent that pursuant to the Resolution Plan, the 10th respondent has brought in Rs. 134.78 Crores as stipulated in the Resolution Plan and Rs. 15.90 Crores towards the difference in payment of Tax and all amounts as stipulated in the Resolution Plan and payment of operational creditors have been done in accordance with the terms of the Resolution Plan and about 33% of the dues to the financial creditors have been paid and also made a submission that the Promoters / Corporate Debtors did not provide for any solution, despite opportunities granted by the NCLAT and the Hon'ble Supreme Court of India. 18. The learned Senior Counsel appearing for the 3rd respondent on the legal plea made a submission that the relevant statutory rules relied on by the learned Senior Counsel appearing for the petitioner can be construed only as directory in nature, in the absence of any indication as to the result of such non-compliance and would further add that the petitioner has also not been prejudiced for the reason that he became aware of the order within a short span of time and the remedy open to him is to avail appeal remedy before the NCLAT, New Delhi. The learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same, the learned Senior Counsel appearing for the petitioner would submit that non-following of certain provisions of NCLT Rules would vitiate the impugned order as the said Rules are mandatory in nature. It is submitted by the learned Senior Counsel appearing for the petitioner that Section 12A of the IBC have not been followed and there exist manifest error of Law and therefore, it can be set right by this Court by issuing a Writ of Certiorari. It is further submitted by the learned Senior Counsel appearing for the petitioner that NCLT Rules came to be framed in exercise of the powers conferred under Section 469 of the Companies Act, 2013 and therefore, Rules 89, 150 to 153 of NCLT Rules are mandatory and from the materials placed, it is seen that the Tribunal had failed to adhere to the same and as such, the impugned common order stand vitiated and it is to be set aside. The learned Senior Counsel appearing for the petitioner would further add that the Tribunal did not record any reasons as to the belated pronouncement of the orders and in the light of various orders passed by the Registrar, NCLT, New Delhi as to the special sitting of the concerned Bench and that the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides and setting out in brackets the rank of the parties whom they represent ; (b) names of the parties, if unrepresented, with their ranks in brackets. (4) The objections and special directions, if any, of the Registry shall be briefly indicated in the daily cause list in remarks column, whenever compliance is required." 26. A perusal of the affidavit of the second respondent dated 13.02.2020 would read that on account of the retirement of Justice M.M.Kumar (Judge Retd., High Court of Karnataka) as the President of NCLT on 04.01.2020, Mr.B.S.V.Prakash Kumar, Member (Judicial), being the seniormost member of NCLT, was appointed as Acting President of NCLT in terms of powers conferred upon the Central Government under Section 415 of the Companies Act, 2013, vide Gazette Notification dated 03.01.2020 and the said member assumed charge on 05.01.2020 as the Acting President of NCLT, Principal Bench at New Delhi. 27. The Registrar of NCLT, Principal Bench, New Delhi has passed an order dated 17.01.2020 in exercise of powers conferred under Section 419 of the Companies Act, 2013 in and by which reconstituted the Benches at New Delhi for the purpose of exercising and discharging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 at 10.a.m in the Notice Board at NCLT, Chennai Bench. It is further stated in the 2nd respondent affidavit that the Registrar, NCLT, was unable to display the Cause List as well as in the Notice Board on the previous day on 19.01.2020 as it happen to be a Sunday (Holiday) and on account of the said reason, Cause List was unable to uploaded in the website. 30. In para 10 it is averred by the 2nd respondent that the Coram for pronouncing the orders on 20.01.2020 has been clearly depicted in the Cause List and thereby giving notice to the Bench having been constituted to all parties concerned. It is further stated that the Acting President Mr.B.S.V.Prakash Kumar (Former Judicial Member, Chennai Bench) is the Administrative Authority responsible for constituting Special Bench and therefore, the said Bench was competent to pronounce orders on 20.01.2020. In para 11, it is averred by the 2nd respondent that the Registrar of NCLT, Chennai ought to have published all the four orders passed on 17.01.2020 and however, orders mentioned in Sl.Nos.(i) and (ii) alone have been uploaded and Sl.Nos.(iii) and (iv) have not been uploaded in the website despite the same having been made available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closing of working hours on each working day the cause list for the next working day and subject to the directions of the President, listing of cases in the daily cause list shall be in the order of priority, unless otherwise ordered by the concerned Bench. Ultimately, the requirement of this nature and to be followed by a court, particularly a substitute for a Civil and Company Court means that people and litigants should know when orders are to be pronounced in cases which have been already heard. Therefore, the broad heads which have to be enumerated in the daily cause list ensure that litigants, parties and equally the public at large know that the cases have been listed for that purpose and with that object. In cases in which arguments are concluded and judgments are ready for pronouncement, then, the pronouncement has to be done after notifying to the parties in advance the date of such pronouncement. The rule makers did not desire or contemplate dispensation of the requirement of pronouncement at all. If dispensation of that was contemplated, then, possibly, there would not have been guidance provided by rules such as Rules 89 and 90. By Rule 90, there is a further assurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders" contains Rules 146 to 162 and particularly Rules 150 to 152 specifically on the point of subject of pronouncement, then, they cannot be ignored totally and in all situations, particularly on broad consideration of expediency. The expediency that is demonstrated in the present case is disturbing. If there was a hearing held in the month of August, 2019 and that was the last one, the remainder of the months of August and September were available for the Members of the Bench to prepare and pronounce their order. There was no great hurry in rushing and pronouncing the order when the Member (Judicial) knew that he was due for promotion or that he has been intimated about the promotion and that there was a notification issued promoting him. The stage or the date from issuance of such notification till the date of taking charge is the period utilised in this case to prepare the final judgment or order. However, there was no great urgency in then dispensing with the requirement of pronouncement of the judgment kept it in the file and communicating it later on. On a date prior to taking charge as a Member of the NCLAT, by a prior notice or intimation to both parties, the order could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matters where the judgments reserved are not pronounced within the period of that month. (iii) On noticing that after conclusion of the arguments the judgment is not pronounced within a period of two months the Chief Justice concerned shall draw the attention of the Bench concerned to the pending matter. The Chief Justice may also see the desirability of circulating the statement of such cases in which the judgments have not been pronounced within a period of six weeks from the date of conclusion of the arguments amongst the Judges of the High Court for their information. Such communication be conveyed as confidential and in a sealed cover. (iv) Where a judgment is not pronounced within three months from the date of reserving judgment, any of the parties in the case is permitted to file an application in the High Court with a prayer for early judgment. Such application, as and when filed, shall be listed before the Bench concerned within two days excluding the intervening holidays. (v) If the judgment, for any reason, is not pronounced within a period of six months, any of the parties of the said lis shall be entitled to move an application before the Chief Justice of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the defect curable under Section 135(3)? In para 8 of the said judgment, the Hon'ble Supreme Court of India had dealt with the general question whether a particular provision of the Statute which on the face of it appears mandatory is merely directory or not? and it is relevant to extract para 8 of the said judgment: "8. The question whether a particular provision of a statute which on the face of it appears mandatory, inasmuch as it uses the word "shall" as in the present case - is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor. The purpose for which the provision has been made and its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting from whether the provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction that should be followed in determining whether a provision of law is directory or mandatory may be summarised thus: The fact that the statute uses the word "shall" while laying down a duty is not conclusive on the question whether it is a mandatory or directory provision. In order to find out the true character of the legislation, the court has to ascertain the object which the provision of law in question has to sub-serve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one. Where, however, a provision of law prescribes that a certain act has to be done in a particular manner by a person in order to acquire a right and it is coupled with another provision which confers an immunity on another when such act is not done in that manner, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay [AIR 1952 SC 181] it was held as under: (AIR p. 185, para 7) "[G]enerally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts done." 45. In Craies on Statute Law, 8th Edn., at p. 262, it is stated thus: " '... It is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.' ... that in each case you must look to the subject-matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. The Municipal Board [AIR 1965 SC 895], a Constitution Bench of the Supreme Court held that the question whether a particular provision is mandatory or directory, cannot be resolved by laying down any general rule and that it would depend upon the facts of each case. The Court has to consider the purpose for which the provision had been made, its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting therefrom when the provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject as well as other considerations which may arise on the facts of a particular case, including the language of the provision. The said decision of the Constitution Bench was followed in Salem Advocate Bar v. Union of India [(2005) 6 SCC 344]. While doing so, the Supreme Court pointed out therein that our laws on procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decision should not be reached behind their back, that proceedings that affect their lives and properties should not continue in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the website or in the Cause List, it is stated by the 2nd respondent that the said information could not be uploaded in the website on the previous day on 19.01.2020 as it happens to be a Sunday (Holiday) and however, took a stand that the common order in the said applications were pronounced in the open Court and also seems to be apologetic by stating in para 11 that non-mentioning of the information as to the pronouncement of the orders in MA/1250/2019 in the Cause List is neither wilful nor wanton. 45. A perusal of the Cause List dated 20.01.2020 with regard to the pronouncement of the orders by the Bench having coram of Mr.B.S.V.Prakash Kumar, Acting President, Former Member (Judicial) and Mr.Vijayaraghavan, Member (Technical) in Court Hall -II, NCLT, Chennai Bench would disclose that Sl.No.7 is MA/780/2019 in CP/280/IN/2018 and in that case, the name of the petitioner, namely Mr.S.Rajendran (RP)/3rd respondent alone has been stated and in the column pertaining to name of the respondent as well as Advocate name, no names have been stated and there was no indication as to the pronouncement of the orders in MA/1250/2019. Thus, there appears to be a lapse on the part of the 2nd r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed an application in MA/1250/2019 in MA/780/IB/2019 in CP/280/IB/2019 challenging the consideration of the Settlement Plan by COC on various grounds and the NCLT, Chennai reheard the entire resolution plan along with MA/1250/IB/2019 and reserved orders on 19.11.2019 and a mention was made by the learned counsel appearing for the 3rd respondent on 06.01.2020 by way of reminder as to the pronouncement of the orders and the Bench assured that orders would be pronounced immediately after the Pongal Holidays and accordingly, orders were pronounced approving the Resolution Plan on 20.01.2020. 51. In Balwant Singh and Others v. Anand Kumar Sharma and Others [(2003) 3 SCC 433], a particular portion of Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 as to the mandate cast upon a tenant to remit rent within time line and the mandatory nature of the said rule came up for consideration and it is relevant to extract the following portion of the same judgment: "7. Yet there is another aspect of the matter which cannot be lost sight of. It is a well-settled principle that if a thing is required to be done by a private person within a specified time, the same would ordinarily be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of IBC and as such, it cannot be said that he has been put to serious prejudice on account of non-uploading of the information relating to pronouncement of the orders on 20.01.2020 and non indication of the same in the Cause List. 55. Now coming to the mandatory nature of NCLT Rules, 2016, more particularly Rules 150 and 153, in the light of the settled legal position that consequences that may arise on account of the non-adherence to the time line/procedure have not been indicated in the said Rules, it can be considered to be only directory. 56. The Division Bench judgment of the Bombay High Court in Kamal K.Singh v. Union of India [2019 SCC OnLine 5609] is distinguishable for the reason that the legal position as laid down by the Hon'ble Apex Court in the various pronouncements as to the directory/mandatory nature of Statutory Rules have not been dealt with in the said judgment. It is a settled legal dictum that "when a public functionary is required to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified". Admittedly, the consequences that may emanate as to the nonadherence/infraction of the Ru ..... 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