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TMI Blog2022 (8) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... cinta D Silva, Mr. Bhaskar Nayak, Advocates for Respondents No. 1 Mr. Anurag Bisaria , Advocate for R - 2 JUDGMENT ( Per Hon'ble Mr. Justice M. Satyanarayana Murthy ) : These two appeals are filed against common order passed in IA No. 830/NCLT/AHM/2021 in CP(IB) No. 268/NCLT/AHM/09/2020 dated 7th June, 2022. 2. As both these appeals are filed challenging a common order, raising common grounds, it is expedient to decide both these appeals by a common judgment. 3. The Appellant in Company Appeal (AT)(Insolvency) No. 699 of 2022 is an ex-Director of Golden Tobacco Ltd. whereas the Appellant in Company Appeal (AT)(Insolvency) No. 812 of 2022 is claiming to be shareholder of Oval Investment Pvt. Ltd. To avoid confusion and to maintain consistency, parties arrayed in these appeals hereinafter will be referred as Appellants and Respondents for convenience of reference. 4. The Appellant in appeal No. 699of 2022 was the Respondent in Appeal No. CP(IB) No. 268/NCLT/2009/AHM/2020 - Corporate Debtor. Arrow Engineering Ltd., a Financial Creditor filed an application before the National Company Law Tribunal (in short 'NCLT') Ahmedabad to initiate Corporate Insolvency Resolution Process ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal by the Hon'ble Apex Court, the Adjudicating Authority passed the impugned order as directed by this Tribunal. 10. Arrow Engineering Pvt. Ltd., a Financial Creditor filed an I.A No. 830/NCLT/AHM/2021 in CP(IB) No. 268/NCLT/09/AHM/2020, claiming the following reliefs: i) Allow the present application; ii) Commence CIRP of the Corporate Debtor in terms of the order dated 02.12.2021 of Hon'ble NCLAT in Company Appeal(IB)(Insolvency) No. 183 of 2021 and pass consequential order; iii) Pass any further order or direction as it may deem fit by this Hon'ble Tribunal. 11. The Application filed by the Financial Creditor was allowed and passed following order: "12. We direct the Financial Creditor to deposit a sum of Rs.2.00 lacs (Rupees Two Lacs only) with the Interim Resolution Professional, namely Mr. Mr. Vichitra Narayan Pathak to meet out the expense to perform the functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within one week from the date of receipt of this order by the Financial Creditor. The amount however be subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issues raised by the Appellant in Company Appeal (AT)(Insolvency) No 699 of 2022, the order passed by the Adjudicating Authority is ex facie erroneous. It is also further contended that a Civil Appeal was preferred before the Hon'ble Apex Court, only, challenging the order of remand and not against the findings recorded by this Tribunal in Company Appeal (AT)(Insolvency) No. 183 of 2021. Therefore, the question of application of principle of resjudicata does not arise. 15. Specific contention of the Appellants in both the appeals are that there was no operational or financial debt and the claim of the Financial Creditor does not attract either Section 5(7) or 5(8) of IBC and has drawn attention of this Court to the judgment of this Tribunal passed in Company Appeal (AT)(Ins) No. 550 of 2020 in the matter of Vipul Ltd. Vs. Solitaire Buildmart Pvt. Ltd. to contend that to maintain an application under Section 7 of IBC, there must be a financial debt as defined under Section 5(8) and also relied on another judgment passed in Company Appeal (AT)(Ins) No. 780 of 2020 in the matter of Mukesh N. Desai Vs. Piyush Patel. The Appellants also contended that there was no acknowledgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... miss the appeal and requested to allow the appeal. Placed reliance on the judgment of the Hon'ble Apex Court in Booz-Allen & Hamilton Inc Vs. SBI Home Finance Ltd. &Ors. 2011 (5) SCC 532 and Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. 2018 (2) SCC 678,Vidarbha Industries Power Limited Vs. Axis Bank Limited Civil Appeal No. 004633 of 2021 In view of the Principle laid down in the Judgments of Apex Court, the Appellant cannot be non-suited on the ground that no appeal was preferred against the order passed by this Appellate Tribunal in Appeal(AT)(Insolvency) No. 183/2021, which was affirmed by Hon'ble Apex Court in Civil Appeal No. 7715 of 2021. 19. Mr. Vikas Mehta, learned Counsel for Arrow Engineering Ltd. Financial Creditor in Company Appeal (AT)(Insolvency) Nos. 699 and 812 of 2022 contended that when the Appellate Tribunal recorded its findings, considering all contentions raised in the appeal were answered and the order attained finality in view of the judgment of the Hon'ble Apex Court in Civil Appeal No. 7715 of 2021, thereby the Appellants are debarred from raising similar contention which attained finality, in support of his contentions, he placed reliance in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it expedient to decide both points by common discussion. It is an undisputed fact that the Financial Creditor filed CP(IB) No. 268/NCLT/AHM/09/AHM/2020 which was dismissed by the Adjudicating Authority by an order dated 07.06.2022. 23. Aggrieved by the order passed by the Adjudicating Authority, the Financial Creditor preferred an appeal before this Appellate Tribunal bearing Company Appeal (AT)(Ins) No. 183 of 2021 which was allowed by this Tribunal by judgment dated 02.12.2021. At this stage it is relevant to advert to certain findings recorded in Company Appeal (AT)(Insolvency) No. 183/2021. In the Written Submission filed in appeal No. 699/2022 and during oral argument, Shri Abhijeet Sinha, learned Counsel contended that application under Section 7 of IBC is not maintainable as the debt cannot be construed as Financial Debt as defined under Section 5(8) of IBC. The basis for this contention is that the MOU was signed by the Corporate Debtor and the 1st Respondent which clearly states that there was an arrangement between the Corporate Debtor and 1st Respondent to carry on joint venture and development of project, while the Corporate Debtor agreed to provide land to Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 11 of CPC and therefore, the Rules of CPC has no application to this Tribunal in view of Section 238 of IBC but still the Appellants are not entitled to raise such pleas which were already decided by this Tribunal, as it amounts to abuse of process of law. 29. The Hon'ble Apex Court in the matter of Canara Bank v. N.G. Subbaraya Setty, referred above supra adverted to the doctrine of resjudicata as in Halsbury law which is as follows: "the doctrine of res judicata is not a technical doctrine applicable only to records; it is a fundamental doctrine of all courts that there must be an end of litigation [Halsbury's Laws of England, 3rd Ed., Vol. 15, para. 357, p. 185]". Halsbury also adds that the doctrine applies equally in all courts, and it is immaterial in what court the former proceeding was taken, provided only that it was a Court of competent jurisdiction, or what form the proceeding took, provided it was really for the same cause (p. 187, paragraph 362). "Res judicata", it is observed in Corpus Juris, "is a rule of universal law pervading every well regulated system of jurisprudence, and is put upon two grounds, embodied in various maxims of the common law; the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l took up the earlier suggestion of Lord Hailsham of St Marylebone LC in Vervaeke (formerly Messina) v Smith [1983] 1 AC 145, 157 that the principle in Henderson v Henderson was "both a rule of public policy and an application of the law of res judicata". He expressed his own view of the relationship between the two at p. 31 as follows: "Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole" and finally the Hon'ble Apex Court concluded as follows: "Res judicata is, thus, a doctrine of fundamental importance in our legal system, though it is stated to belong to the realm of procedural law, being statutorily embodied in Section 11 of the Code of Civil Procedure, 1908. However, it is not a mere technical doctrine, but it is fundamental in our legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther because no appeal was taken to a higher court or because the appeal was dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. This principle of res judicata is embodied in relation to suits in Section 11 of the Code of Civil Procedure; but even where Section 11 does not apply, the principle of res judicata has been applied by courts for the purpose of achieving finality in litigation. The result of this is that the original court as well as any higher court must in any future litigation proceed on the basis that the previous decision was correct." From the above extract, it is clear that while res judicata may have been codified in Section 11, that does not bar its application to other judicial proceedings, such as the one in the present case. 31. In view of the principle laid down in the above judgment strictly doctrine of resjudicata is applicable even to the proceedings under IBC and challenge to the findings in incidental or collateral proceedings amounts to an abuse of process of Court. In any view of the matter, when the Appellant raised a specific ground before the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and Judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself." 34. Since the adjudication by this Tribunal is in effect right in rem, the Appellant, being shareholder, filed this appeal. The law declared by Hon'ble Apex Court is not in dispute, but the Appellant herein is claiming interest through Corporate Debtor. When the Corporate Debtor challenged the same applying doctrine of resjudicata, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Adjudicating Authority in CP (IB) No. 268/NCLT/AHM/2020, though Civil Appeal No. 7715 of 2021 was dismissed at the stage of admission. Thus, the findings recorded by this Tribunal attained finality. Those findings cannot be challenged in incidental or collateral proceedings. The claim of appellants is hit by doctrine of resjudicata and abuse of process of law, as this Tribunal exercising powers conferred by Section 61 of IBC, while, deciding Company Appeal (AT)(Ins) No. 183 of 2021 adverted to all the contentions of both the parties and recorded specific findings. Even assuming for a moment that those findings were not challenged by the Appellants, still the judgment became final. Therefore, the Appellants either in Appeal No. 699 or in Appeal No. 812 of 2022 are disentitled to re-agitate the findings recorded by this Tribunal and affirmed by the Hon'ble Supreme Court, in the incidental proceedings. This Tribunal cannot sit in appeal over its own order, cannot review its own order. 35. Mr. Vikas Mehta, learned Counsel for Respondents in Appeal Nos. 699 and 812 of 2022 submits that when the judgment of this Tribunal has become final, the Appellants are dis-entitled to agitate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid issue in respect of Appellants 1 and 3 had already attained finality. More so, if in the tenancy registers of the relevant years, the High Court could not have opened the issues of factual controversies at all. 36. In addition to the above judgment of Hon'ble Supreme Court, in the recent judgment in Civil Appeal No. 4840 of 2021 dated 17.08.2021 in the matter of Neelama Srivastava Vs. State of UP and Ors. Civil Appeal No. 4840 of 2021 held that when the judgment attained finality, it cannot be re-agitated in any collateral or incidental proceeding. In Rudra Kumar Sain and Ors. Vs. Union of India and Ors. (2000) 8 SCC 25 while dealing with identical issue, the Hon'ble Supreme Court held that reconsideration of the judgment of the Court which has attained finality is not normally permissible. The decision upon the question of law rendered by this Court was conclusive and would bind the Court in subsequent cases. The Court cannot sit in appeal against its own judgment. 37. In the matter of Union of India Vs. Maj. S.P. Sharma Civil Appeal No. 2951-2957 of 2001, the Hon'ble Apex Court held a decision rendered by the Competent Court cannot be challenged in a collateral proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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