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TMI Blog2022 (5) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. 5. It is the uncontroverted position that the present liquidation proceedings have been set in motion by an entity (JPSL) which according to the judgment rendered in Anuj Jain v Axis Bank ("Anuj Jain") [(2020)8 SCC 401 paras 45, 47, 47.1, 47.2,48, 50.1, 50.2 & 45] and followed in Phoenix ARC Ltd. v Ketulbhai Ramubhai Patel [(2021) 2 SCC 799 paras 35,36], is admittedly not a financial creditor. This is because "pledge of shares" does not qualify as "financial debt" and hence an application under S.7 of IBC by JSPL, who is not a financial creditor with respect to corporate debtor under Section 5(7) of IBC, is not maintainable before the Learned Tribunal. The proposition that JSPL is not a financial creditor, has not been contested. 6. The liquidation proceedings have always been held as "civil death" of an organization. The settled common law is that the initiation of liquidation proceedings must be construed strictly and shall only be a matter of last resort. The objective of IBC is to revive the corporate debtor, ensure its continuation and prevent its corporate death [Swiss Ribbons v.Union of India (2019) 4 SCC 17 para 28]. This is more so important to be followed in spirit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present application, is totally misconceived and baseless. Since the original order passed by this Tribunal was itself a nullity, there is no question of such null order merging with any other order. Something that is null and void cannot merge with anything else. 11. Furthermore, as to the argument of res-judicata, it is important to note that the Applicants here in viz.shareholders were never parties and were never heard by any forum in connection with these proceedings. It is made clear even in section 11 of CPC that res-judicata shall apply only "between the same parties". Thus, res-judicata is not a plea available to oppose the instant application. [(2021) 3 SCC 475 at paras 31, 32{Phoenix ARC v. Spade} 12. Re:Difference between jurisdictional facts and adjudicated facts - Jurisdictional fact is never final. Accordingly, merger and res-judicata do not apply in case of inherent lack of jurisdiction. Existence of a jurisdictional fact is thus as sine qua non or condition precedent to the assumption of jurisdiction by a court or tribunal. [Carona case(supra)]. Similar view has been expressed by the Constitution Bench of Apex Court in Calcutta Discount v. Income Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospectively. 16. The doctrine of prospective overruling is in apposite and inapplicable. 17. The argument presented by JSPL based on the Explanation to Order XLVII of the CPC, 1908 is totally misplaced. Firstly, Order XLVII relates to "review" of orders and in any event has no application to proceedings under IBC. In the present case, no review is sought and instead there life prayed for is to set aside the CIRP and Liquidation orders based on the ground that they are nullities. 18. Secondly, the issue here in does not relate to any factual aspect on merits or any legal question touching upon the merits. Instead, the clear position that emerges is that the entire proceedings from the very inception were completely without jurisdiction and anullity. This is a doorway/threshold issue, because if the Tribunal did not have jurisdiction to even entertain the main petition (which is not contested even by JSPL), there is no question of admitting the section 7 petition. 19. Thirdly, there is no question of law which has been reversed or modified by Hon'ble Supreme Court in Anuj Jain's case. On the contrary, the Hon'ble Supreme Court has expounded and stated the law that "pledge of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In short, no water has flown in the last two and half years. Hence, recalling of the order dated 11.03.2019 and 11.12.2019 on the grounds of lack of jurisdiction shall cause no harm to any third party. Infact, such an order would be aligned with the objective of Insolvency &Bankruptcy Code, 2016, the ratio laid down in Swiss Ribbons &in the interest of the justice. 24. Re: No locus of JSPL to oppose the revival plans of the Corporate Debtor - JSPL is not a financial creditor u/s 5(7) of the IBC. It is also a major share holder in the corporate debtor and no benefit will accrue to JSPL, if the corporate debtor is liquidated. Instead, JSPL will be benefitted if the corporate debtor is revived in line with the requirement of IBC. As such, the opposition of JSPL to present application is against the interest of all stakeholders and cannot be deemed bonafide. There is no justifiable logic (apart from personal vendetta against the CD) for JSPL to oppose the prayer made herein. 25. Re: Doctrine of Merger - The Doctrine of Merger can be better understood from the following observation of the Supreme Court in a landmark decision in the Kunhayammed v. State of Kerala (2000) 6 SCC 359 par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating Authority has been firstly upheld by the Hon'ble NCLAT and then further upheld by the Hon'ble Supreme Court, the said order dated 11.03.2019 therefore, stands merged into the order of the Hon'ble Supreme Court. Reliance is placed on the following Judgments: (i) M/s Gojer Bros (Pvt.) Ltd. Vs. Shri Ratan Lal Singh; (1974) 2 SCC 453; [Paras: 11, 21, 22]. (ii) Collector Of Customs, Calcutta Vs. East India Commercial Co. Ltd., Calcutta And Others; AIR 1963 SC 1124. [Paras 4, 5, 6]. 31. In view of the applicability of doctrine of merger, the order passed by this Hon'ble Tribunal stands merged with the order passed by the Hon'ble Supreme Court and that the admission order dated 11.03.2019 does not survive independently as such. Any challenge to the same can only be made before the Hon'ble Supreme Court. 32. Subsequent decision in Anuj Jain's case is not a ground of review. The contention of the Applicant that in view of a subsequent decision of the Hon'ble Supreme Court the judgment passed by this Tribunal ought to be reviewed / recalled is baseless and completely contrary to the provisions of Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (CPC). 33. Reliance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the category of a 'Financial Debt'. Thereafter, even the Hon'ble NCLAT has taken into its consideration the said aspect to hold that that the interest clause contained in the agreement fulfils the requirement of 'time value for money'. Resultantly, the Hon'ble NCLAT upheld the decision of this Hon'ble Tribunal holding the Respondent No. 2 herein to be a 'financial creditor'. 39. Even an erroneous decision on a question of law is binding and operates as a res judicata. 40. Without prejudice to the submissions made hereinabove, it a mandate of law that even an erroneous decision on a question of law operates as res judicata between the parties to it. Thus, even if the order dated 11.03.2019 passed by this Hon'ble Tribunal is said to be an erroneous decision (though not admitted), the same can now not be challenged by way of the captioned applicble. Reliance is placed on: Mohanlal Goenka Vs. Benoy Kishna Mukherjee And Others; AIR 1953 SC 65 [Paras: 22 & 23]. 41. In view of the dismissal of the Civil Appeals by the Hon'ble Supreme Court, it is trite to state that the challenge to the admission order dated 11.03.2019 has been put to rest. However, by way of the captioned appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nised by the Court or the Tribunal by judgment and order which have attained finality will not be adversely affected by the contrary view now taken in the judgment in Madras Telephones. Further, Division Bench of Hon'ble High court of Madhya Pradesh in WP No.3257/2017, State of M.P. vs. Maharaj Singh, after considering the doctrine of Prospective overruling and law laid down in Golak Nath's in particular (State of M.P. vs. Maharaj Singh) has held on 30 July, 2019, has held : "15. In Somaiya Organics (India) Ltd. v. State of U.P., this Court held that the doctrine of prospective overruling was in essence a recognition of the principle that the court moulds THE HIGH COURT OF MADHYA PRADESH WP No.3257/2017 (State of M.P. vs. Maharaj Singh (dead) the relief claimed to meet the justice of the case and that the Apex Court in this country expressly enjoys that power under Article 142 of the Constitution which allows this Court to pass such decree or make such order as is necessary for doing complete justice in any case or matter pending before this Court. This Court observed: (SCC p. 532, para 27) "27. In the ultimate analysis, prospective overruling, despite the terminology, is only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase it is an admitted position as borne out from the table of dates and events referred above, the proceedings in C.P. No. 1340 of 2018 has attained finality and after attaining the finality the matter is in liquidation at present since 11.12.2019. 48. The process, after appointment of Liquidator, is irreversible after it attained finality particularly after the dismissal of the SLP by Hon'ble Supreme Court of India on 16 August, 2019 49. The law laid down by the Hon'ble Supreme Court of India in subsequent judgment in Anuj Jain case on 26 February, 2020 taking a different view as to Pledge of debentures is not a operational debt has, has apply in those cases where the proceedings initiated under IBC 2016 have not attained finality. 50. Where proceedings have attained finality like decree has become final in a civil court, a different view in Interpretation Nature of Debt, subsequently by Hon'ble Supreme Court will apply only to proceedings that may be initiated subsequent to this judgment and pending proceedings which have not attained the finality. For the reasons brought out herein above, we hereby reject this application. 51. Certified copy of this order may be issued, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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