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TMI Blog2023 (2) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... d 18.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-III in CP(IB)-1165/(MB)/CIII/ 2023 in an application filed by Kookmin Bank, the Respondent herein under Section 95 of the IBC. In the impugned order, the Adjudicating Authority has appointed a Resolution Professional who was directed to examine the application and submit a report as provided under Section 99(1) of the IBC. The Appellant, Personal Guarantor of the Corporate Debtor who was Respondent in the application, aggrieved by the impugned order has come up in the Appeal. 2.2. Company Appeal (AT) (Insolvency) No.77 of 2024 has been filed against the order dated 18.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-III in CP(IB)-1164/(MB)/CIII/ 2023 in an application filed by Kookmin Bank under Section 95 against the Appellant. The Adjudicating Authority by the impugned order appointed a Resolution Professional who was directed to examine the application and submit a report as provided under Section 99(1) of the IBC. 2.3. Company Appeal (AT) (Insolvency) No.1341 of 2023 has been filed against the order dated 17.08.2023 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 of 2023 submits that the insolvency petition had been filed by the Financial Creditor against the Corporate Debtor- 'AA Estates Private Limited' which proceedings are pending in NCLT, Court-V, Mumbai Bench. The State Bank of India filed an application under Section 95 of the Code against the Appellant as Personal Guarantor on 20.01.2022 in which NCLT, Court-1, Mumbai Bench issued notice on 20.06.2022 while insolvency proceeding against the Corporate Debtor was commenced by NCLT, Court-V on 06.12.2022. The order was passed on 17.08.2023 by the NCLT, Court-1, Mumbai Bench appointing an IRP. It is submitted that the insolvency proceedings under Section 7 being pending in NCLT, Court-V, NCLT Court-1, Mumbai Bench had no jurisdiction to pass order in Section 95 application filed by the SBI. It is submitted that as per sub-section (1) of Section 60, the Adjudicating Authority in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. Thus, both for insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (2) of Section 60 is erroneous. It is not in the domain of an applicant to file an application before a particular court. Filing of the application is always in the Registry of the NCLT and which court shall hear the application is the internal domain of the NCLT. The interpretation put by the Appellant is not in accord with the scheme. Counsel has also distinguished cases relied by Counsel for the Appellant in support of his submission, it is submitted that none of the judgments support the interpretation put by Appellant. 7. Shri Ankur Mittal, Learned Counsel appearing for the State Bank of India refuting the submissions of the Appellant submits that the NCLT, Mumbai Bench is a Bench of the NCLT which has been notified by the notification dated 01.06.2016 issued by the Central Government in exercise of powers under sub-section (1) of Section 419 of the Companies Act, 2013. It is submitted that the NCLT Mumbai Bench which is located at Mumbai has territorial jurisdiction over State of Chhattisgarh, State of Goa and State of Maharashtra. All applications pertaining to the aforesaid geographical area has to be filed before the NCLT Mumbai Bench. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force." 12. Section 419 of the Companies Act, 2013 provides for 'Benches of Tribunal'. Central Government by Notification can constitute such number of Benches of the Tribunal as specified under Section 419. Sub-section (1), (2) and (3) of Section 419 are as follows:- "419. Benches of Tribunal.- (1) There shall be constituted such number of Benches of the Tribunal, as may, by notification, be specified by the Central Government. (2) The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the President of the Tribunal. (3) The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member: Provided that it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify: P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Hyderabad (1) State of Andhra Pradesh (2) State of Telangana 9. National Company Law Tribunal, Kolkata Bench Kolkata (1) State of Bihar (2) State of Jharkhand (3) State of Odisha (4) State of West Bengal (5) Union territory of Andaman and Nicobar Islands 10. National Company Law Tribunal, Mumbai Bench Mumbai (1) State of Chhattisgarh (2) State of Goa (3) State of Maharashtra 14. We, in the present case, are concerned with NCLT Mumbai Bench. NCLT Mumbai Bench transacts its business by two members out of which one is Judicial Member and another is Technical Member sitting in different Courts. The powers of the Tribunal as per sub-section (3) of Section 419 shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member. 15. Sub-section (1) of Section 419 which empowers Central Government to constitute Benches of the Tribunal and sub-section (3) provides the powers of the Tribunal shall be exercisable by Benches consisting of two Members. 16. The expression 'Benches' has been defined in the IBC under sub-section (2) of Section 3 which is as follows:- "3. Definitions.- ........(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. Subsection (2) of Section 60 provides that where a corporate insolvency resolution process of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution of a personal guarantor, as the case may be, of such corporate debtor shall be filed before such National Company Law Tribunal. Sub-section (2) uses two expressions before NCLT i.e. 'a' and 'such'. The provision makes it clear that when insolvency resolution process of a corporate debtor is pending before a NCLT, an application relating to insolvency of personal guarantor shall be filed before such NCLT. Uses of expression 'a' and 'such' makes it clear that both the proceedings have to be before the same NCLT. 21. Both the parties have referred to the judgment of this Tribunal in "State Bank of India, Stressed Asset Management Branch vs. Mahendra Kumar Jajodia, Personal Guarantor to Corporate Debtor- Company Appeal (AT) (Insolvency) No.60 of 2022" decided on 27.01.2022. Subsections (1) and (2) of Section 60 came for consideration in the above judgment where following has been laid down in paragraphs 7 and 8:- "7. Sub-Section 1 of Section 60 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled before the NCLT, Mumbai Bench. 23. NCLT Rules framed under Section 469 of the Companies Act, 2013 also defines 'bench' in sub-rule (7) of Rule 2, which is as follows:- "2. Definitions. ...-(7) "Bench" means a Bench of the Tribunal constituted under section 419 of the Act and includes Circuit Benches constituted by the President with prior approval of the Central Government to sit at such other geographical locations as may be necessary having regard to requirements." 24. From the definition of 'bench' as contained in the IBC as well as NCLT Rules, 2016 read with Sections 408 and 409, it is clear that the word 'bench' refers to a bench of NCLT as constituted under Section 419. The expression 'bench' as contained in IBC and NCLT Rules 2016 as well as under Section 419 of the Companies Act, 2013 only refers to Bench of NCLT. The legislature never contemplated NCLT for courts of particular Bench of NCLT sitting in composition of two members in a court, court of NCLT hearing a petition or application was not under contemplation in sub-section (2) of Section 60. Sub-section (2) of Section 60 refers to NCLT which includes also a bench of NCLT, hence, the bench shall mean a bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular bench business are transacted if there are more than two members in different court room. For example, in NCLT Mumbai Bench, there are five courts who are transacting business with regard to cases filed before NCLT Mumbai Bench. 29. Learned Counsel for the Appellant contends that what is contemplated under sub-section (2) of Section 60 is when a CIRP against the Corporate Debtor has been filed before one particular court of a bench of the NCLT, an application against personal guarantor should be filed in the same court of the NCLT. 30. When we look into the Scheme of the IBC and the Rules framed thereunder i.e. NCLT Rules 2016, it is clear that Section 60(2) only provided for filing of the application against personal guarantor before the same NCLT where insolvency resolution process against the corporate debtor is pending. Legislature neither contemplated nor intended hearing of both the applications by one particular court room. A bench of NCLT is a unit and filing of application and petitions are before the bench of the NCLT and not before a particular court. How the different courts transact their business and how the cases are listed before different court of a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en relied by Counsel for the Appellant in support of his submission. The judgment of this Tribunal in Mahendra Kumar Jajodia (supra) was a case where this Tribunal were examining the question as to when no insolvency proceeding pending against corporate debtor whether an application under Section 95 can be entertained by the Adjudicating Authority. The Adjudicating Authority in the said case has refused to entertain the application against which Appeal filed was allowed by this Tribunal and it was held that even if no insolvency proceedings are pending against the Corporate Debtor, application under Section 95 can be entertained. In the above context, sub-section (2) of Section 60 was interpreted in Paragraphs 7 and 8 of the judgment, already noticed and extracted above. The judgment was not considering the issue which has been raised in the present appeal, hence, no assistance can be taken by the Appellant from the above judgment. 33. The next case of this Tribunal relied by the Appellant in "Schweitzer Systemtek India Pvt. Ltd. vs. Phoenix ARC Pvt. Ltd. & Ors.- 2017 SCC OnLine NCLAT 235". In the above case, an order was passed by the Adjudicating Authority admitting Section 7 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tribunal must consist of a Judicial Member and an Administrative Member, hence, the case could not have been disposed of by the Judicial Member alone. In paragraph 4, following was held:- "4. In view of the above state of the law we have no hesitation in coming to the conclusion that the matter ought not to have been disposed of by the Administrative Member alone. We, therefore, set aside the impugned order and remand the matter to the Tribunal for disposal in accordance with law by a bench properly constituted as required by Section 5(2) of the statute. The civil appeal is accordingly disposed of." 36. The question which arose for consideration in the above case was entirely different and has no bearing on the issue which has been sought to be raised in the present case. The above judgment is clearly distinguishable. 37. Another judgment of this Tribunal relied by the Appellant is "Monica Jajoo vs. PHL Fininvest Pvt. Ltd. & Anr.- 2023 SCC OnLine NCLAT 348" in which a two members bench was hearing a case arising out of a proceeding under Section 95 against personal guarantor. In the above case, application under Section 95 was heard by Court IV of NCLT, New Delhi by which or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and was not to a particular court room. Thus, the conclusion to which this Tribunal arrived in "Monica Jajoo" case is not in accord with the statutory scheme delineated by the IBC. Reliance on judgment of this Tribunal in "Mahendra Kumar Jajodia" (supra) was misplaced, hence, two-member bench erred in laying down that sub-section (2) of Section 60 provides both in liquidation proceeding as well as Section 95 proceedings have to be heard by the same court of NCLT. 39. We, thus, are of the view that the judgment of this Tribunal in "Monica Jajoo" does not lay down the correct law. The interpretation which is sought to be advanced by the Appellant in event it is accepted shall lead to uncertainty and conflict regarding jurisdiction of a NCLT to entertain an application under Section 95. As observed above, all applications and petitions filed in NCLT including its benches have to be heard and decided as per the general and special order of the President. Applications are listed in different court of one bench of NCLT as per the general and special order of the President. When a matter is listed before a particular court of bench of NCLT, the Court where the matter is listed has nec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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