The Bombay High Court will decide whether an order pronounced by the National Company Law Tribunal (NCLT) is valid, if not pronounced in an Open Court..A Division Bench of Justices S C Dharmadhikari and R I Chagla has been hearing a plea by Rolta India Limited (Rolta), a software firm challenging the order of the Mumbai Bench of NCLT that initiated insolvency proceedings against it..A Mumbai Bench of NCLT judges V P Singh and Rajesh Sharma passed its order on October 22, this year..Being aggrieved, Kamal K Singh, the Founder and Chairman of the firm on Tuesday moved the Bombay High Court claiming that the Tribunal had not passed the order in an open court and hence not a valid judgment. The NCLT order should be quashed and set aside, not on merits but only on the ground that it does not comply with the Rules, argued the counsel for Rolta..In this regard, Senior Counsel Janak Dwarkadas and Vikram Nankani, appearing for Rolta cited Rule 150 of the National Company Law Tribunal Rules, 2016 dealing with the pronouncement of the order. It was submitted that the Rule makes the pronouncement mandatory and there is no legal and valid order unless it is pronounced in the Court. It was argued,.“The order may have been kept ready for pronouncement, but the Tribunal, exercising judicial powers, ought to have pronounced that order…It may be a pronouncement at once or as soon as after hearing the applicant and the respondent is concluded. It may not be possible to immediately pronounce the order, but there is an outer limit also prescribed of thirty days from the date of the final hearing.”.Moreover, it was contended that the date of pronouncement was not notified and the firm found out about the said decision only when the Resolution Professional (RP) visited the company office with a copy of the order..Dwarkadas went on to argue,.“There was no board prepared of the proceedings and particularly, no pronouncement of the order in open Court. There was no intimation to the parties and that the petitioner’s advocate was in the Court, but no pronouncement was done.” .Dwarkadas further argued that the process pertaining to insolvency resolution can have drastic consequences as the petitioner could not get an opportunity to appeal before the Appellate Tribunal. Once the insolvency process begins, the company’s right to settle with the creditors is lost, argued Rolta..He also argued that earlier, the Delhi High Court had done away with the similar practice adopted by Income Tax Tribunal of not pronouncing orders in open Court. In this regard, the petitioners requested the Court to lay down a law for NCLT proceedings.. “The act of pronouncement is crucial and lack of it cannot be cured. As Supreme Court has laid down earlier, it becomes a nullity. Moreover, it indicates finality and becomes operative. My client got no time to seek a stay before the National Company Law Appellate Tribunal (NCLAT).”.On the other hand, Senior Counsel Ravi Kadam, appearing for respondents, who had sought insolvency of Rolta contested the plea and submitted that the Rules cannot be elevated to such a status making it impossible for the Tribunal to function..“There is no serious omission and of nature pointed out. Rather, there is a pronouncement of the order in the absence of the parties. That does not mean that there is no pronouncement of the order or that the parties had not been intimated of such pronouncement.” Kadam, on Friday, argued that parties were intimated by the NCLT..In order to decide the matter, a Bench led by Justice S C Dharmadhikari asked Advocate RV Govilkar appearing for the Registrar of NCLT to produce the original records..After perusing the records submitted on Thursday, the Court made preliminary observations and noted that it did not find any endorsement of the Court Master..In light of this, the Court observed,.“If the order was pronounced under sub-rule (2) of Rule 151, which says that after pronouncement of order under Rule 151 by a Member of the Bench, on behalf of the Bench, the Court Master shall make a note in the order sheet that the order of the Bench consisting of President and Members was pronounced in open Court on behalf of the Bench, pertinently, there is no endorsement in the original file of this nature and Mr. Govilkar has conceded that there is no roznama also.”.The Court then directed the respondents to inspect the records and it is likely to pass an order on the validity of the NCLT order today..[Read Order dated November 21, 2019]
The Bombay High Court will decide whether an order pronounced by the National Company Law Tribunal (NCLT) is valid, if not pronounced in an Open Court..A Division Bench of Justices S C Dharmadhikari and R I Chagla has been hearing a plea by Rolta India Limited (Rolta), a software firm challenging the order of the Mumbai Bench of NCLT that initiated insolvency proceedings against it..A Mumbai Bench of NCLT judges V P Singh and Rajesh Sharma passed its order on October 22, this year..Being aggrieved, Kamal K Singh, the Founder and Chairman of the firm on Tuesday moved the Bombay High Court claiming that the Tribunal had not passed the order in an open court and hence not a valid judgment. The NCLT order should be quashed and set aside, not on merits but only on the ground that it does not comply with the Rules, argued the counsel for Rolta..In this regard, Senior Counsel Janak Dwarkadas and Vikram Nankani, appearing for Rolta cited Rule 150 of the National Company Law Tribunal Rules, 2016 dealing with the pronouncement of the order. It was submitted that the Rule makes the pronouncement mandatory and there is no legal and valid order unless it is pronounced in the Court. It was argued,.“The order may have been kept ready for pronouncement, but the Tribunal, exercising judicial powers, ought to have pronounced that order…It may be a pronouncement at once or as soon as after hearing the applicant and the respondent is concluded. It may not be possible to immediately pronounce the order, but there is an outer limit also prescribed of thirty days from the date of the final hearing.”.Moreover, it was contended that the date of pronouncement was not notified and the firm found out about the said decision only when the Resolution Professional (RP) visited the company office with a copy of the order..Dwarkadas went on to argue,.“There was no board prepared of the proceedings and particularly, no pronouncement of the order in open Court. There was no intimation to the parties and that the petitioner’s advocate was in the Court, but no pronouncement was done.” .Dwarkadas further argued that the process pertaining to insolvency resolution can have drastic consequences as the petitioner could not get an opportunity to appeal before the Appellate Tribunal. Once the insolvency process begins, the company’s right to settle with the creditors is lost, argued Rolta..He also argued that earlier, the Delhi High Court had done away with the similar practice adopted by Income Tax Tribunal of not pronouncing orders in open Court. In this regard, the petitioners requested the Court to lay down a law for NCLT proceedings.. “The act of pronouncement is crucial and lack of it cannot be cured. As Supreme Court has laid down earlier, it becomes a nullity. Moreover, it indicates finality and becomes operative. My client got no time to seek a stay before the National Company Law Appellate Tribunal (NCLAT).”.On the other hand, Senior Counsel Ravi Kadam, appearing for respondents, who had sought insolvency of Rolta contested the plea and submitted that the Rules cannot be elevated to such a status making it impossible for the Tribunal to function..“There is no serious omission and of nature pointed out. Rather, there is a pronouncement of the order in the absence of the parties. That does not mean that there is no pronouncement of the order or that the parties had not been intimated of such pronouncement.” Kadam, on Friday, argued that parties were intimated by the NCLT..In order to decide the matter, a Bench led by Justice S C Dharmadhikari asked Advocate RV Govilkar appearing for the Registrar of NCLT to produce the original records..After perusing the records submitted on Thursday, the Court made preliminary observations and noted that it did not find any endorsement of the Court Master..In light of this, the Court observed,.“If the order was pronounced under sub-rule (2) of Rule 151, which says that after pronouncement of order under Rule 151 by a Member of the Bench, on behalf of the Bench, the Court Master shall make a note in the order sheet that the order of the Bench consisting of President and Members was pronounced in open Court on behalf of the Bench, pertinently, there is no endorsement in the original file of this nature and Mr. Govilkar has conceded that there is no roznama also.”.The Court then directed the respondents to inspect the records and it is likely to pass an order on the validity of the NCLT order today..[Read Order dated November 21, 2019]
