NCLAT SETS ASIDE IBC ORDER IN A CASE HEARD BY DB

BY- Rishi Khandelwal

BACKGROUND (NCLAT Order Heard By)

The NCLAT has set aside insolvency proceedings initiated against Ambience Pvt Ltd by Vistra ITCL(India) Ltd.’ on the ground that the matter was heard by a Division Bench of the NCLAT Delhi, comprising of R. Vardharajan (Member Judicial) and Ms. Deepa Krishan (Member Technical) but the order was passed by a single bench comprising of the only judicial member.

Vistra ITCL (India) Ltd, a financial creditor of Ambience Pvt Ltd filed an application for initiating corporate insolvency resolution process (CIRP) against Ambience Pvt Ltd under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). Only the judicial member R Vardharajan was presiding over the bench even though the division bench comprised both R Vardharajan and Deepa Krishan which heard the final arguments in the matter. The order was reserved on 22nd April 2019.

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CURRENT ISSUE (NCLAT Order Heard By)

The admission order was challenged on the ground that since the issue has been heard by division bench of two NCLT members, one being a technical member and other being a judicial member. Senior advocate Abhishek Manu Singhvi appeared on behalf of the Corporate Debtor (CD) Ambience Pvt Ltd and referred to Rule 152(4) of NCLT Rules, 2016 and Section 419(3) of the Companies Act to support his arguments against the admission of the insolvency proceedings and its order.

As per section 419(3) of the Companies Act (Act), the Benches of the Tribunals, constituted under section 410 of the Act, shall comprise of two members – one ‘technical’  and one ‘judicial’ member, and exercise their powers. Rule 154(4) provides that.

On 27th August 2019 Ambience Pvt Ltd approached the NCLAT against the order by way of an appeal and was being heard, and the technical member Ms. Deepa Krishan retired on 19th July 2019 in the meantime. The appeal was based on Rule 154(4) of the NCLT Rules, which lays down than an order passed the Tribunals may be corrected by the way of rectification, in case of any accidental slip or omission.

The arguments put forth by Ambience Pvt Ltd were also accepted by Senior Advocate Mr. Arun Kathpalia, appearing on behalf of Vistra ITCL (India) Ltd.

CONCLUSION (NCLAT Order Heard By)

Justice S J Makhopadhyay of the appellate bench was of the opinion that the matter is remitted back to the NCLT, for fresh hearing on the basis of merit, and accordingly set aside by the CIR proceedings against Ambience Pvt Ltd.

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