JAI BALAJI INDUSTRIES LIMITEDversusSTATE BANK OF INDIA & ORS.

694                       [2019]
               SUPREME COURT     4 S.C.R. 694
                              REPORTS                     [2019] 4 S.C.R.


A                   JAI BALAJI INDUSTRIES LIMITED
                                       v.
                      STATE BANK OF INDIA & ORS.
                         (Civil Appeal No.1929 of 2019)
B                              MARCH 08, 2019
                       [N. V. RAMANA AND
                 MOHAN M. SHANTANAGOUDAR, JJ.]
            National Company Law Appellate Tribunal Rules, 2016 –
      rr. 48 and 52 – Application filed by respondent no.1 against the
C
      appellant u/s.7, IBC – Order by National Company Law Tribunal,
      Calcutta (NCLT) rejecting the application – Challenged by
      respondent no.1 – National Company Law Appellate Tribunal
      (NCLAT) issued notice on the question of limitation as well as on
      the merit of the appeal – Judgment reserved – NCLAT set aside the
D     order of the NCLT, directing it to admit the application filed by the
      respondent no.1 u/s.7, IBC – Plea of appellant that it was neither
      served with notice of appeal before the NCLAT nor was given hearing
      before it – Held: While the respondent no.1 has submitted that an
      advanced copy of the appeal was served on the appellant, the same
      cannot be treated as service of notice as stipulated u/r. 48, NCLAT
E
      Rules – r.52, NCLAT Rules categorically states that the judicial
      section of the registry of the NCLAT shall record, in the “Notes of
      the Registry” column in the order sheet, the details regarding
      completion of service of notice on the respondents – Material placed
      does not indicate that the aforementioned stipulation was complied
F     with – Thus, no notice was served upon the appellant before the
      NCLAT as stipulated under the rules, and the right of the appellant
      to be heard, audi alteram partem, was violated – Impugned order set
      aside – Matter remanded back to NCLAT – NCLAT to dispose of the
      matter as expeditiously as possible after affording opportunity of
      hearing to the parties – Insolvency & Bankruptcy Code, 2016 – s.7.
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            Disposing of the appeal, the Court
            HELD: 1.1 In the rejoinder affidavit before Supreme Court
      the appellant has submitted that, pursuant to issuance of notice
      vide order dated 02.01.2019, neither did respondent no. 1 file
H     process fee for issuance of summons in terms of the said order,
                                   694
JAI BALAJI INDUSTRIES LIMITED v. STATE BANK OF INDIA                    695


nor was the same served upon the appellant. Thus the judgment           A
which was reserved on 08.01.2019 by the NCLAT, and
consequently pronounced, was done without hearing the appellant
and the observation of the NCLAT that all the parties were heard
is erroneous. In fact, even the impugned order does not note the
appearance of the counsels on behalf of appellant herein. While
                                                                        B
the respondent no. 1 has submitted that an advanced copy of the
appeal was served on the appellant, the same cannot be treated
as service of notice as stipulated under Rule 48 of the NCLAT
Rules, 2016. Rule 48 of the NCLAT Rules clearly stipulates
service of notice on the other side, pursuant to issuance of notice
by the NCLAT in the appeal, regardless of supply of advance             C
copy of appeal paperbook prior to the issuance of notice by
NCLAT. [Paras 6-8] [697-F-H; 698-A, C-D]
      1.2 Rule 52 of the NCLAT Rules categorically states that
the judicial section of the registry of the NCLAT shall record, in
the “Notes of the Registry” column in the order sheet, the details      D
regarding completion of service of notice on the respondents.
However, the material placed does not indicate that the
aforementioned stipulation has been complied with. As per the
rejoinder affidavit filed on behalf of the appellant, the counsel for
the appellant had undertaken a search of the register of process
fee and summons, and the concerned file in the office of the            E
NCLAT on 28.02.2019. However, no record of respondent no.1
having paid the process fee for issuance and service of notice to
the appellant was found.[Paras 9, 10] [698-D, F-H]
      1.3 No notice was served upon the appellant before the
NCLAT as stipulated under the rules, and the right of the appellant     F
to be heard, audi alteram partem, has been violated. In the facts
and circumstances of the case, the order of NCLAT is set aside
and the matter is remanded back to the NCLAT for fresh
consideration with a direction to dispose of the matter as
expeditiously as possible after affording an opportunity of hearing     G
to the parties. No opinion is expressed on the merits of the case.
The NCLAT to adjudicate the matter on its own merits
uninfluenced by any of the observations made. [Paras 11, 12
and 14] [698-H; 699-A-D]

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696            SUPREME COURT REPORTS                          [2019] 4 S.C.R.


A           Ghaziabad Development Authority v. Machhla Devi,
            2018 SCC OnLine SC 2178 – referred to.
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1929
      of 2019.
            From the Judgment and Order dated 08.02.2019 of the National
B     Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
      (Insolvency) No.788 of 2018.
            Kapil Sibal, Dr. Abhishek Manu Singhvi, Mukul Rohatgi, Gaurav
      Pachnanda, Sr. Advs., Rajat Sehgal, Vasanth Bhairani, Saurabh Kirpal,
      Vikas Mehta, Sanjay Kapur, Ms. Megha Karnwal, Kauser Husain,
C     Ms. Shubhra Kapur, Rahul Gupta, Advs. for the appearing parties.
            The Judgment of the Court was delivered by
             N.V. RAMANA, J. 1. This appeal is directed against order
      dated 08.02.2019, passed by the National Company Law Appellate
D     Tribunal, New Delhi [“the NCLAT”], in Company Appeal (AT)
      (Insolvency) No.788 of 2018, whereby the order of the National Company
      Law Tribunal, Calcutta [“the NCLT”] dated 10.10.2018 was set aside
      and the NCLT was directed to admit the application filed by respondent
      no.1 against the appellant under Section 7, IBC.
             2. Aggrieved by the said order, the appellant has preferred the
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      instant appeal.
             3. Mr. Kapil Sibal, learned senior counsel appearing on behalf of
      the appellant, assiduously urged that the appellant’s right to be heard,
      audi alteram partem, one of the principles of natural justice, has been
      violated in as much as the appellant has neither been served with notice
F
      of appeal before the NCLAT nor been given a hearing before it. The
      learned senior counsel further submitted that the impugned order passed
      by the NCLAT is contrary to law as it failed to comply with the procedure
      laid down under the NCLAT Rules, 2016 [“NCLAT Rules”], specifically
      Rule 48, which clearly provides that pursuant to issuance of notice by
G     the NCLAT, the copy of the appeal and documents filed therewith, if
      any, shall be served along with the notice on the other side. He further
      submitted that though notice was directed to be issued by the NCLAT,
      the same was never received by the appellant herein and the NCLAT
      passed order without hearing the appellant, erroneously noting that it has
      heard all the parties.
H
JAI BALAJI INDUSTRIES LIMITED v. STATE BANK OF INDIA                        697
                  [N.V. RAMANA, J.]

       4. On the other hand, Mr. Mukul Rohatgi, learned senior counsel      A
appearing on behalf of respondent No.1, vehemently contested the above-
mentioned submissions of appellant. He submitted that the advance copy
of the appeal paperbook filed by respondent no.1 in NCLAT was duly
delivered by post at the registered office of the appellant, wherein it
showed intent to challenge the order of the NCLT. Despite this, the
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counsel for the appellant did not appear before the NCLAT. He referred
to the proceedings before the Calcutta High Court to show that the
appellant has been employing delay tactics to stall the insolvency
proceedings, which assertion was denied by the learned senior counsel
for the appellant.
       5. Having heard the learned senior counsel for the parties, we       C
have also perused the materials placed before us. We find that in the
instant case, the NCLAT, vide order dated 02.01.2019, issued notice
both on the question of limitation as well as on the merit of the appeal.
Subsequently, judgment was reserved vide order dated 08.01.2019. On
08.02.2019, the judgment was pronounced noting:                             D
      “17. For the reasons aforesaid, we set aside the impugned
      order dated 10th October, 2018 and remit the matter to the
      Adjudicating Authority, Kolkata Bench, Kolkata with direction
      to admit the application under Section 7. Before such
      admission, intimation to be given to the ‘Corporate Debtor’,          E
      but no further hearing is required to be given to any person,
      this Appellate Tribunal having heard all the parties and having
      held that it is a fit case for admission.”
                                                    (emphasis supplied)
       6. It is to be noted that in the rejoinder affidavit before us the   F
appellant has submitted that, pursuant to issuance of notice vide order
dated 02.01.2019, neither did respondent no. 1 file process fee for
issuance of summons in terms of the said order, nor was the same served
upon the appellant. Thus the judgment which was reserved on 08.01.2019
by the NCLAT, and consequently pronounced, was done without hearing         G
the appellant and the observation of the NCLAT that all the parties were
heard is erroneous. In fact, even the impugned order does not note the
appearance of the counsels on behalf of appellant herein.


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698            SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A            7. While the respondent no. 1 has submitted that an advanced
      copy of the appeal was served on the appellant, the same cannot be
      treated as service of notice as stipulated under Rule 48 of the NCLAT
      Rules which, inter alia, provides:
            “48. Issue of notice-
B           (1) Where notice of an appeal or petition or interlocutory
            application is issued by the Appellate Tribunal, copies of the
            same, the affidavit in support thereof and if so ordered by the
            Appellate Tribunal the copy of other documents filed
            therewith, if any, shall be served along with the notice on the
C           other side.”
             8. Rule 48 of the NCLAT Rules clearly stipulates service of notice
      on the other side, pursuant to issuance of notice by the NCLAT in the
      appeal, regardless of supply of advance copy of appeal paperbook prior
      to the issuance of notice by NCLAT.
D           9. Further, Rule 52 of the NCLAT Rules categorically states that
      the judicial section of the registry of the NCLAT shall record, in the
      “Notes of the Registry” column in the order sheet, the details regarding
      completion of service of notice on the respondents. It notes:
            “52. Entries regarding service of notice or process.- The
E           Judicial Section of the Registry shall record in the column in
            the order sheet ‘Notes of the Registry’, the details regarding
            completion of service of notice on the respondents, such as
            date of issue of notice, date of service, date of return of notice,
            if unserved, steps taken for issuing fresh notice and date of
F           completion of services etc.”
             10. However, it is pertinent to note that the material placed before
      us do not indicate that the aforementioned stipulation has been complied
      with. As per the rejoinder affidavit filed on behalf of the appellant, the
      counsel for the appellant had undertaken a search of the register of
      process fee and summons, and the concerned file in the office of the
G
      NCLAT on 28.02.2019. However, no record of respondent no. 1 having
      paid the process fee for issuance and service of notice to the appellant
      was found.
            11. Thus, in view of the above position, it is abundantly clear that
      no notice was served upon the appellant before the NCLAT as stipulated
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JAI BALAJI INDUSTRIES LIMITED v. STATE BANK OF INDIA                           699
                  [N.V. RAMANA, J.]

under the rules, and the right of the appellant to be heard, audi alteram      A
partem, has been violated [See:Ghaziabad Development Authority v.
Machhla Devi, 2018 SCC OnLine SC 2178].
       12. In the facts and circumstances of the case, we are of the
considered opinion that the instant appeal can be disposed of by setting
aside the order of NCLAT and remanding the matter back to the NCLAT            B
for fresh consideration. Accordingly, we set aside the impugned order
dated 08.02.2019 passed by the NCLAT and remand the matter back to
NCLAT with a direction to dispose of the matter as expeditiously as
possible after affording an opportunity of hearing to the parties.
      13. The appellant and the respondents are also directed to approach      C
the NCLAT on March 13, 2019 with a prayer for early listing of the
matter. It is clarified that there is no necessity for the NCLAT to issue
any fresh notice to the appellant herein.
      14. Before parting with the matter, we make it clear that we have
not expressed any opinion on the merits of the case. Needless to say, the      D
NCLAT will adjudicate the matter on its own merits uninfluenced by
any of the observations made hereinabove.
      15. The appeal stands disposed of in the above terms. Pending
applications, if any, shall also stand disposed of. No costs.
                                                                               E
Divya Pandey                                             Appeal disposed of.




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