A single judge bench of the Jammu and Kashmir High Court, in the case of S. A. Gold Ispat Private Ltd. v. The J&K Bank Limited and others, has entertained a Writ Petition against an order passed by the NCLT under section 7 of IBC.

The petitioner challenged an order passed NCLT u/s 7 of IBC initiating CIRP, against the petitioner, by way of filing a Writ Petition u/a 226 of the constitution. The Respondent i.e. Bank had raised a preliminary objection vis-a-vis maintainability of the writ petition. 

Brief Facts

The petitioner-company through this writ petition challenged the judgment dated 10.01.2020, passed by National Company Law Tribunal, Chandigarh under Section 7 of Insolvency and Bankruptcy Code, 2016.

Case of the Petitioner 

The learned counsel appearing for the petitioners submitted that the Tribunal committed error on many aspects and go to the root of the case. The tribunal lacked the jurisdiction to entertain the petition filed before it and passed the order which was not within its jurisdiction.

In any case, Tribunal failed to exercise the jurisdiction as per the provisions of the Act which consequently gives jurisdiction to this court to deal with the order impugned irrespective of the fact that remedy of appeal is available to the petitioners herein under the Code.

Case of the Respondent 

Mr. Z. A. Shah, learned Sr. counsel appearing on behalf of the respondents- bank, argued that the writ petition was not maintainable as the Code provided alternative remedy of appeal against the order passed by the Tribunal and which was impugned in the present writ petition. The failure to exercise the jurisdiction in a particular manner did not give the petitioner right to approach the High Court in writ petition even if it was assumed for the sake of arguments that some error crept in the order impugned before this court.

The learned counsel also submitted that the writ petitioner failed to make out through grounds of the writ petition the exact nature of grievance which they may have qua the judgment passed by the Tribunal.

Note: The learned counsels of both the sides relied upon the judgments of the Hon’ble Supreme Court passed in M/S Embassy Property Developments Pvt. Ltd. v. State of Karnataka & ors. and Bombay high court passed in WP(L) titled Kamal K. Singh Vs. Union of India and others and put-forth their respective contentions accordingly.

Reasoning and Decision of the Court

As the court was only to confine itself to the maintainability of the writ petition, it did not do a detailed examination and determination of the grievance of the petitioner on factual aspects of the matter while deciding the present issue and therefore the same were not dealt with.

The Court observed that learned counsels for the both sides banked upon certain observations of the judgements (mentioned above) in support of their respective contentions.

“The above mentioned judgements provide window as to whether the discretion is to be exercised or not by the High Court in exercise of the powers conferred by Article 226 of the Constitution of India.”

“The distinction between the lack of the jurisdiction and the wrongful exercise of the same should be taken into account by the High Court when Article 226 is sought to be pressed into service as the aspect of by-passing statutory alternate remedy is to be decided is what is basically propounded by the Apex court in its judgment (supra). It is suffice to mention herein that the judgment dealt with the order passed by NCLT in the case under the Code.”

“The perusal of the writ petition reveals of the petitioner challenging the order of the Tribunal on various grounds. The very challenge to the proceedings filed by the bank before the Tribunal has been agitated in the writ petition and in addition to that the violation of the provisions of Section 7 and Section 10 of the Code stand highlighted in the writ petition. The proceedings initiated before the civil courts against the bank with regard to the transaction entertained into between the petitioner herein and the respondent bank and its impact on the proceedings initiated before the Tribunal are also the issues which go to the root of the case and require to be decided. As the petition has challenged the basic proceedings initiated before the Tribunal in the present petition the court is of the view that the issue has to be addressed by the court.”

The Court further observed:

It cannot be disputed in the light of the Judgments (Supra) that the writ jurisdiction against the order passed by the Tribunal cannot be said to be completely barred and it depends upon the facts and circumstances of the case as to whether the writ jurisdiction can be invoked in any given case. As the pronouncements (Supra) are in the context of the Statute which is subject matter of the present writ petition, therefore, the court need not refer to the other authoritative pronouncements under other Statutes where the courts have entertained the petition under Article 226 of the constitution inspite of the fact that the Statute provides remedy of appeal.”

Held

“The court is of the view that the present petition is maintainable in view of the grounds taken and the matter requires consideration by the court. It is made clear that the court has not otherwise expressed any opinion on the merits of the case. The petition is also admitted to hearing. The counter be filed by the respondents-bank by the next date. Put up on 05.5.2021.”

Case Details

Name: S. A. Gold Ispat Private Ltd. v. The J&K Bank Limited and others

Case No.: WP(C) No. 361/2020, CM No. 717/2020

Bench: HON’BLE MR. JUSTICE PUNEET GUPTA

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