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After hearing the parties, the NCLT reserved its order, subsequent to which the debtor filed an application to recall the order and hear the matter afresh on additional objections. The NCLT rejected the application, against which an appeal was preferred before the NCLAT
The National Company Law Appellate Tribunal has recently dismissed an appeal against the order of the National Company Law Tribunal, holding that refusing to hear a fresh application after reserving the order is not a miscarriage of justice.
A bench of the NCLAT, comprising Chairperson Justice Ashok Bhushan, Technical Member Barun Mitra, and Technical Member Arun Baroka, was hearing an appeal against the order passed by the NCLT.
The corporate debtor had obtained a loan of Rs. 1 crore from Karnataka Bank Ltd in 2010, which was classified as NPA in 2013. Subsequently, a demand notice was issued under the SARFAESI Act.
The Karnataka Bank transferred the loan to an asset reconstruction company (ARC) that entered into a one-time settlement with the debtor in 2016. Upon failure to comply with the payment, the ARC filed a CIRP petition.
After hearing the parties, the NCLT reserved its order, subsequent to which the debtor filed an application to recall the order and hear the matter afresh on additional objections.
The NCLT rejected the application, against which an appeal was preferred before the NCLAT.
The debtor argued before the NCLAT that the Section 7 petition was incomplete, and since the loan was taken from the bank, the ARC did not have the locus to file the petition.
The ARC contended that the only key issue under the Section 7 petition was whether the debt was owed and unpaid, and therefore, the NCLT had rightly rejected the application.
The NCLAT upheld the order of the NCLT, observing that a debt has arisen which is due and payable by the Corporate Debtor, and a default has occurred.
“We are of the considered opinion that since in the facts of the present case, a debt has arisen which is due and payable by the Corporate Debtor and a default has occurred, admission of Section 7 application cannot be obfuscated by raising technical pleas and that too after hearing in the main petition stood concluded and matter was reserved for hearing,” the order reads.
Advocates Saswat K. Acharya and Dhananjay Bhaskar Ray appeared for the corporate debtor.
Advocates Utsav Mukherjee and Vikalp Wang appeared for the ARC
Case title: Loramitra Rath vs JM Financial Asset
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