SC Cancels Chhota Rajan's Bail in 2001 Jaya Shetty Murder Case  ||  NCLAT: Workmen Can Claim Dues Post-Layoff If They Worked After Corporate Debtor's Notice Issuance  ||  NCLAT: Debt Can be Proved Through Any Documentary Evidence, No Written Contract Needed.  ||  Madras HC: Railway Authorities Can't Deboard Valid-Ticket Passengers Heading to Protest  ||  Delhi HC: Women’s Entry into Army Corps Can’t be Restricted; Vacant Male Posts Must be Open to Women  ||  Delhi HC: Pressuring Husband to Cut Ties With His Family Amounts to Cruelty; Ground For Divorce  ||  Bombay HC: Magistrate Need Not Pass Preliminary Order U/S 145 CrOC If HC or SC Directs Inquiry  ||  Delhi HC Allows Woman to Terminate 22-Week Pregnancy from False Promise of Marriage  ||  Supreme Court: Reasons Omitted In an Order May be Considered In Specific Circumstances  ||  SC: Execution of Arbitral Award Cannot be Stalled Just Because Section 37 Appeal is Pending    

E.S. Krishnamurthy and Ors. vs. Bharath Hi Tech Builders Pvt. Ltd. - (Supreme Court) (14 Dec 2021)

Adjudicating Authority and Appellate Authority under IBC cannot compel a party to the proceedings before it to settle a dispute

MANU/SC/1249/2021

Insolvency

In present matter, on a petition which was instituted by the Appellants under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating the Corporate Insolvency Resolution Process in respect of the Respondent, the NCLT declined to admit the petition and instead directed the Respondent to settle the claims within three months. The NCLAT found no merit in the appeal against the NCLT’s order.

The Adjudicating Authority has clearly acted outside the terms of its jurisdiction under Section 7(5) of the IBC. The Adjudicating Authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the Adjudicating Authority must then either admit or reject an application respectively. These are the only two courses of action which are open to the Adjudicating Authority in accordance with Section 7(5). The Adjudicating Authority cannot compel a party to the proceedings before it to settle a dispute.

The IBC is a complete code in itself. The Adjudicating Authority and the Appellate Authority are creatures of the statute. Their jurisdiction is statutorily conferred. The statute which confers jurisdiction also structures, channelises and circumscribes the ambit of such jurisdiction. Thus, while the Adjudicating Authority and Appellate Authority can encourage settlements, they cannot direct them by acting as courts of equity.

The order of the Adjudicating Authority, and the directions which eventually came to be issued, suffered from an abdication of jurisdiction. Plainly, the Adjudicating Authority failed to exercise the jurisdiction which was entrusted to it. A clear case for the exercise of jurisdiction in appeal was thus made out, which the Appellate Authority then failed to exercise. The impugned judgment and order of the NCLAT is set aside. The petition under Section 7 of the IBC is accordingly restored to the NCLT for disposal afresh. Appeal allowed.

Tags : DISPUTE   SETTLEMENT   DIRECTION  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved