High Court directed the NCLT to expedite the adjudication of CIRP applications and ensure compliance with interim orders.
The Karnataka High Court Single-Judge Bench, led by Justice Hemant Chandangoudar, addressed a petition and directed the NCLT to adjudicate pending applications, including those related to the reconstitution of the Committee of Creditors and the removal of the Interim Resolution Professional (IRP), within two weeks of resuming sittings. The Court further ensured that interim relief would remain in force to protect the interests of stakeholders, emphasizing the NCLT’s obligation to consider all applications in accordance with the law, while upholding procedural fairness and jurisdictional responsibility.
The High Court addressed a writ petition filed by the petitioner seeking several reliefs, including a writ of mandamus directing the National Company Law Tribunal (NCLT), Bengaluru, to adjudicate pending interim applications within a specified timeframe. The petitioner also sought an order directing Respondent No. 1 to maintain the status quo regarding the Corporate Insolvency Resolution Process (CIRP) of Think & Learn Private Limited and to refrain from holding further meetings of the reconstituted Committee of Creditors (CoC) until the NCLT adjudicates the interim applications.
The case originated from a CIRP petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by Respondent No. 2, which the NCLT admitted on 16.07.2024. Respondent No. 1 was appointed as the Interim Resolution Professional (IRP). Subsequently, the petitioner filed applications to remove Respondent No. 1 as IRP, alleging fraud and malafides, and to reconstitute the CoC. These applications remained pending before the NCLT, prompting the petitioner to approach the High Court, citing inaction by the tribunal.
Respondent No. 1 filed a clarification application before the High Court, seeking permission to convene a CoC meeting to authorize payments for salaries and essential expenses. However, the petitioner opposed the application, citing insufficient details regarding the proposed disbursements. The High Court, by an interim order dated 25.10.2024, restrained Respondent No. 1 from proceeding with the CoC meeting scheduled for the same date.
The Court noted that the NCLT was set to resume hearings from 04.11.2024. Accordingly, it directed the NCLT to consider and decide all pending applications, including any new applications filed by Respondent No. 1, within two weeks of resumption. The Court also granted liberty to Respondent No. 1 to seek approval for salary disbursements and statutory dues before the NCLT, which was directed to decide such applications in accordance with the law after hearing all parties.
The High Court extended its interim order dated 25.10.2024 until the disposal of the petitioner’s applications by the NCLT. However, it clarified that Respondent No. 1 could approach the NCLT for permission to convene a CoC meeting exclusively to approve payments for salaries and necessary expenses or to comply with directives from the Supreme Court. The High Court underscored the NCLT’s obligation to decide all applications based on the material on record and in accordance with the law. The writ petition was disposed of with these directions.
Mr. Uday Holla Senior Advocate with Mr. Srinivas Raghavan Senior Advocate, Mr. Nikhilesh M. Rao and Mr. Mithel Reddy R., Advocates represented the Petitioner.
Mr. Vikram Hulinol, Senior Advocate along with Mr. Prateek Rath., Advocate appeared for Respondent No. 1.
Ms Bhavya Gayan Mohan, Advocate appeared for C/Resondent No. 2.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines, Press Releases and more.
Click on the Citation/Link to access these resources
Comments