The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) imposed Rs. 1 Lakh costs on the Creditor under Contempt of Court Act, 1971 invoking the doctrine of ‘approbate & reprobate’.
The appeal is directed against the order passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) by which an application filed by the Appellant under Section 7 of the Insolvency & Bankruptcy Code, 2016 ( IBC ) read with Rule 4 of the Insolvency & Bankruptcy ( Application to Adjudicating Authority ) Rules, 2016 (‘Rules’) against M/s Shivam Water Treaters Pvt. Ltd. ( Corporate Debtor ) has been dismissed.
The Counsel for the appellant has argued that the Adjudicating Authority has committed an error in dismissing the application because the amount of interest can also be claimed by filing an application under Section 7 and has relied upon a decision of the Court rendered in ‘Base Realtors Pvt. Ltd. vs. Grand Realcon Pvt. Ltd.’ decided on 15.11.2022.
On the other hand, counsel for Respondent has submitted that the Appellant did not approach the Court with clean hands and is guilty of supprssio veri or suggestion falsi. It was submitted that the Appellant initially filed the application under Section 9 as an operational creditor in respect of the amount of Rs. 58,30,077/- claiming it to be an investment. However, the said application was withdrawn by the Appellant in view of the order passed by the NCLT, Mumbai because another application filed under Section 7 by a different financial creditor against the same CD was admitted.
It was further submitted that it was not the case of the Appellant that the application filed under Section 9 of the Code was withdrawn because there was a defect in the pleadings because no such application was ever filed. It is further submitted that the decision in the case ‘Base Realtors Pvt. Ltd’, relied upon by the Appellant is not applicable to the facts of the present case because the said case was regarding the interest arising out of debenture which was locked in for a period of six years and the amount of interest was to be paid by the CD at regular intervals and was not paid.
A Three-Member Bench comprising Justice Rakesh Kumar Jain, Member ( Judicial ), Naresh Salecha, Member ( Technical ) and Indevar Pandey, Member ( Technical ) observed that “The Appellant did not make any effort to bring to the notice of the Adjudicating Authority in the application filed under Section 9 about the bonafide mistake which has been pleaded in the rejoinder filed in the present appeal in order to avoid the pleadings already set up in the application filed under Section 9 of the Code in which it was averred that the amount in question has been invested which is now sought to be changed as a loan.”
“In view of the aforesaid facts and circumstances, the conduct of the Appellant is depreciable and deplorable because this kind of practice is not acceptable before this Court, therefore, this is one such case in which the Appellant deserves to be saddled with costs for initiating a frivolous litigation. Hence, while dismissing the present appeal, we impose a cost of Rs. 1 Lac. upon the Appellant which shall be paid by it to the Respondent by way of a demand draft within a period of 30 days from the date of passing of this order” the Tribunal noted.
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