The National Company Law Appellate Tribunal (NCLAT), Delhi Bench has held that the Doctrine of stare decisis applies to NCLT, NCLAT.
The Corporate Debtor, obtained two loans from the Financial Creditor by means of two deposit agreements. The first deposit was secured by Deed of Mortgage and other security documents. Similarly, the second agreement was also secured by Deed of Mortgage and other security documents. As per the terms of the First Deposit Agreement, the first loan was repayable on the expiry of three months from the date of first loan. The date for payment was extended till 31.03.2018. The Corporate Debtor was liable to repay the outstanding principal amount and interest. An Application under Section 7 of the ‘I&B Code’ was filed by the Financial Creditor claiming default of debt.
After issuance of notice by the Adjudicating Authority, the Corporate Debtor appeared and opposed the Application. The Corporate Debtor objected to the petition on the ground that (i) Financial Creditor has committed breach of contract in not fully making the payment of advance amount of Second Deposit Agreement (ii) amounts under the First Deposit are secured and amounts under the Second Deposit are also secured. The Adjudicating Authority by impugned judgment admitted the Application.
Arun Kathpalia, Senior Counsel appearing for the Appellant in support of Appeal submits that Application under Section 7 ought not to have been filed by the Financial Creditor due to the reason that under the terms and conditions of agreement and mortgage deed, the entire amount was secured and the assets mortgaged were of more value than the amount due. The Appellant ought to have realised its amount from the security as per terms and conditions of the mortgage deed and Application under Section 7 was not maintainable.
On the other hand, Amit Sibal, Senior Counsel appearing for the Respondent refuting the submission of the Learned Counsel for the Appellant contends that Application filed under Section 7 by the Financial Creditor was well within the jurisdiction and fully maintainable. Even under the terms and conditions of the Mortgage Deed, it was the right of the Mortgagee to seek remedy by realising his dues from security or to take any other remedy available in law.
The coram headed by the Chairperson, Justice Ashok Bhushan, Judicial Member, Justice Jarat Kumar Jain and Technical Member, Dr. Alok Srivastava held that there can be no doubt that the principle of stare decisis is fully applicable on judgments delivered by the NCLT as well as this Appellate Tribunal. Both NCLT and this Tribunal are bound by doctrine of stare decisis.
At this juncture, the Tribunal clarified that what is binding as a precedent on Company Law Tribunal is the judgement of jurisdictional Tribunal. Judgments delivered by NCLT in other jurisdictions have only persuasive value. The present is a case where judgement of the co-ordinate Bench of jurisdictional Tribunal was cited.
“We, thus, are also of the view that no error has been committed by the Adjudicating Authority in admitting Section 7 Application filed by the Financial Creditor. There is no merit in this Appeal. The Appeal is dismissed,” the Tribunal ruled.
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