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Territorial Jurisdiction Of NCLT Cannot Be Taken Away By Agreement Between The Parties: NCLAT

Akshay Sharma
27 April 2022 10:24 AM GMT
Territorial Jurisdiction Of NCLT Cannot Be Taken Away By Agreement Between The Parties: NCLAT
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The National Company Law Appellate Tribunal (NCLAT) Principal bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla in the case of Anil Kumar Malhotra v. M/s Mahindra & Mahindra Financial Services Ltd. held that the territorial jurisdiction of NCLT to decide case under Insolvency and Bankruptcy Code, 2016 cannot be taken away by the agreement between the...

The National Company Law Appellate Tribunal (NCLAT) Principal bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla in the case of Anil Kumar Malhotra v. M/s Mahindra & Mahindra Financial Services Ltd. held that the territorial jurisdiction of NCLT to decide case under Insolvency and Bankruptcy Code, 2016 cannot be taken away by the agreement between the parties.

Suspended director of Corporate Debtor filed an appeal under Section 61 of the Code before NCLAT against the order dated 18.02.2022 of NCLT Principal Bench, New Delhi wherein it has initiated the Corporate Insolvency Resolution Process of Corporate Debtor.

Contentions Of Suspended Director, Corporate Debtor

It was contended by the Appellant that NCLT New Delhi has no jurisdiction to entertain the Section 7 application against the Corporate Debtor as clause 24.12 of the facility agreement between the parties specifically confers the jurisdiction upon the courts of Mumbai in respect of any matter arising out of facility agreement.

Relevant Law

Section 60(1) of the Code provides for Adjudicating Authority for Corporate Persons. Section 60(1) is as follows:

60. (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate persons located."

Decision By NCLAT

NCLAT relying on the provision of Section 60(1) of the code held that the adjudicating authority in relations to insolvency resolution shall be the NCLT having the territorial jurisdiction over the place where the registered office of corporate person is located.

"In view of the Section 60(1) read with Section 238 of the Code, the Appellant cannot rely on clause 24.12 to the Facility Agreement which provides jurisdiction to the Mumbai Courts. For filing Application under Section 7 of the Code, the provisions of Section 60(1) read with Section 238 of the Code shall be overriding clause 24.12 of the Facility Agreement to the above extent."

NCLAT further noted that the registered office of Corporate Debtor is situated at New Delhi and therefore NCLT New Delhi will have the territorial jurisdiction to entertain application under Section 7 of the Code and thus dismissed the appeal filed by the Appellant.

Case Title: Anil Kumar Malhotra v. M/s Mahindra & Mahindra Financial Services Ltd

Counsel For Appellant: Mr. Yajur Bhalla, Mr. Siddharth Srivastava, Sumeir Ahuja, Advocates

Counsel For Respondent: Advocate Gunjan Chauvey and Mr. Rajesh Kumar Mittal

Click Here To Read/Download Order

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