NCLT Delhi Imposes Cost Of Rs. 1 Lakh On Suspended Director

Background Facts

Indian Bank (Erstwhile Allahabad Bank) ("Financial Creditor") had filed a petition under Section 7 of the Insolvency and Bankruptcy Act, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against Nimitaya Hotel & Resorts Pvt. Ltd. ("Corporate Debtor"). The Adjudicating Authority had initiated CIRP against the Corporate Debtor on 24.12.2021.

Mr. Sanjeev Mahajan ("Applicant/Suspended Director") who is a Suspended Director of Corporate Debtor, had submitted Settlement Proposal and was permitted to participate in the Committee of Creditors ("CoC") meetings. Further, the Suspended Director had alleged that the Petition has been filed by the Financial Creditor over malicious intent.

The Suspended Director filed an application bearing I.A. No. 2611 of 2022 before the Adjudicating Authority under Section 65 of IBC, seeking (i) Imposition of cost on the Financial Creditor for an amount of Rs. 1 Crore; (ii) Direction to the CoC to re-consider the settlement proposal of the Applicant; and (iii) Direction to the CoC and the Resolution Professional of Corporate Debtor to keep the CIRP and finalization of Resolution Plan in abeyance till disposal of the Application.

During the pendency of I.A. No. 2611 of 2022, the Suspended Director filed a similar application bearing I.A. No. 3204/ND/2019 with verbatim prayers as mentioned in I.A. No. 2611 of 2022.

The Adjudicating Authority dismissed the application (I.A. No. 2611 of 2022) while observing that the Tribunal would not intervene in the decision making of the CoC.

Decision Of NCLT

When the I.A. No. 3204/ND/2019 came for hearing before the Bench, the Bench observed that the Applicant had preferred the said application during the pendency of I.A. No. 2611 of 2022, seeking verbatim reliefs. The Bench held that same reliefs cannot be sought in two parallel Applications against the same party.

"The Application is barred by the doctrine of Res Sub-Judice. Since, the applications have resulted in multiplicity of proceedings and in wastage of precious judicial time, we discourage such practice. The Application is accordingly dismissed with a cost of Rs. 1,00,000/- (one lakh) only to be deposited by the Applicant herein in the Prime Minister's Relief Fund within 15 days, the receipt of which shall be filed with the NCLT Registry."

The Bench imposed a cost of Rs. 1 Lakh upon the Applicant for instituting multiple proceedings seeking same relief and wasting precious judicial time. The Application was dismissed.

Case Title: Indian Bank (Erstwhile Allahabad Bank) v Nimitaya Hotel & Resorts Pvt. Ltd.

Case No.: C.P. (IB) 1913 (ND)/2019

Counsel for Applicant: Rajesh Kr. Gautam, Anant Gautam, Nipun Sharma, Sachin Singh, Vidur Ahluwalia, Kumar Anurag Singh, Zain A Khan, Advocates.

Counsel for Respondent: Manuj Nagrath, Advocate.

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