“Inappropriate, Almost Bordering On Contempt”: SC Deprecates NCLAT Order Impeding Implementation Of SC Order

Background Facts

SREI Equipment Finance Ltd. (“Financial Creditor”) had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Shree Ram Urban Infrastructure Ltd. & Ors. (“Corporate Debtor”). The Adjudicating Authority had admitted the Corporate Debtor into CIRP. Mr. Srigopal Choudhary was appointed as the Interim Resolution Professional and later confirmed as the Resolution Professional. However, the Adjudicating Authority vide an order dated 28.11.2022 had replaced Mr. Srigopal Choudhary with another Resolution Professional namely, Mr. Sapan Mohan Garg.

Proceedings Before NCLAT

The removal of Mr. Srigopal Choudhary from the position of Resolution Professional was challenged before the National Company Law Appellate Tribunal (“NCLAT”) Delhi in Company Appeal (AT) (Ins) No. 1443 of 2022 and the same was reserved for Orders. Further, the appointment of Mr. Sapan Mohan Garg as the Resolution Professional was challenged before the NCLAT in another appeal bearing Company Appeal (AT) (Ins) No. 1472 of 2022 (“Company Appeal”).

In the meanwhile, Civil Appeal No.7050/2022 was pending before the Supreme Court. The said appeal was filed by Kalpataru Properties Pvt. Ltd. (“Kalptaru”), showing its willingness to bring money in account of the Corporate Debtor amounting to Rs. 75.30 Crores, in terms of the arbitral award, if the Resolution Professional executes the sale deed after receiving the amount. It is relevant to mention that Indiabulls Housing Finance Ltd. & Ors., one of the Financial Creditors of the Corporate Debtor, and Mr. Srigopal Choudhary (Resolution Professional) were respondents in the appeal. The Supreme Court vide an Order dated 14.11.2022 had disposed off the Civil Appeal No.7050/2022, while directing Kalpataru to deposit the money and Mr. Srigopal Choudhary (Resolution Professional) to execute the sale deed in favour of Kalptaru within 10 days’ period from deposit of the amount. Further, the Supreme Court categorically stated in the Order that no impediment should be created to the execution of the Order.

Subsequently, on 06.12.2022 the Company Appeal (AT) (Ins) No. 1472 of 2022 came up for hearing before the NCLAT Bench comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member) and the NCLAT Bench granted status quo till 19.12.2022.

IIRF India Realty XII Ltd. challenged the order of status quo order of NCLAT dated 06.12.2022 before the Supreme Court, as it impeded the implementation of Supreme Court’s Order dated 14.11.2022.

Supreme Court Verdict

The Supreme Court Bench observed that the proceedings before NCLAT concerned removal of the Resolution Professional and his replacement by another Resolution Professional. The Civil Appeal No.7050/2022 was already disposed of by the Supreme Court with certain directions for the monies to be deposited and sale deeds to be executed.

The Bench observed that, “We fail to appreciate how a status quo order could have been passed by a Bench of the NCLAT seeking to impede the implementation of the order of this Court. If there was a grievance about the implementation of the order of the Court, only this Court could have got into it. We consider the conduct of the Bench not only inappropriate but almost bordering on contempt. We strongly deprecate the order passed by the NCLAT Bench. We thus, set aside the order of status quo in those proceedings and insofar as that appeal i.e. Company Appeal (AT) (INS.) No.1472/2020, is concerned, the same be placed before a Bench presided over by the Chairman.”

The Supreme Court Bench has deprecated the Order dated 06.12.2022 passed by the NCLAT and the order has been accordingly set aside. The Bench has directed the Company Appeal to be heard by an NCLAT Bench presided over by the Chairman.

Case Title: Indiabulls Housing Finance Ltd. v Iirf India Realty Xii Ltd. & Ors.

Case No.: CIVIL APPEAL NO.9062/2022

Counsel for Petitioners: Mr. Mukul Rohatgi, Sr. Adv. Mr. Parag Tripathi, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. C. Rashmikant, Adv. Mr. Sunil Mittal, Adv. Ms. Anu Tiwari, Adv. Mr. Arshit Anand, Adv. Ms. Geetika Sharma, Adv. Ms. Mishika Bajpai, Adv. Ms. Namrata Shah, Adv. Ms. Nidhi Malhotra, Adv. Mr. Praveen Dhage, Adv. Mr. Kyus Modi, Adv. Mr. Sudhir Kumar, Adv. Mr. Shamant Satiya, Adv. Mr. E. C. Agrawala, AOR Mr. Vikas Singh, Sr. Adv. Mr. Mohd. Shahan, Adv. Mr. Abhijeet Sinha, Adv. Mr. K.V. Viswanathan, Sr. Adv. Mr. Siddhant Buxy, AOR Ms. Priyanka Vora, Adv. Mr. Ativ Patel, Adv. 5 Mr. Anirban Bhattacharya, Adv. Krishna Sumanth, Adv. Mr. K. Venugopal, Sr. Adv. Mr. Dhrupad Vaghani, Adv. Ms. Anshula Grover, Adv. Ms. Nitika Grover, Adv. Mr. Vikram Nankani, Sr. Adv. Mr. Ashish Batra, AOR.

Counsel for Respondents: Mr. Mahfooz A. Nazki, AOR, Mr. Polanki Gowtham, Adv., Ms. Niti Ricchariya, Adv., Mr. Naveen Sharma (Bhardwaj), Adv. Ms. Rajeswari Mukherjee, Adv.

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