Bombay High Court strikes down NCLT's insolvency order on Rolta India

The Bombay High Court, in a far-reaching order, has set aside an earlier order of National Company Law Tribunal (NCLT) which had admitted an insolvency petition against Rolta India. A two-member Mumbai bench of the tribunal admitted the plea of -- Value Partner Greater China High Yield Income Fund and Pinpoint Multi-Strategy Fund -- claiming default of around Rs 1,060 crore.

Kamal Singh, the director of the company, had challenged the NCLT's order. The High Court set aside the appointment of an insolvency resolution professional. The NCLT had appointed Shailendra Ajmera of EY as the interim professional of the company to complete the Corporate Insolvency Resolution Process.

How the Case unfolded?

• Instead of going to NCLAT, a writ petition was filed in the High Court against the NCLT order.
• It is alleged that on 22^nd October 2019, the Bench of the Judicial Member and Technical Member did not conduct any adjudicatory business. It is stated that the order has been put in communication without the same having been pronounced.
• The grounds are then set out and in relation to the validity and legality of the order, it is stated that this order is passed in violation of the principles of natural justice and the procedure established by law, which governs the functioning of the NCLT.

Various legal Provisions involved:

Writ Petition challenge:

• Writ Petition under Article 226 of the Constitution of India challenges the order passed by the NCLT.

Regarding NCLT Order

• Rule 150 to Rule 152
• Rule 156 - Making entries by Court Master & Rule 157 - Transmission of order by the Court Master)
• Rule 89 (“Preparation and publication of daily Cause List”) and Rule 90 (Carry forward of cause list and adjournment of cases on account of non-sitting of a Bench), Rule 91 – Diaries, Rule 92 - Order sheet, Rule 93 - Maintenance of court diary of the NCLT Rules, 2019

Rule: 150. Pronouncement of Order-

• The Tribunal, after hearing the applicant and respondent, shall make and pronounce an order either at once or, as soon as thereafter as may be practicable but not later than thirty days from the final hearing.
  NCLAT: In this case, We are not concerned with a situation where this time limit is not adhered to.
• Every order of the Tribunal shall be in writing and shall be signed and dated by the President or Member or Members constituting the Bench which heard the case and pronounced the order,
• A certified copy of every order passed by the Tribunal shall be given to the parties
• The Tribunal, may transmit order made by it to any court for enforcement, on application made by either of the parties to the order or suo motu.
• Every order or judgment or notice shall bear the seal of the Tribunal.

Rule: 151. Pronouncement of order by any one member of the Bench

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