NCLAT Hon'ble Justice Venugopal on Section 4 of the 'I&B' Code is prospective and not retrospective
The National Company Law Appellate Tribunal (NCLAT) headed by Hon'ble Justice Venugopal observed that the conclusion arrived by the National Company Law Tribunal (NCLT) Kolkata Bench, ('Adjudicating Authority') in the impugned order for the effect that the notification dated on 24th March, 2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective. The Adjudicating Authority had admitted the application for Corporate Insolvency Resolution Process ('CIRP') against the Corporate Debtor (CD) and further declared a moratorium.
According to the Appellant, he is a major shareholder and one of the Directors on the 'Suspended Board of Directors' of the 'Corporate Debtor' and he is affected and prejudiced by the Impugned Order in admitting the application and initiating CIRP as against the 'Corporate Debtor' (Om Boseco Rail Products Ltd., Bengal).
On September 2019, the 2nd Respondent/ Operational Creditor projected an application against the 'Corporate Debtor' under section 9 of the 'I&B' Code before the NCLT Kolkata Bench.
The Appellant submitted that 'Adjudicating Authority' while passing the impugned order had committed an error in Law by reason of the amendment to Section 4 of the Insolvency and Bankruptcy Code, 2016 (IBC), the application was no longer maintainable in Law and was barred by Law. Hence the Authority should have dismissed the application because of the simple reason that the amendment in issue is having retrospective effect.
The Learned Counsel for the Appellant pointed, that no different intention appears, section 4 of the Code being procedural in nature, the notification of 24th March, 2020 must have 'Retrospective Operation.' Furthermore, it contended that the impugned order was passed by the Authority was on the basis of erroneous assumption, the Authority had exceeded its jurisdiction wrongly and in fact the application filed by the 'Operational Creditor' under Section 9 of the Code is per-se not maintainable, in Law.
The learned counsel for the 2nd Respondent submitted that notification issued on 24th March, 2020 cannot have retrospective effect because of the fact that Section 9 of the IBC, 2016 provides substantive right to file an application to initiate CIRP which cannot be taken away on a future date with retrospective effect.
After hearing both the parties the Tribunal succinctly pointed out, there was no payment made on the part of the 'Corporate Debtor' after receipt of Demand Notice from the 2nd Respondent / Operational Creditor. Hence it came to a consequent conclusion that the 'Adjudicating Authority' had rightly admitted the application and in this regard, there is no legal flaw.
Furthermore, the tribunal dealt with the issue as to whether the notification issued by the Jt. Secy. of Ministry of Corporate Affairs, Govt. of India dated 24.03.2020 in Section 4 of the IBC, 2016 has a retrospective or prospective effect.
The NCLAT after examining the notification unerringly came to a conclusion that the said notification is only 'Prospective in nature' and not a 'retrospective' one because of the simple reason that the said notification does not in express term speaks about the applicability of 'retrospective' or 'retroactive' operation and the relevant terms were absent, hence no implicit inference can be drawn for such a construction in the context in issue.
Further, the appellate tribunal was of the opinion that the "Duty of Judges is to expound and not to legislate is a primordial rule. Moreover, the transience of justice at the hands of Law troubles a judge's conscience. It is an axiomatic principle in Law that a judgement / an order of a Court of Law / Tribunal is to be written after much travail and productive disposition."
The present appeal was thus dismissed by appellate tribunal.