No interfere in corporate insolvency proceedings under Article 227
Delhi High Court Upholds NCLT Order in Parsvnath Developers Insolvency Case. The Court dismisses Parsvnath Developers' petition, reinforcing NCLT's decision on insolvency proceedings under the Insolvency and Bankruptcy Code.
In a significant judgment, the Delhi High Court, presided over by Justice Girish Kathpalia, dismissed the petition filed by Parsvnath Developers Limited, challenging the revival of corporate insolvency resolution proceedings initiated by its financial creditor. The proceedings were originally allowed by the National Company Law Tribunal (NCLT), New Delhi Bench, under Section 7 of the Insolvency and Bankruptcy Code, 2016.
The core of Parsvnath Developers' appeal was the alleged violation of principles of natural justice, claiming they were not given adequate opportunity to file a formal reply to the application for revival of insolvency proceedings. However, the court found that the petitioner had ample opportunity to submit their reply but failed to do so, despite being served with a notice to file the reply within a stipulated period.
The High Court emphasized that its supervisory jurisdiction under Article 227 of the Constitution of India cannot be invoked when an alternate efficacious appellate remedy is available, unless there is a breach of fundamental rights, jurisdictional error, or violation of natural justice. The court reiterated its stance against speculative litigation and forum shopping aimed at delaying legal proceedings.
Justice Kathpalia noted that the Insolvency and Bankruptcy Code is a complete code in itself, with sufficient checks and balances, remedial avenues, and appeals. The court also highlighted that the petitioner had previously failed to secure a stay on the revival proceedings under the Arbitration and Conciliation Act, indicating attempts to protract the legal process.
The judgment aligns with previous decisions of the Supreme Court, affirming that adherence to legal protocols and procedures is crucial for maintaining discipline and justice within the insolvency framework. Consequently, the Delhi High Court upheld the NCLT's decision, dismissing Parsvnath Developers' petition as an abuse of the process of law.
Bottom Line:
High Court's supervisory jurisdiction under Article 227 of the Constitution of India cannot be invoked to interfere in corporate insolvency resolution proceedings under the Insolvency and Bankruptcy Code when an alternate efficacious appellate remedy is available.
Statutory provision(s): Article 227 of the Constitution of India, Insolvency and Bankruptcy Code, 2016 - Section 7, Section 61.
Parsvnath Developers Limited v. Union of India, (Delhi) : Law Finder Doc Id # 2782725
