Status as on- 13/05/2023
In Vikram Puri v. Universal Builders, the National Company Law Appellate Tribunal (“NCLAT”) concluded that the adjudicating body has the ability under the Insolvency and Bankruptcy Code 2016 (“IBC”) to issue non-bailable warrants against individuals. The decision was made in a case where the directors of the suspended corporate debtor filed an appeal against the National Company Law Tribunal’s (“NCLT”) ruling that rejected their request to have a non-bailable warrant issued against them.
The issue arose from an application filed by the corporate debtor’s resolution professional under IBC Section 19(2) against a suspended director for non-corporation. A non-bailable warrant was also issued against the directors in this application, and the NCLT issued an order requiring them to appear before the Registrar. The directors submitted an interim application for the revocation of non-bailable arrest warrants rather than appearing before the Registrar, but NCLT rejected it. An appeal was filed against this order.
Arguments
According to the appellants, there is no justification for issuing a non-bailable warrant during IBC proceedings. The NCLT does not need the directors’ physical presence in order to proceed ex parte and issue the proper order against the suspended directors. They claimed that the NCLT lacked the authority to issue non-bailable warrants.
The respondent argued that NCLT had sufficient jurisdiction to compel anyone to appear in the proceeding. The Adjudicating Authority had no choice but to issue non-bailable warrants because the Suspended Directors did not cooperate with the Resolution Professional or provide the documentation.
Decision
While answering the question, of whether NCLT has jurisdiction to issue a non-bailable warrant against any person or party, NCLAT examined the provisions of the National Company Law Appellate Tribunal Rules, 2016 (“NCLAT Rules”). Rule 77 of the NCLAT Rules which deal with ‘procedure for examination of witnesses’ states that relevant provisions of the Order XVI Rule 10 of the Civil Procedure Code will apply in summoning and enforcing any person’s attendance. Order XVI Rule 10 specifically empowers the Court to issue a bailable or non-bailable warrant for the arrest of a person, who without any lawful excuse, failed to attend or to produce the document in compliance with the summons of the Court.
In the present case, NCLAT noted that despite being given multiple chances, the suspended directors refused to show up or provide any paperwork. The Adjudicating Authority is completely empowered to issue a non-bailable warrant for ensuring someone’s attendance under the provisions of Rule 77 of the NCLAT Rules, 2016 read with Order XVI Rule 10 of the Civil Procedure Code. Thus, NCLT was entirely within its rights to use the authority it had to issue the Appellants with a Non-Bailable Warrant.
Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at ibc@centrik.in.
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