FACTS:

1. The PLAINTIFF (respondent in present case) had initiated a Corporate Insolvency Resolution Process against the DEFENDANT (petitioner in the appellant case) before the National Company Law Tribunal Amaravati Bench (for short 'NCLT'), by way of under Section 9 of the Insolvency and Bankruptcy Code, 2016. This application was filed on the ground that the DEFENDANT (petitioner in the appellant case) had defaulted an operational debt of Rs.8,98,12,678/-.
2. While the matter was pending before the NCLT, the petitioner and the respondent executed a Memorandum of Understanding, dated 20.07.2020, under which it was recorded that: -
   a) The respondent agreed to withdraw the application filed before the NCLT immediately.
   b) On withdrawal of the application, the petitioner was to pay an amount of Rs.5,00,00,000/- to the respondent as full and final settlement.
   c) This amount of Rs.5,00,00,000/- was to be paid in instalments of Rs.20,00,000/- each in 25 instalments, within 45 days from the date of withdrawal of the application.
   d) The mode of payment was to be online banking through RTGS to the account of the respondent.
   
   
3. On the basis of the above Memorandum of Understanding, the respondent filed a memo of withdrawal before the NCLT. In this memo of withdrawal, it was stated that the parties had entered into a joint Memorandum of Understanding dated 20.07.2020 and the details of the understanding were set out. The Memo also stated that the 3rd respondent be permitted to withdraw the application with liberty to continue the proceedings, if the above Memorandum of Understanding failed for any reason. The NCLT passed an order on 23.07.2020 recording the amicable settlement, with the observation that the case is disposed of as withdrawn with a liberty to the petitioner to come back, in case of default by the respondent.

 

4. The respondent had subsequently filed a case on 27.01.2021, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, to restore and reopen the previous case, on the ground that the petitioner herein had only paid an amount of Rs.2,65,00,000/- leaving a balance of Rs.2,35,00,000/- out of the amount of Rs.5,00,00,000/- and as such the petitioner herein had defaulted.

Contention of petitioner

1. He filed a writ petition.
   
   
2. They contended that a petition, which has been withdrawn, cannot be restored and a fresh petition has to be filed. Execution of the Memorandum of Understanding outside the Tribunal has resulted in a fresh contract between the parties, which supersedes the earlier transactions and as such the respondent would seek to traverse beyond the conditions in the Memorandum of Understanding, if the petition is restored and such a course of action would result in Memorandum of Understanding being frustrated.
   
   
3. The contention of the writ petitioner is that the NCLT does not have power under Section 60(5) of the Insolvency and Bankruptcy Code or under Rule 11 of the NCLT Rules, to restore a petition which has been withdrawn.

 

Contention of respondent

1. The respondent contended that taking back the cognizance of a case is within inherent power of NCLT.
2. Rule 11 of the NCLT Rules reads as follows:

"11. Inherent Powers. - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal."

 

3. The learned counsel appearing for the respondent submits that the petitioner has an effective alternative remedy under Section 61 of the Insolvency and Bankruptcy Code, 2016, which provides an appeal before the NCLAT. Moreover, petitioner has already filed such an appeal before the NCLAT and has now chosen to approach this Court without pursuing the alternative remedy, which has already been exercised by the petitioner. And according to them a writ petition is not maintainable if there is other remedy available.

 

JUDGMENT

1. The Statute, in the present case, is silent on the issue of restoration of a petition, which has been withdrawn with the leave of the tribunal and in such cases, in view of the above observations; the Tribunal would have the residuary power to restore such petitions.
   
   
2. The NCLT has the inherent power to entertain and allow applications for restoration of powers which had earlier been withdrawn on the permission granted by the NCLT.
3. The recognition of such a power, by the Hon'ble Supreme Court, in Swiss Ribbons (P) Ltd., and Anr., vs. Union of India and Ors.,2, which is not covered or contemplated under the Statute or the Rules made there under, clearly shows that the inherent powers of the NCLT cannot be interpreted restrictively and a wider and larger approach need to be taken while interpreting Rule 11 of the NCLT Rules. Such an expansive interpretation of Rule 11 would clearly mean that the Tribunal, which has the inherent power to permit withdrawal of a petition, would also have the inherent power to restore such a petition.
   
   
4. Accordingly, this writ petition is disposed of leaving it open to the writ petitioner to raise all the aforesaid issues before the NCLT, in the hearing before the NCLT, which would take an appropriate decision on the objections raised by the writ petitioner. There shall be no order as to costs.