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Jord Engineers India Ltd. Through its Signatory vs. Valia and Co. (D) Thr. LRs

Civil Appeal · 2022 INSC 348Decided 28 Mar 2022
Civil Appeal No. 7281 of 2018
Dinesh Maheshwari · Aniruddha Bose

Background

An operational creditor (Valia and Co.) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against Jord Engineers India Ltd., alleging default in payment of about Rs. 4.72 crores for goods supplied in 2012. The National Company Law Tribunal (NCLT), Mumbai admitted the application, but the National Company Law Appellate Tribunal (NCLAT) set that order aside on the ground that the demand notice had been served by an advocate with no formal position with the creditor. The creditor then approached the Supreme Court, which remanded the matter back to the NCLAT, but this remand order was passed without notice to Jord Engineers, and subsequent notices sent to Jord Engineers could not be delivered because the company had moved from its address. As a result, the NCLAT decided the remanded matter without Jord Engineers being heard at all.

Decision Breakdown

The Supreme Court held that the NCLAT's fresh order could not be sustained because it was passed without giving Jord Engineers a real opportunity to be heard: the company never received notice of either the Supreme Court's remand order or the revived NCLAT proceedings. The Court set aside the NCLAT's order and restored the appeal for a fresh decision on merits, including consideration of Jord Engineers' plea that a "pre-existing dispute" existed (which would bar the insolvency application). The Court clarified that its earlier stay of Tribunal proceedings would continue until the Appellate Tribunal's fresh decision, without affecting other creditors' independent proceedings, and directed the NCLAT to decide the matter expeditiously.

Lesson Learnt

A party cannot be bound by an adverse order, even one following from an earlier Supreme Court remand, if it was never actually given notice or a fair opportunity to present its case; courts will set aside such orders and send the matter back for a proper hearing.

Official source (sci.gov.in)View Judgment (PDF)

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