Dismissed

In the matter of Ocl Iron and Steel Limited [Ia No. 246-CB-2023 in Cp (Ib) No. 111-CB-2020]

NCLT11 Oct 2023IA No. 246-CB-2023 in CP (IB) No. 111-CB-2020

Case brief

AI extract

What is this about?

The NCLT Cutoff Bench dismissed an application for leave to file a rejoinder. The court held that the respondent's reply did not introduce new facts, so the condition for filing a rejoinder under Rule 42 of NCLT Rules, 2016 was not met.

What did the court decide?

The application seeking leave to file rejoinder in I.A. No. 246/CB/2023 is dismissed.

In the matter of Ocl Iron and Steel Limited [Ia No… — Insolvency and Bankruptcy | NCLT (2023)

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IN TIIE NATIONAL COMPAI{Y LAW TRIBUNAL CUTTACK BENCH CUTTACK

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IA No. 246/CB/2023

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-In-

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CP (IB) No. 111/CBl2020

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In the Matter of:

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An application filed under Rule 55 and Rule 11 of NCLT Rules, 20L6 fledby the Applicants;

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-And-

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In the Matter of:

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STATE BANK OF INDIA, Stressed Assets Management Branch-L lzn Floor, JawaharYyapar Bhawan 1, Tolstoy Marg, New Delhi- 110 001;

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... Applicant

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-Yersus-

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INDRAM PATNAIK, A-6, Commercial Estate, Civil Township, Rourkela - 769 004;

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INDIAN BANK, SAM Branch, 17 (First Floor) Parliament Sffeet, New Delhi

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-^{110 001,}

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UCO BANK, FCC Branch (L945), UCO Bank Building, 5 Parliament Sffeet, New Delhi 110 001;

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BANK OF BARODA, Stressed Asset Management Branch, 4ft Floor, Rajendra Bhawan, Rajendra Palace, New Delhi 110 008;

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ICICI BANK LIMITED, ICICI Bank Tower, NBCC Place, Bisham Pitamah Marg, PragaaVihar, New Delhi, 110 003;

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UNION BANK OF INDIA, Sffessed Asset Management Branch, Unit No. 603 B, Konnectus Tower, Bhav Bhuti Marg, Opp. New Delhi Railway Station, Ajmeri Gate Side, New Delhi- 110 001;

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ASIA OPPORTUMTIES (Itr) MAIruTruS LIMITED, 5, President John Kennedy Sffeet, Rogers House, Port Louis, Mauritius;

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PUNJAB NATIONAL BANK, Zonal Sasffa Cenffe, I't Floor, 7 Bhikaji Cama Place, Africa Avenue, New Delhi- 110 066;

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Respondents sl

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Page 1 of8

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IN THE NATIONAL COMPANY I-AW TRIBUNAL CUTTACK BENCI{

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IA No. 246/CB/2023 -InCP^(IB) No. 111/CB/2020

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In Tes: INDRANI PATNAIK VS. STATE BANI( OF INDIA

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-In-

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INDIAN BANK,

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... Financial Creditors

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-Yersus-

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OCL IRON AND STEEL LIMITED,

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... Corporate Debtor

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&ryearances^{throughyideo conference: -} For Applicant

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Mr. S. S. Das, Sr. Adv for

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Mr. Shantanu Das, Adv.

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For Respondent (s) Mr. Gautam Mishra, Sr. Adv for Mr. Anuj Singh, Adv. For Rl Mr. S. Sourav, Adv. For R2 to R7

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Coram:

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Order reserved onz 27.09,2023 Order pronounced ou 11.10,2023 Shri P. Mohan Raj : Member (Judicial) Shri Kaushalendra Kumar Singh : Member (Technical)

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ORDER

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This application is filed under the caption Rule 55 and 11 of NCLT Rules, 2016 to gtant leave to file rejoinder in main I.A.No.l49/CB/2023. 2. The brief facts of the case necessary to dispose of this application are as follows: The corporate debtor OCL IRON AND STEEL LTD was admitted into CIRP by an order of this Authority dated 20.09.2021 in section 7 of IBC, 2016 petition filed by Indian Bank. Mr" Vijaykumar V. Iyer was appointed as the Resolution professional. The apphcant and respondents 2 to 7 constituted COC. The Resolution plan submitted by the 1't respondent was approved by the CoC with 88.98% voting. The applicant and 8tr'respondent voted against the resolution plan. In the 18'r'and 19th CoC meeting the manner of distribution of upfront amount was discussed and mechanisms was worked out. The provision is made in the resolution plan for payment to the dissenting creditors. The plan was approved by this Adjudicating Authoriry in I.A.No.275/CB/2022 on20.03.2023. After approval of the resolution plan in the 4'r'monitoring committee meeting it was decided how to make distribution of amount for both assenting and dissenting creditor. Aggrieved by the decision of the monitoring committee the applicant preferred an

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<-l

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Page 2 of8

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IN TIIE NATIONAL COMPANY LAW TRIBUNAL CUTTACK BENCII

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IA No. 246/CB/2023

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-In-

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CP (IB) No. 111/CB/2020 In Tes: iNDRANI PATNAIK VS, STATE BANI( OF INDIA

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I.A.No.149/CB/2023 claiming the amount as provided under section 30 (2) (b) R/w 53 (1) of IBC, 2016. The Respondents 2 to 7 filed their common counter questioning the maintainability of I.A,No.l49/CB/2023because of non-joinder of monitoring commiffee as a pafty and submitted that the mandatory provision of Act as alleged by the applicant is not applicable to this case since dissenting financial creditor has approved the distribution mechanism in the 18th and l.9th CoC meeting.

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The present application I.A.No.246/CB/2023 is filed by the applicant in I.A. No.149 of 2023 to take on record the rejoinder filed to the reply filed by respondents 2 to 7 in I.A. No.149lCB/2023. The application I.A. No.149lCB/2023 is filed for direction against the respondents to make minimum payments to the applicant as dissenting financial creditor under section 30(2Xb) R/w section 53 of IBC 20t6. The respondents 2 to 7 filed their repty dated L0.07.2023 to I.A.No.L4g/CB/2023 with frivolous and baseless objections. The applicant stated in this application thatafter filing reply by respondents 2 to 7, come in possession of the minutes of the monitoring committee which are necessary to bring on record for ffue and correct facts, therefore the applicant seek leave to file rejoinder in response to reply dated 10.07 .2023 of respondents 2 to 7. Also, certain fresh developments have happened in the present case which warrants attention of this Authority. For proper adjudication rejoinder to be taken on record.

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4, The respondents 2 to 7 fiked their common reply in this I.A. No. 246/CB/2023 and opposed to receive the rejoinder. The respondents stated that the applicant by rejoinder try to develop its case, the rejoinder intend to file is beyond the scope of rejoinder. The applicant tries to patch up the lacuna viz nonjoinder of necessary pafty by way of taking a plea that after the filing of I.A. No. 149/CB/2023. The applicantby rejoinder cannot make out a thtd/new case. The application to be dismissed.

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Point for consideration is:

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Whether leave to be granted to take the rejoinder on record?

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Initially this Authority inclined to dispose of the application in casual manner without going in depth in order to avoid_delay, however on the

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Page 3 of8

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IN TLIE NATIONAL COMPANY LAW TRIBUNAL CUTTACK BENCH

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IA No. 246/CB/2023 -In-

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CP (IB) No. 11 1/CBl2020 in Tes: INDRANI PATNAIK VS. STATE BANK OF INDIA

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respondents' side insisted to pass an order on merit, the senior counsel who appeared for the respondents rely upon the order of this Authority dated 07 .11.2022 passed in I.A. No. 248lCB/2022 in C.P. No. 20lCB /2022 Magnum Sea Foods Limited vs Ashadeep Aquaculfirre Private Ltd, and submitted that the said citation is squarely applicable to this case here also the applicant under the garb of rejoinder try to file this application to introduce new facts and subsequent events to avoid filing amendment and to receive additional documents applications. In the supra citation tr,paragraph 9 it is observed as follows:

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For the reasons stated abote, it is concluded that the additional pleadingsfiled by the applicant under the caption Rejoinder is not a rejoinder at all, in the absence of raised any new point in the reply the right to file rejoinder does not arise to the applicant, it is obyious that under the garb of rejoinder applicant filed this application to introduce new plea, and to get rid of filing amendment and to receiye additional document applications, ltence the application is not maintainable the same is liable to be dismissed thus this point is answered. This is an application fit to impose cost, howeyer since it appears that the application has beenfiled on the wrolxg legal advice, we declined to impose cost upon the applicant"

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The respondents' counsel further stated that the writ petition flled challenging the supra order of this Authority is pending before the High court of Orissa. Thus, the matter is under sub^judice. 6. The parties to litigation are permitted to file their pleadings, primarily plaint/petitron/ and Reply /counter are considered as pleadings. The Respondent is entitled to file his reply to the averments made in petition. If the respondent introduced a new case in reply, then only the applicant will be permitted to file rejoinder. Filing the rejoinder is not routine, the right to file rejoinder accrues to petitioner only if the respondent filed a reply in such a manner introducing new case or adding additional facts. Filing rejoinder to reply cannot be permitted in

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IN THE NATIONAL COMPANY LAW TRIBUNAL CUTTACI( BENCH

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IA No. 246/CB/2023 -In-

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CP(IB)No. 111/CBl2020 IN TCS: INDRANI PATNAIK VS. STATE BANK^{OF INDIA}

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routine manner" The leave to be^granted after scrutinizing the application and^reply. Pleading is defined in Rule 2 (19) of NCLT Rules, 20t6 as follows:

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2,(19) "pleadings" means and includes application including interlocutory application, petition, appeal, retision, reply, rejoinder, statement, counter claim, additional statement supplementing the original application and reply statement under these rules and as may be permitted by the Tribunal;

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7 . The applicant filed this application under Rule 55 R/w 11 of NCLT Rules, 2076 to take on record the rejoinder. Rule 42 of NCLT Rules,2016 specifically deals with rejoinder, but Rule 55 of NCLT Rules, 2016 speaks about the subsequent pleadings. What is rejoinder, when the leave to be granted to frle rejoinder, are explained in Rule 42 of NCLT Rules, 2016. Rule 42 of NCLT Rules, 2016 runs as follows:

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Filing of Rejoinder. - Were the respondent states such additional facts as may be necessary for the^just decision of the case, the Bench may allow the petitioner to file a rejoinder to the reply filed by the respondent, with an advance copy to be served upon tlte respondent.

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Thus, the specific provision Rule 42 is available in the NCLT Rules 2016, seeking leave to file rejoinder" The Rule 55 quoted by the apphcantis pertaining to the filing of supplemental pleading to the original pleadings. The appropriate Rule seeking leave to file rejoinder is Rule 42 of NCLT Rules, 2016.It is established rule that wrong quoting of provision of law is not fatal to the proceeding and the court can decide the application under the applicable provision of law, accordingly this application seeking the permission to take the rejoinder on record is dealt under R:ule 42 of NCLT Rules, 2076. 7. The reading of the supra rule explains that in the event of any additional facts brought by the respondent in its reply, the leave may be granted to the applicant to file rejoinder to meet the additional facts brought in reply. In our case

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IN'fHE NATIONAL COMPANY L,AW TRIBUNAL CUTTACI( BENCH

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IA No" 246/CB/2023 -In-

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CP (IB) No. 111/CBl2020 IN TCS: INDRANI PATNAIK VS. STATE BANK OF IND]A

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the applicant filed the application seeking relief that the applicant must be^paid as dissenting financial creditor as provided under section 30(2)(b) R/w53 of IBC, 2016. For which the respondent filed reply stating that since the dissentingfnancial creditor has approved the distribution mechanism in the 18tr and 19tr COC meetings and after acceptance of the resolution plan cannot take a different stand. The respondent also stated in the reply that since the applicant challenge the distribution mechanism decided on the 4fr meeting of the monitoring committee held on 04.05.2023, but the monitoring committee is not arrayed as party hence the application to be dismissed. Thus, it is obvious that no additional or new case/facts introduced by the respondents in their reply consequently the applicanthas no right to file rejoinder.

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When the applicants are permitted to file rejoinder and not permitted to file rejoinder are explained by Rajasthan High Court in State of Rajasthan and others vs Mohamed Iqbal and others AIR 1999 Raj169, as follows:

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Furthermore, the principles offiling a rejoinder were summarized most ffictirely in this case wherein the I{C of Rajasthan laid down the following principles: "a) The plaintiff cannot be allowed to introduce new pleas by way offiling rejoinder, to alter the basis of his plaint.

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b) In rejoinder, the plaintiffcan be permitted to explain the additionalfocts which have been incorporated in the written srarcment.

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c) The plaintiff cannot be allowed to come forward with an entirely flew case in his rejoinder.

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d) The plaintiff cannot be permitted to raise inconsistent pleas to alter his original cause of action. )^{Application under Order 8, Rule 9, CPC cannotbe} treated as one under Order 6, Rule 17 (Amendment of pleadings), CPC as both is contextually dffirent,"

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IN THE NATIONAL COMPANY I.AW TRIBUNAL CUTTACK BENCH

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IA No. 246/CB/2023

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-In-

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CP (IB) No, 111/CBl2020 In Tes: INDRANI PATNAIK VS. STATE BANI( OF INDIA

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The leave can be gtanted to file rejoinder to explain the additional facts if any incorporated in reply, but here admittedly there is no plea that the respondent introduced additional/new facts in their reply, hence gtanting leave does not arise at all.

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The applicant itself in the application stated that since after filing of the reply the applicant came into possession of minutes of monitoring committee, hence he filed this application for rejoinder. The applicant also stated that certarn fresh developments have happened in the case and wants to bring it to the attention of this Authority" Thus, the reasons stated by the applicant for filing rejoinder is unsustainable, because Rule 42 rs clear that the rejoinder canbe filed only to the additional facts found in reply filed by respondent and not for any other purpose. For the mere denial of averments of reply re-joinder need not to be filed. The petitioner cannot be deemed to have admitted the reply averments simply because petitioner had not filed the re-joinder.

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10 The events happened after filing of the suit/petition or the applicant came to know certain facts subsequent to filing of suit or petition are not a ground to file rejoinder. There is substantial difference between filing the rejoinder,and filing the supplementary/additional pleadings. If the rejoinder is taken on record, the respondent has no right to file response to rejoinder. This is evident that there is no provision in the NCLT Rules, 2016 permitting the respondent to file his version in response to rejoinder. Hence leave to file rejoinder be granted only after scrutiny of petition andreply. The pleadings end with rejoinder.

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11" Rule 55 of NCLT Rules, 2016 deals with filing of subsequent pleadings. The Rule 55 of NCLT Rules, 2016 rvns as follows:

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55, Pleadings before the Tribunal. - No pleadings, subsequent to the reply, shall be presented except by the leate of the Tribunal upon such terms as the Tribunal may thinkfit.

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When the petitioner/ Appbcant is permitted to file pleadings subsequent to reply the respondent has right to file additional reply to the subsequent pleading, such a right is not provided when the rejoinder is filed by the petitioner, because

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IN THE NATIONAL COMPANY LAW TRIBUNAICUTTACK BENCIi

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IA No. 246/CB/2023

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-In-

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,r r.r, rr**r rOrOr* rr. ffi

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rejoinder is filed only in response to addition al factstated by the respondent" The applicant akeady filed I.A, No. 2gs/cB/2023 and kepr in pending for an amendment and to receive additional documents, to insert the same contents what he prayed in this application to take on record as rejoinder.

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13' In these circumstances the application to gtantleave to file rejoinder is not in accotdance with Rule 42 of NCLT Rules, 2ol6,since the ingredients of Rule 42 of NCLT Rules, 2016 are not compried with the apprication is liable ro be dismissed.

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In fine the Apprication I.A. No.246/CB/2o2Jis DrsMrssED. 15' Registry is directed to send e-mail copies of the order forthwith to all the party's concern.

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