Enkay Brand Distribution Pvt. Ltd. Vs. Nike India Pvt. Ltd. - The power of the Adjudicating Authority to take proceeding for prosecution are ample and at any stage the Adjudicating Authority can direct for the prosecution of either of the parties.

 NCLAT (15.09.2022) in Enkay Brand Distribution Pvt. Ltd. Vs. Nike India Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 1132 of 2022] held that;

• The power of the Adjudicating Authority to take proceeding for prosecution are ample and at any stage the Adjudicating Authority can direct for the prosecution of either of the parties.

Excerpts of the order;

15.09.2022: Heard learned counsel for the Appellant as well as learned counsel appearing for the Respondent. This Appeal has been filed against the order dated 02.09.2022 by which the Adjudicating Authority has rejected I.A. No. 4201 of 2022 and I.A. No. 4202 of 2022. These I.As. have been filed under Section 76 of the I&B Code and Section 340 of CRPC in a pending matter where Section 9 application has been filed by the Operational Creditor. The Adjudicating Authority while deciding I.A. No. 4201 of 2022 has observed that similar application was withdrawn by the Corporate Debtor. With regard to I.A. No. 4202 of 2022, Adjudicating Authority has observed that no sufficient ground has been made out to allow the application.

 

# 2. Learned counsel for the Appellant challenging the order impugned contends that the observation recorded in the order that Appellant has withdrawn earlier application under Section 76 is incorrect. He submits that application under Section 76 was although filed but it was laying in default in the Registry. It was not listed when the Court passed the order.

 

# 3. Learned counsel for the Respondent submits that Section 9 application which was filed by the Operational Creditor has been heard thrice once in December,2021 then in March and June, 2022 and the Court has granted opportunity to both the parties to submit their written submissions and further affidavits. It is submitted that these applications have been filed only when Court has made it clear that hearing is complete and parties may file written submission so that orders may be issued.

 

# 4. Learned counsel for the Respondent has also placed before us the subsequent order dated 13.09.2022 passed by the Adjudicating Authority, where Adjudicating Authority has passed following order:-

“ORDER

Heard the arguments advanced by the Learned Counsels for both the parties. Arguments in this matter are completed in all respects. Both the Counsels are directed to file afresh written arguments/written submissions within seven days (excluding Saturday, Sunday and Public Holiday) and it is made clear that no further extension of time will be granted for filing the written submissions and if the written submissions are not filed within the given time, the right to file written submissions will be closed and the order will be reserved. Let this matter be listed after one week regarding the confirmation about the filing of written arguments. List this matter on 29.09.2022.”

 

# 5. We have considered submissions of learned counsel for the parties and perused the record.

 

# 6. From the submissions which have been placed before us, there is no dispute that matter has been heard thrice by the Adjudicating Authority but Section 9 Application could not be decided. Learned counsel for the Appellant submits that after order was passed on 03.06.2022, the Operational Creditor was directed to file affidavit which has already been filed. Learned counsel for the Appellant submits that it is only thereafter concealment has come which impelled the Corporate Debtor to file applications.

 

# 7. The Respondent Counsel has categorically submitted that order dated 12.01.2022 indicates that when the matter was being heard by the Adjudicating Authority a statement was made by the Corporate Debtor that the application which was filed under Section 76 shall be withdrawn.

 

# 8. It is true that the application under Section 76 was not listed and was laying in defect, as has been submitted by learned counsel for the Appellant, however, the order record the statement of counsel for the Corporate Debtor that they shall withdraw the application. The Adjudicating Authority has heard the parties and has to decide finally. The power of the Adjudicating Authority to take proceeding for prosecution are ample and at any stage the Adjudicating Authority can direct for the prosecution of either of the parties.

 

# 9. We are of the view that filing of applications on 30.08.2022 under Section 76 of I&B Code and Section 340 of CRPC were only for the purpose of delaying the proceedings as has been observed by the Adjudicating Authority. We are of the view that the Adjudicating Authority who is at the helm of the affairs and made observations after consideration and conducting the proceeding, due weightage has be given to such observation. When the Adjudicating Authority has observed that the application has been filed for delaying the proceedings, we have no reason to take a different view. We are of the view that there is no merit in the Appeal. Appeal is dismissed.

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