Lawstreet Journal

NCLT Cannot Review Orders Passed By Statutory Bodies Or Quasi-Judicial Orders: SC [Read Judgment]

Lawstreet Journal 4 Dec 2019 10:42pm

Image courtesy: Lawstreet Journal Business NCLT Cannot Review Orders Passed By Statutory Bodies Or Quasi-Judicial Orders: SC [Read Judgment]

The Supreme Court in the case of Embassy Properties Developments Pvt. Ltd. v. State of Karnataka & Ors. on December 3, 2019 held that the NCLT can only review orders arising out of contractual transactions between the parties and cannot review quasi judicial orders or orders passed by statutory bodies that fall within the ambit of public law. 

A bench of the Supreme Court comprising of Justices R.F. Nariman, Aniruddha Bose and V. Ramasubramanian was hearing an appeal filed by the Corporate Debtor through its Resolution Profession, resolution Applicant and Committee of creditors challenging the interim order passed by the High Court of Karnataka staying the order of the NCLT.

Dismissing the appeals, the court held that, “though NCLT and NCLAT have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes arising under the MMDR Act, 1957, especially when the disputes revolve around decisions of quasi judicial bodies, which can only be corrected by judicial review of administrative action. Hence the High Court was justified in entertaining the Writ Petition.”

The main questions before the Court were whether the High Court can entertain petitions under Article 226 of the Constitution against order passed by NCLT when a statutory remedy is available under the Insolvency and Bankruptcy Code, 2016 and if so, then under what circumstances and whether fraud can be inquired into by the NCLT/NCLAT in the proceedings initiated under the IBC.

Answering the above question, the Court held that, “Even fraudulent tradings carried on by the Corporate Debtor during the… Continue Reading...

Tagged: NCLT  
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