JK Jute Mills Company Limited Vs. Surendra Trading Company Limited [Company Appeal (AT) No. 09 of 2017] - Synopsis
Team SoOLEGAL 4 Feb 2021

In this case, JK Jute Mills Company Limited Vs. Surendra Trading Company Limited [Company Appeal (AT) No. 09 of 2017], a complaint under section 9 of the Insolvency Bankruptcy Code 2016, was lodged against the appellant before the Allahabad bench of the NCLT. Both the Operational Creditor and the workers' union demanded a status quo grant, as the Corporate Debtor could alienate its properties or assets. The Corporate Debtor had objected to the granting of temporary relief since there is no explicit clause in Insolvency Bankruptcy Code 2016. National Company Law Tribunal on 09.03.2017 had held that, according to Section 11 of the NCLT Rules, the Tribunal was liable for ensuring substantial justice and ordered the Corporate Debtor to preserve the status quo in respect of its immovable property or fixed assets until further notice. The said interim order is questioned by the Corporate Debtor before National Company Law Appellate Tribunal.
According to the NCLAT, various deadlines have been set out in under Section 7, 9, 10, 12, and 16 of the Code and suggested that if an application is not eliminated or an order is not passed within the time limit set out in the Code, the NCLT may record the reasons for not doing so within the time limit prescribed and can request the Hon'ble President of the NCLT to extend the time limit set out in the Act but not to exceed 10 days as specified under Section 64(1) of the Code.
The Bench had referred to a case, P.T. Rajan Vs. T.P.M. Sahir and Ors (2003), in which the  Supreme Court had noted that it is a well-established theory of law that, when a statutory officer is asked to conduct a statutory duty within the period specified, the same will be directory and not be compulsory. Furthermore, a clause of the statue which is of a procedural sort, even though the term 'shall' is used, cannot be treated as binding if there is no bias to that effect. However, the time of 7 days for the repair of the error, as stipulated, must be complied with, the submission of which, otherwise incomplete, must be refused. The clause for the replacement of the defect within 7 days is necessary and should be denied on the failure of the appeal. The Court held that the end result of the resolution process is the approval of the resolution plan or the commencement of liquidation proceedings, which is why the period given under Section 12 of IBC is mandatory. The term approved by Interim Resolution Specialist U/S 16 for the execution of the duties cannot be considered obligatory.
As in the present case, the submission was found to be faulty and the appeal was thus admissible.


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