Ananda Rao Korada vs Insolvency And Bankruptcy Board ...
2023 Latest Caselaw 5343 Cal

AD-09
Ct No.09
21.08.2023
TN
                           WPA No. 19016 of 2023

                              Ananda Rao Korada
                                    Vs.
                   Insolvency and Bankruptcy Board of India


             Mr. Chayan Gupta,
             Mr. Shoham Sanyal,
             Mr. Soumyajyoti Nandy,
             Mr. G. Prakash
                                                 .... for the petitioner

             Ms. A. Rao,
             Mr. A. Basu
                                               .... for the respondent

The question of maintainability of the writ

petition is raised at the outset by learned counsel

appearing for the respondent.

Learned counsel for the respondent cites the

judgment rendered by the Supreme Court in Kusum

Ingots & Alloys Ltd. Vs. Union of India and another

reported at (2004) 6 SCC 254, to argue on the

contours of Article 226(2) of the Constitution of India.

Learned counsel also places reliance on the

judgment of Oil and Natural Gas Commission Vs.

Utpal Kumar Basu and others, reported at (1994) 4

SCC 711, as well as (2004) 9 SCC 786 [National Textile

Corpn. Ltd. and others Vs. Haribox Swalram and

others] in support of her proposition.

In ONGC (supra), it is argued, it was observed

that the dispute arose in connection with the rejection

of a bid of the petitioner therein, in a tender process

floated by the ONGC.

The petitioner had, inter alia, contended that

the advertisement was read by the petitioner at

Calcutta and the offer was submitted from Calcutta.

Representations were made by the petitioner from

Calcutta as well.

However, the Supreme Court, while turning

down the said plea of the petitioner, held that the

Calcutta High Court did not have territorial

jurisdiction to take up the matter.

In National Textile Corpn. Ltd. (supra), the

Supreme Court held on similar lines. It was observed

that the question which arose for consideration was

whether the service of the notice at the head office of

the company at Calcutta could give rise to a cause of

action within the State of West Bengal to enable the

Calcutta High Court to exercise jurisdiction in a

matter where challenge to acquisition proceeding was

conducted in Jaipur. The Supreme Court, in the said

case, turned down the plea of the petitioner that the

Calcutta High Court had jurisdiction to take up the

matter. It is argued that, in the present case as well,

the entire corporate resolution proceeding from which

the cancellation of the petitioner's registration as a

Resolution Professional arose, took place in Odisha.

In fact, the petitioner also participated in a proceeding

in connection therewith in the High Court at Odisha.

That apart, the decision to cancel the

petitioner's registration was taken by the respondent

in New Delhi.

As such, the mere fact that the petitioner has

obtained the licence in Kolkata and that the

cancellation of the registration of the petitioner was

communicated in Kolkata, does not confer territorial

jurisdiction on this Court to entertain the present writ

petition.

Lastly, learned counsel places reliance on

Magma Fincorp Ltd. vs. Assistant Director, DGCEI,

Kochi & Ors., reported at 2013 SCC OnLine Cal 17881.

Learned counsel appearing for the writ

petitioner, while answering the question of

maintainability, places reliance on a judgment

rendered by a Division Bench of this court in Everest

Coal Co. Pvt. Ltd. vs. Coal Controller and Ors., reported

at 90 CWN 438. In the said case, the court observed

that in order to maintain the writ petition, the

petitioner has to establish that within the territorial

limit of the court's jurisdiction prima facie a legal right

claimed by him has been either infringed or

threatened to be infringed by the respondents.

It was also observed that at least a part of the

cause of action has to arise within the territorial

jurisdiction of the court which assumes jurisdiction.

It is highlighted by learned counsel that the Division

Bench in the said case observed that when an order

becomes effective only when it is communicated or

served, the service of the order or receipt of a notice

thereof would form part of the cause of action for filing

the writ petition by the person aggrieved. It is argued

that the same happened in the present case.

Learned counsel submits a coordinate Bench

decision of this court rendered in Sri Pankaj Panwar

vs. Lalit Kala Akademi & Ors., reported at AIR 2015

Cal 67, where all the judgments cited by the petitioner

were considered by the learned Single Judge.

Ultimately, the learned Single Judge came to a finding

that to hold service of an order or a notice on the

addressee would never give rise to a cause of action to

move the court within whose territorial limit the

order/notice is received, may not be reasonably

sound. The learned Single Judge observed that if

service of an order or a notice is an event of

substance, that is, an event which is a material,

essential or integral part of the lis connected with the

action that is impugned, there is no plausible reason

as to why the same should not be considered as a

material, essential or integral part of the cause of

action.

Learned counsel next cites another judgment of

this court rendered in Pranab Bose vs. Union of India

and Ors., which is an unreported judgment where it

was, inter alia, observed that the premise of the

challenge there was on a wider footing of blacklisting

the petitioner therein from participating for one whole

year for any work with the respondent authority. It

was observed that another logic which sanctifies the

territorial jurisdiction of this court is that the effect of

the impugned blacklisting would directly be that the

petitioner would not be able to function in any activity

of the respondent authorities from its registered office

situated in Kolkata, which is within the territorial

jurisdiction of this High Court.

That apart, learned counsel for the petitioner

cites Cement Workers' Mandal vs. Global Cements

Limited (HMP Cements Limited) and others, reported at

(2019) 20 SCC 517, in support of the proposition that

Article 226(2) of the Constitution confers jurisdiction

on any High Court, within the jurisdiction of which

even a part of the cause of action has arisen, to decide

the writ petition.

Lastly, learned counsel cites a Division Bench

judgment of the Bombay High Court, which is also an

unreported one, where the Division Bench entertained

a writ petition, on a similar issue of challenge to the

order passed by the Disciplinary Committee appointed

by the Insolvency and Bankruptcy Board of India

(IBBI), where the proceedings took place in Delhi, that

is, outside the territorial jurisdiction of the Bombay

High Court.

A perusal of the judgments cited by both sides

indicates that certain cardinal principles have been

laid down by the Supreme Court while deciding the

scope of operation of Article 226(2) of the Constitution.

Although facts differ from case to case, it has been

held that the cause of action or a part of it has to arise

within the territorial jurisdiction of the relevant High

Court, for it to assume jurisdiction.

As echoed in the judgment of the learned Single

Judge of this court in Sri Pankaj Panwar (supra), the

court has to consider whether the material, essential

or integral part of the cause of action arises within the

territorial jurisdiction of the court assuming

jurisdiction.

The premise of the judgment rendered by the

Supreme Court in ONGC (supra) was a challenge to a

rejection of a bid of the petitioner therein in a tender

process. The petitioner therein had sought to invoke

the jurisdiction of the Calcutta High Court primarily

on the ground that the advertisement for the tender

was read by the petitioner in Calcutta (now Kolkata)

and that the petitioner had sent its offer from Calcutta

along with certain subsequent representations.

As rightly held by the Supreme Court in the said

case, the simple fact of the petitioner having issued an

offer from Kolkata might not be a germane fact

embodying an essential part of the cause of action.

The cause of action in the said case was a challenge to

the refusal to accept the bid of the petitioner, which

took place outside Calcutta and the Supreme Court

was justified in turning down the jurisdiction of the

Calcutta High Court on such count.

The other relevant judgment relied on by the

respondent is that of National Textile Corpn. Ltd.

(supra). In the said case, the question which arose for

consideration was summed up in paragraph 12 of the

report. The textile mills which were situated in

Bombay and the supply of cloth, which was in

dispute, was to be made ex-factory at Bombay.

According to the writ petitioner, the money was paid

to the mills at Bombay and the learned Single Judge

in the said case, after a detailed discussion of the

matter held that the Calcutta High Court had no

jurisdiction to entertain the writ petition. The Division

Bench, in the case, reversed the finding on the ground

that a concluded contract had come into existence

which could be cancelled only after giving opportunity

of hearing and consequently the question of

revocation of the contract at the petitioner's Calcutta

address would constitute a cause of action.

With utmost respect, it could be argued, as

done in the said case, that the said revocation of

jurisdiction could be termed as a bit convoluted,

having no direct connection with the bundle of facts

which led to the said writ petition. The prayer made

in the writ petition was a writ of mandamus

commanding the respondents therein to produce the

entire records relating to withdrawal of delivery of

goods pursuant to the contract mentioned in the writ

petition.

However, the facts of the said case, in the

context of which the Supreme Court rendered the

findings therein, have no similarity with the present

case.

Kusum Ingots (supra) undoubtedly lays down

the contours of the operation of Article 226(2) of the

Constitution. A proposition was laid down therein

that if a part of the cause of action arises within the

territorial jurisdiction of a court, the same has

jurisdiction. In fact, in paragraph no. 30 of the same,

the Supreme Court while dealing with the concept of

Forum conveniens observed that it ought to be

reminded that even if a small part of the cause of

action arises within the territorial jurisdiction of the

High Court, the same by itself may not be considered

to be a determinative factor compelling the High Court

to decide the matter on merits. In appropriate cases,

the court may refuse to exercise its discretionary

jurisdiction by invoking the doctrine of Forum

conveniens. As opposed to the said case, in the

present case, the effect of the impugned action of the

respondent is on a much wider footing.

In most of the judgments cited by the

respondent, the dispute revolves around the refusal of

a particular entity in a tender process or some other

similar process.

In the present case, however, the cancellation of

the registration of the petitioner as a Resolution

Professional under the Insolvency and Bankruptcy

Code, 2016 (for short "the IBC, 2016") is not restricted

or confined to a proceeding happening at Odisha. The

petitioner, while acting as the resolution professional,

undoubtedly operated within the scope of the Odisha

Tribunal and functioned as a resolution professional

in the said proceeding, including appearing before the

Orissa High Court. However, functioning as a

resolution professional before the Odisha forums is a

direct antithesis of the cancellation of the registration

of the petitioner as a resolution professional.

Hence, the functioning of the petitioner as a

resolution professional within the territorial

jurisdiction of Odisha cannot, by any stretch of

imagination, be cited as a determinant for territorial

jurisdiction when the petitioner's very registration for

acting as a resolution professional has been cancelled.

The cancellation, as much as in Odisha,

precludes the petitioner from acting as a resolution

professional throughout the territorial jurisdiction of

India, which is not restricted to a particular State, be

it West Bengal, Odisha or the Union Territory of Delhi.

The mere fact that the decision to cancel the

petitioner's registration was taken in New Delhi by the

respondent does not, in any way, restrict the

jurisdiction of the present cause of action to the Delhi

High Court. In fact, as held in most of the cited cases,

even if a part of the cause of action arises within the

territorial jurisdiction of a High Court, it may very well

assume jurisdiction under Article 226(2) of the

Constitution.

In the present case, the cause and the effect of

the decision of the respondent-authorities was not

limited to the functioning of the petitioner in New

Delhi. The basis of the decision apparently took place

throughout the country, particularly in other States

than New Delhi such as Odisha.

As such, it cannot be said that the territorial

jurisdiction for the present purpose can be restricted

to Odisha. Also, the petitioner himself was registered

in Kolkata as a resolution professional and thereafter

has started functioning in such capacity throughout

the country.

That apart, the cancellation directly pertains to

the registration of the petitioner which was obtained

in Calcutta for pan-India purpose. Moreover, the

cancellation was a composite continuum of the act of

issuing the decision of cancellation by e-mail and the

component of the petitioner receiving the same in

Kolkata. Receiving the cancellation order in Kolkata

completed the bundle of cause of action by ripening

the issue for the petitioner to prefer the present writ

petition. It cannot, in any manner, be equated to

merely reading a pan-India tender advertisement

online in Kolkata.

In the present case, as such, this court has

territorial jurisdiction, since at least a part of the

cause of action has arisen within the territorial

jurisdiction of West Bengal. As such, the objection as

to maintainability taken by the respondent is hereby

turned down.

The writ petition is now taken up for deciding

on the question of passing ad-interim order.

Learned counsel for the petitioner seeks to make

out a prima facie case in the writ petition.

Heard learned counsel for both sides.

Although an arguable case has been made out

for hearing of the writ petition on merits, this court is

of the opinion that grant of interim order, as prayed,

even to the extent that the petitioner will continue to

perform as a resolution professional in the pending

corporate resolution proceedings, would tantamount

to grant of final relief in the writ petition.

Going by the concept of balance of convenience

and inconvenience, in the event the petitioner is

permitted to carry on functioning as a resolution

professional in some proceedings somewhere within

India and ultimately the writ petition is dismissed, the

damage then done would be irreversible, since the

entire gamut of the proceedings cannot be put back in

time.

On the other hand, the petitioner shall not

suffer any irreversible or irreparable injury in the

event he remains restrained from functioning as a

resolution professional due to the cancellation,

subject to the outcome of the writ petition, since the

resolution professional can be changed in a

proceeding within the preview of IBC, 2016 at any

point of time.

Keeping such consideration in view, the ad

interim prayers made in the writ petition are refused.

The respondent shall file their affidavit-in-

opposition within three weeks from date. Reply

thereto, if any, shall be filed within a week thereafter.

The matter shall next be listed for hearing on

September 25, 2023.

(Sabyasachi Bhattacharyya, J.)