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Difference between ‘Adjudicating Authorities’ & ‘Court’

In Vijay Pal Garg & Ors. Vs Pooja Bahry, appeal was filed before the NCLAT ordering that the affairs of the Corporate Debtor ought to be investigated. Accordingly, the Central Government is directed to order an investigation into the affairs of the Corporate Debtor under Section 210 (2) of the Companies Act, 2013.

The Appellants submitted that the Adjudicating Authority had incorrectly invoked Section 210(2) of the Companies Act, 2013 while exercising jurisdiction under the provisions of ‘I&B’ Code. The Appellants contends that for the purpose of exercise of jurisdiction as per Section 210(2) of the Companies Act, 2013, the meaning of term ‘Court’ or the ‘Tribunal’ has to be considered in terms of the definition specified under the Companies Act, 2013 and that as per Section 5(1) of ‘I&B’ Code the Adjudicating Authority as defined thereof clearly does not fall within the purview of the term ‘Court’ as defined in Section 2(29) of the Companies Act, 2013 and therefore cannot issue the direction for investigation.

The NCLAT observed that in the present case it is to be pointed out that the term Adjudicating Authority, as defined in Section 5(1) of IBC cannot come within the ambit of court as defined in Section 2(29) of the Companies Act, 2013. In fact, Section 2(29)(i) of the Companies Act defines ‘Court’ the High Court having jurisdiction in relation to the place at which the registered office of the Company concerned is situated etc. Section 2(29)(ii) of the Act speaks of ‘District Court’ and Section 29(iii) deals with the Court of Session, Section 29(iv) pertains to the Special Court constituted u/s 435 and Section 29(5) is concerned with any Metropolitan Magistrate or Judicial Magistrate of the 1st Class.

Likewise, the term Tribunal is defined u/s 2(90) of the Companies Act which means the NCLT constituted under Section 408 of the Companies Act, 2013.

It is significant to point out that a court of Law exercises judicial power in discharging judicial function and finally arrive at a conclusion. A ‘Tribunal’ is similar to a ‘Court’ but it is not a ‘Court’. In short, the ‘Court’ means a ‘Court’ of civil judicature and the and the ‘Tribunal’ means body of men appointed to decided the disputes /controversies (of course judicial power of the state being conferred in it. The procedure of a ‘Court of Law’ and ‘Tribunal’ will differ but they function in their own field. However, a ‘court of Law’ and the ‘Tribunal’ act judicially in both senses. To put it lucidly, a Tribunal does not have the trappings of a ‘court’. An Administrator is to exercise a prudent skill and care in dealing with property affairs, duly entrusted to him. Further, the Adjudicating Authority is to subjectively satisfy itself that a complete and comprehensive probe into the affairs of company is very much required, in the interest of Company because of maladministration and poor governance.

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