The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice M. Venugopal (Judicial Member) and Dr. Alok Srivastava (Technical Member) was hearing an appeal and held that any attempt to enforce a foreign judgment against a corporate debtor through the Adjudicating Authority/Tribunal is not permissible under the Insolvency and Bankruptcy Code.
Appellate Tribunal clarifies the limits of the Adjudicating Authority/NCLT's jurisdiction regarding foreign judgments in insolvency proceedings and emphasizes the primacy of the approved resolution plan in extinguishing claims against the corporate debtor.
In a Company Appeal, the Appellant challenged an order by the Adjudicating Authority/NCLT that dismissed their application seeking direction against the Respondent to pay an amount due, citing the Supreme Court's ruling. The Appellant argued that their case was unique and not covered by the cited judgment, as their claim arose during the Corporate Insolvency Resolution Process (CIRP) and after the approval of the Resolution Plan. They contended that the order was illegal and invalid as it did not show the application of judicial mind.
The 1st Respondent argued that the Adjudicating Authority/Tribunal lacked jurisdiction to execute a foreign judgment under the I&B Code, 2016. They asserted that all costs during the CIRP were accounted for and paid, and any claims not covered by the Resolution Plan were baseless. The Respondent claimed that no amounts other than those covered by the Resolution Plan could be claimed from the new management.
The NCLAT dismissed the appeal, stating that the Adjudicating Authority/Tribunal does not have jurisdiction to decide on the legality or propriety of a foreign judgment in insolvency proceedings. It emphasized that all claims not part of the approved resolution plan stand extinguished, and no proceedings can be initiated or continued for such claims after the approval of the plan. The NCLAT highlighted the objective of the I&B Code to balance the interests of all stakeholders and not just financial creditors and it cannot be used to enforce a foreign judgment.