The displeased party appealed the impugned order issued by the Honourable NCLT, New Delhi Bench, which instructed the Central Government to order an investigation into the Corporate Debtor's affairs in accordance with Section 210(2) (Investigation into the affairs of a company) of the Companies Act, 2013. The appellants later approached the Hon. NCLAT to request a stay of the said order because they were unhappy with it.
In the instant case titled Vijay Pal Garg v. Pooja Bahry, the issue raised for clarification before the NCLAT was:
Whether the Adjudicating Authority (Tribunal) in Law is allowed to order an investigation directly to be carried out by the Central Government?
With regard to this issue, according to NCLAT, this Tribunal has reached the "irresistible" and unavoidable conclusion that the Adjudicating Authority (Tribunal) in Law is not empowered to order an investigation directly, to be carried out by the Central Bureau of Investigation. This is because the Tribunal/Adjudicating Authority is guided by the Principles of Natural justice and is to follow the procedure prescribed u/s 213(b) of the Companies Act. In accordance with Section 213 of the Companies Act, an adjudicating body (Tribunal), which is a competent or appropriate authority, may choose to issue a notice on the accusations made against the appellants and other parties (including the promoters).
The National Company Law Appellate Tribunal (NCLAT), New Delhi, ruled that the word "Adjudicating Authority," as used in Section 5(1) of the IBC, cannot be construed to include a court, as that term is used in Section 2(29) of the 2013 Companies Act.
The NCLAT categorically stated 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".