Paul Allen (as Trustee in Bankruptcy of Pramod Mittal) v Pramod Mittal
| Jurisdiction | England & Wales |
| Judge | Mr Justice Trower |
| Judgment Date | 24 April 2023 |
| Neutral Citation | [2023] EWHC 920 (Ch) |
| Docket Number | Case No: CH-2022-000085 |
| Court | Chancery Division |
In the Matter of Pramod Mittal (A Bankrupt)
And in the Matter of the Insolvency Act 1986
[2023] EWHC 920 (Ch)
THE HONOURABLE Mr Justice Trower
Case No: CH-2022-000085
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS
ON APPEAL FROM THE ORDER OF DEPUTY ICC JUDGE AGNELLO KC DATED
1 APRIL 2022
Royal Courts of Justice,
7 Rolls Building
Fetter Lane,
London, EC4A 1NL
Tony Beswetherick KC and Rowena Page (instructed by Mishcon de Reya LLP) for the Appellant
Adam Chichester-Clark (instructed by Collyer Bristow LLP) for the Respondent
Hearing dates: 14 and 15 February 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 24 April 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg https://www.bailii.org/ew/cases/EWCA/Civ/2022/1169.html).
THE HONOURABLE Mr Justice Trower
Introduction
This is an appeal by the trustee in bankruptcy (the “Trustee”) of Pramod Mittal (“Mr Mittal”) against the order of Deputy ICC Judge Agnello KC (the “Judge”) dated 1 April 2022. By her order, the Judge refused the Trustee's application under section 279(3) of the Insolvency Act 1986 (“IA 1986”) to suspend Mr Mittal's discharge from bankruptcy (the “suspension application”).
The relevant parts of section 279 are as follows:
“(1) A bankrupt is discharged from bankruptcy at the end of the period of one year beginning with the date on which the bankruptcy commences.
…
(3) On the application of the official receiver or the trustee of a bankrupt's estate, the court may order that the period specified in subsection (1) shall cease to run until:
(a) the end of a specified period, or
(b) the fulfilment of a specified condition.
(4) The court may make an order under subsection (3) only if satisfied that the bankrupt has failed or is failing to comply with an obligation under this Part.
(5) In subsection (3)(b) “condition” includes a condition requiring that the court be satisfied of something.”
Prior to the hearing before the Judge, an interim order suspending Mr Mittal's discharge pending a substantive hearing had been made by ICC Judge Prentis pursuant to the jurisdiction confirmed by the Court of Appeal in Bagnall v the Official Receiver [2004] 1 WLR 2832 (“ Bagnall”). This interim order was made on 17 June 2021, two days before the expiry on 19 June 2021 of the one year period referred to in section 279(1). As Arden LJ explained in Bagnall at [27]:
“… the court has power to make an interim order under this section and in doing it must be satisfied that there are reasonable grounds for concluding that such an order would be made after the substantive hearing on the material then placed before the court.”
There was no appeal against the interim order made by Judge Prentis. Although the Judge refused the relief sought at the substantive hearing, she extended the interim relief granted by Judge Prentis pending determination of the Trustee's application for permission to appeal against that refusal. Permission to appeal was granted by Edwin Johnson J on 4 July 2022. He further extended the suspension of Mr Mittal's discharge pending the substantive determination of this appeal.
The argument before the Judge did not focus on the question of whether the Trustee had established that Mr Mittal had failed to comply with any of his obligations under Part IX of IA 1986 so as to meet the requirements of section 279(4). Indeed, the Judge recorded that Mr Mittal had made clear that he would only contest the application on issues of service and procedure, and not in relation to the matters of conduct which the Trustee said justified a suspension of his discharge. She also explained that Mr Mittal had filed no evidence relating to the merits of the suspension application and held that, for the purposes of her judgment and on the basis of the evidence which had been filed, she was “prepared to accept that there is a compelling case on the merits for the suspension of bankruptcy.”
The issues with which the Judge was concerned were Mr Mittal's submissions that the Trustee's suspension application should be dismissed because:
i) he had failed to effect valid service of the suspension application prior to the date on which Mr Mittal was discharged in accordance with section 279; and
ii) he had failed to serve the suspension application and the evidence on Mr Mittal and the official receiver within time prior to the first hearing of the application on 17 June 2021.
The Judge accepted Mr Mittal's case on the first issue and concluded that there had been a failure to effect valid service of the application prior to the date of what would have been his automatic discharge under section 279(1) of IA 1986 and that, for this reason, no order should be made for the suspension of his discharge. In refusing to make the order sought by the Trustee, the Judge also refused his application (made during the course of the hearing before her) for an order pursuant to CPR 6.15 and/or Schedule 4 of the Insolvency (England and Wales) Rules 2016 (“IR 2016”)) that the delivery of the suspension application on two separate occasions shortly before the date on which Mr Mittal was to have his automatic discharge was good service.
Background to the interim suspension order
Mr Mittal was adjudged bankrupt on 19 June 2020 on a petition debt of just under £140 million owed to Moorgate Industries UK Limited (“Moorgate”). Shortly thereafter, he proposed an individual voluntary arrangement (“IVA”) under Part VIII of IA 1986 which was approved on 26 October 2020. The approval of the IVA was challenged by an application made by Moorgate on 13 November 2020. Revocation of the IVA was sought on the basis of material irregularity (including an allegation that creditors acted in bad faith). On 25 November 2022, Chief ICC Judge Briggs concluded that there was a material irregularity at the meeting of creditors convened to consider the proposal ( Moorgate Industries UK Limited v Pramod Mittal and others [2022] EWHC 3009 (Ch)) and he made an order revoking the IVA. He determined that, in the light of other irregularities at the creditors meeting, it was unnecessary to deal with the issue of good faith. At the time of the hearing before me this order was subject to appeal, but permission has since been refused.
Meanwhile, on 10 June 2021, the Trustee had issued the suspension application. The relief sought included an order that the discharge of Mr Mittal's bankruptcy due to take place on 19 June 2021 be suspended until such time as a full hearing could be listed. The application notice requested that the suspension should run until at least the determination of the application to revoke Mr Mittal's IVA (which was then pending). It also sought an order that, in the event of the IVA challenge being successful, the discharge continue to be suspended for a further nine months, provided that Mr Mittal complied with his obligations under the IA 1986 and cooperated with the Trustee's enquiries.
Rule 10.142 of IR 2016 governs the procedure applicable to the suspension application. The Trustee was required to file and deliver to the official receiver and Mr Mittal his evidence in support of the application at least 21 days before the date fixed for the hearing (rule 10.142(5) of IR 2016). Rules 10.142(6) and 10.142(7) required Mr Mittal, as the bankrupt, to file and deliver to the official receiver and the Trustee copies of a notice specifying any statements in the Trustee's evidence which he intended to deny or dispute. The Trustee was also required by rule 12.9(3) of IR 2016 to serve a sealed copy of the application endorsed with the venue for the hearing on Mr Mittal at least 14 days before the date fixed for its hearing. This requirement is subject to rule 12.10 of IR 2016 which permits the court, where the case is urgent (and without prejudice to its general powers to extend or abridge time limits) to hear the application immediately with or without notification to, or the attendance of, other parties.
The request for a suspension until such time as a full hearing of the suspension application could be listed adopted the procedure sanctioned by Bagnall in which the Court of Appeal confirmed that the court has jurisdiction to grant interim relief suspending discharge both (a) in circumstances in which the application has been filed and served in time but the court is unable to deal with a substantive (normally opposed) hearing before the date on which automatic discharge would otherwise occur and (b) in circumstances in which there is insufficient time for the requirements of rule 10.142 to be complied with before that date. This jurisdiction is of some practical importance because any order suspending discharge must be made before the one year period (at the end of which a bankrupt is automatically discharged pursuant to section 279(1)) expires. This is because section 279(3) only permits the court to order that the one year period shall cease to run. It follows that, once discharge has occurred without being suspended, the power given by section 279(3) is spent; the court has no jurisdiction to suspend with retrospective effect.
As Bagnall itself demonstrates (see [23] and [27] of Arden LJ's judgment), the court is able to grant interim relief whether or not the bankrupt is notified of or served with the application so long as the case is urgent and so long as the reasonable grounds test I have cited above is satisfied. However, as Arden LJ explained in [30] of her judgment, fairness demands that a bankrupt should be given as much notice as practicable even if the 21 or 14 days periods are thereby...
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Where There's A 'Will' ' Service Of Insolvency Applications
...the importance of adhering to service rules and giving as much notice as possible of insolvency applications. In Allen v Pramod Mittal [2023] EWHC 920 (Ch) the Chancery division considered an appeal by a trustee in bankruptcy (the Trustee) seeking to suspend the automatic discharge from ban......