Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that once the Corporate Insolvency Resolution Process (CIRP) is initiated and an Interim Resolution Professional (IRP) is appointed, a corporate debtor cannot file an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, in its own name. The Bench comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) dismissed an appeal filed by Dhara Cements (India) Pvt. Ltd., holding that it was not maintainable since the appeal had been filed by the corporate debtor itself and not through its suspended director.

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The appeal arose from an order dated 13.02.2024 by which the NCLT admitted a Section 7 application and appointed Mr. Gyaneshwar Sahai as the IRP for Dhara Cements. After admission, the corporate debtor challenged the order before the NCLAT but filed the appeal in its own name.

The appellant argued that Section 61(1) of the IBC allows “any person aggrieved” to prefer an appeal and that under Section 3(23), the term “person” includes a company. It was contended that since the IRP had not yet taken over the management of the corporate debtor, the company could file the appeal. The appellant also filed an application seeking amendment of the cause title to show that the appeal was being pursued through the suspended director. Relying on Dena Bank v. C. Shivakumar Reddy, it was argued that amendment of pleadings is permissible under the Code.

The respondent opposed the appeal, submitting that once a company is admitted into CIRP, its management stands suspended and the company cannot act independently. Reliance was placed on the Supreme Court’s decision in Innoventive Industries Ltd. v. ICICI Bank, where it was held that “once an insolvency professional is appointed to manage the company, the erstwhile directors who are no longer in management, obviously cannot maintain an appeal on behalf of the company.” The respondent further relied on the NCLAT’s earlier judgment in Krystal Stone Exports Ltd., where an appeal filed in the name of the corporate debtor was dismissed as non-maintainable.

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It was also argued that the application for amendment of the title was filed more than a year after the admission order and was barred by limitation. Section 61 allows only 30 days for filing an appeal, extendable by a maximum of 15 days for sufficient cause, and therefore the lacuna could not be cured at such a belated stage.

After examining the statutory framework and the judicial precedents, the NCLAT held that an appeal filed directly by the corporate debtor after initiation of CIRP is not maintainable. The Tribunal reiterated that control of the corporate debtor vests with the IRP from the date of admission and the company cannot litigate in its own name. The Bench observed that the appellant’s reliance on earlier substitution orders was misplaced since, in those cases, substitution applications were filed within the limitation period by the suspended directors or shareholders, unlike the present case where the amendment application was “highly belated.”

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The NCLAT also noted that the appellant incorrectly claimed that the Tribunal had directed amendment of the cause title. The record showed that the Tribunal had merely granted time for the appellant to file an appropriate application, not issued any direction permitting amendment. Concluding that there was no merit in the appeal or in the application for amendment, the NCLAT dismissed both, holding that the appeal was not maintainable under Section 61 of the IBC when filed by the corporate debtor itself after CIRP admission and IRP appointment. All pending IAs were closed.

Appearance

For Appellant: Ms. Manisha T Karia, Sr. Advocate, Mr. Deepin Deepak Sahni, Ms. Ananya Arora, Advocates.

For Respondent: Mr. Palash S. Singhai, Mr. Harshal Sareen, Advocates and Mr. Tirth Nayak.

Cause Title: Dhara Cements (India) Pvt. Ltd. v. Dineshbhai Khimjibhai Patel

Case No: Company Appeal (AT) (Ins.) No. 444 of 2024 & I.A. No. 1520, 1521, 4288 of 2024

Coram: Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member), Mr. Indevar Pandey (Technical Member)