NCLAT: Ex-Parte IBC Order Set Aside as Renumbered Company Petition Was Not Notified to Corporate Debtor
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that where a company petition is restored and assigned a different number without notifying the corporate debtor, leading to its inability to access the case and present a defence, an ex-parte order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be sustained.
Background
The appeal was filed by Abhishek Singh, suspended director of Manpasand Beverages Ltd., challenging the order dated 24 September 2024 passed by the National Company Law Tribunal (NCLT), Ahmedabad, Division Bench, Court-I, which admitted a Section 7 application filed by the financial creditor, Respondent No. 1, on an ex-parte basis.
Initially, Company Petition (CP) No. 129 of 2023 had been disposed of on 1 May 2024 after noting that the corporate insolvency resolution process (CIRP) against the corporate debtor had commenced on 11 September 2023. This CIRP order was challenged before the NCLAT, and liberty was given to the financial creditor to re-agitate the matter if the CIRP order was set aside.
Following this, the financial creditor sought restoration of the company petition. By order dated 3 July 2024, the NCLT allowed restoration after issuing notice on 12 June 2024. Upon restoration, the petition was assigned a new number — RCP(IB)/5(AHM)2024 — and listed for hearing on 4 September 2024. On that date, in the absence of any representation for the corporate debtor, the adjudicating authority proceeded ex-parte. The matter was subsequently taken up on 20 September 2024, heard in the absence of the corporate debtor, and reserved for orders. On 24 September 2024, the NCLT admitted the Section 7 application.
Appellant’s Contention
The appellant argued that after the petition was renumbered upon restoration, neither the corporate debtor nor its counsel was informed of the change. As a result, the new case details could not be accessed, and the corporate debtor was deprived of a fair opportunity to contest the proceedings. The absence on the key hearing dates — 4 September and 20 September 2024 — was directly due to this lack of intimation.
NCLAT’s Findings
The NCLAT noted that the renumbering of CP (IB) No. 129 of 2023 to RCP(IB)/5(AHM)2024 was not communicated to the corporate debtor. This led to its counsel being unable to trace the matter in the cause list or access case details, resulting in non-appearance. The Tribunal observed: “The number of the Company Petition… has been changed without notice to the Corporate Debtor. Counsels appearing for the Corporate Debtor could not access the number… and that is the reason that none could appear on 04.09.2024.” The Bench held that the impugned order was passed ex-parte without giving the corporate debtor an adequate opportunity to be heard.
Subsequent Development and Disposal
During the appeal proceedings, the appellant deposited ₹2.65 crore in an interest-bearing account pursuant to the Tribunal’s interim order dated 26 September 2024. Counsel for the financial creditor informed the NCLAT that the amount, along with accrued interest, would be accepted in full satisfaction of its dues and that it did not intend to pursue the Section 7 application. In view of this, the NCLAT directed the registry to release the deposited amount with interest to the financial creditor. It further held that there was no reason to revive CP (IB) No. 129 of 2023, which stood closed. Accordingly, the appeal was disposed of.
The NCLAT reaffirmed that where a company petition is renumbered after restoration, failure to notify the corporate debtor and provide access to case details vitiates the fairness of the proceedings. Any ex-parte order in such circumstances cannot stand, as the corporate debtor is entitled to be heard before admission of a Section 7 application.
Appearance
For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Himanshu Satija, Mr. Harsh Saxena, Ms. Heena Kochar, Mr. Shevaaz Khan, Advocates.
For Respondents: Mr. Gaurav Mitra, Sr. Advocate with Mr. Abhishek Devgan, Advocate for R-1. Ms. Srishty Kaul, Ms. Roopsee Pandita, Advocates for Applicant in I.A. No.4228 of 2025.
Cause Title: Abhishek Singh, Suspended Director of Manpasand Beverages Ltd. V. Yoginkumar Ashokbhai Patel & Anr.
Case No: Company Appeal (AT) (Insolvency) No. 1863 of 2024
Coram: Ashok Bhushan [Chairperson], Mr. Barun Mitra [Technical Member]
