NCLAT: Procedural Order Seeking Affidavit on Ledger Accuracy Not Appealable Under Section 61 IBC
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), has ruled that a procedural direction issued by the National Company Law Tribunal (NCLT) requiring the filing of an affidavit to confirm the accuracy of ledger entries is not appealable under Section 61 of the Insolvency and Bankruptcy Code, 2016. The ruling came in a matter where the appellant, Medekar Intisar Mohamed, the erstwhile director of Samaara Leathers Pvt. Ltd., challenged an order passed by the NCLT directing him to file an affidavit confirming the correctness of ledger transactions for the financial years 2017–18 and 2018–19. The order was passed in proceedings initiated by the liquidator under Section 66 of the IBC alleging fraudulent transactions.
Background of the Case
The dispute stemmed from a forensic audit conducted during the liquidation process of Samaara Leathers Pvt. Ltd., which uncovered inconsistencies in the ledger accounts maintained during the appellant’s tenure as director. The liquidator filed an application under Section 66 of the IBC before the NCLT, seeking recovery of Rs. 27,07,470/-. The claim included Rs. 20,44,411/- allegedly underreported in ledger balances and Rs. 6,63,059/- in missing cash.
The NCLT, upon reviewing the audit findings, directed the appellant to file an affidavit confirming the accuracy of the transactions as reflected in the ledgers. The appellant contested this direction, asserting that it was based on unsubstantiated allegations and flawed audit methodology. He also contended that the transactions were part of the regular business and had been audited by statutory auditors.
Contentions Raised
Challenging the NCLT’s order before the NCLAT, the appellant argued that the forensic audit was not reliable and that the NCLT's direction for filing an affidavit infringed upon his rights. He also filed an application for condonation of a 14-day delay in filing the appeal, explaining that the delay was due to the time taken in seeking legal advice.
The liquidator, on the other hand, maintained that the direction issued by the NCLT was limited to confirming factual accuracy and did not impose any liability or determine any rights. It was procedural in nature and aimed at resolving factual inconsistencies flagged by the audit.
Observations of the NCLAT
The NCLAT began by condoning the delay in filing the appeal, noting that the order was uploaded on March 10, 2025, and the appeal was filed on April 23, 2025—well within the condonable period under Section 61(2) of the IBC. It relied on the Supreme Court's ruling in Sanjay Pandurang Kalate v. Vistra (India) Ltd , which held that limitation could be computed from the date of uploading of the order when relevant.
On merits, the Appellate Tribunal made it clear that the direction issued by the NCLT was purely procedural and intended to assist the tribunal in determining the veracity of financial records. It emphasized that: “The nature of the order… was exclusively a fact-finding direction only for the purpose of ensuring the truthfulness of the ledger entries… attempted to be established by filing of an affidavit by the Appellant.”
The Tribunal observed that such procedural orders do not affect any substantive rights of the parties, nor do they create any legal impediment. Since the affidavit had not yet been evaluated or led to any conclusive finding on liability, the matter was still open for adjudication before the NCLT. Reiterating this position, the NCLAT stated: “The nature of the order… is only procedural in nature; it neither impinges upon any right of the Appellant or the opposite party… nor creates any obstacle of any right of either of the parties.”
The NCLAT concluded that since the impugned direction was procedural and did not adjudicate on any right or liability, an appeal under Section 61 of the IBC was not maintainable. It also clarified that the dismissal of the appeal should not be seen as any comment on the merits of the allegations made against the appellant.
“The affidavit thus ordered to be furnished will be considered by the Tribunal independently… to arrive at a reasoned conclusion pertaining to the correctness of the transactions entered into the ledger account of the Appellant.” Accordingly, the appeal was dismissed, and all pending applications were disposed of.
Appearance
For Appellant: Mr. Pawan Jhabakh, Advocate
Cause Title: Medekar Mohamed V. K. Muruganandan (Liquidator of Samaara Leathers Private Limited)
Case No: Company Appeal (AT) (CH) (Ins) No. 275/2025
Coram: Justice Sharad Kumar Sharma [Member – Judicial], Jatindranath Swain [Member – Technical]
