NCLT Guwahati Rules, Prior Approval Of Adjudicating Authority Before Initiating Legal Proceedings Against Any Party U/S 33(5) Of IBC Is Mandatory
Pranav B Prem
The Guwahati Bench of the National Company Law Tribunal (NCLT), consisting of Judicial Member Shri Rammurti Kushawaha and Technical Member Shri Yogendra Kumar Singh, has held that the Liquidator must obtain prior approval of the Adjudicating Authority under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), before initiating any legal proceedings against any party. It further clarified that the party against whom proceedings are to be initiated is not required to be given a hearing at the approval stage.
The decision was rendered in an application filed by Mr. Purshotam Gaggar, the Liquidator of Sree Bajrang Infracon Private Limited, seeking leave to initiate legal proceedings against Kamakhya Biofuels Private Limited (KBPL) for recovery of outstanding dues amounting to ₹4,29,85,347/-. The Tribunal considered the matter in IA(IBC)/42/GB/2025 filed under Section 33(5) of the IBC read with Rule 11 of the NCLT Rules, 2016.
According to the Liquidator’s submissions, the Corporate Insolvency Resolution Process (CIRP) of Sree Bajrang Infracon was initiated by the Tribunal vide order dated 12.01.2024 in CP(IB)/7/GB/2023. During the CIRP, it was revealed that an amount exceeding ₹4.29 crore was outstanding from KBPL, a client that had availed services from the Corporate Debtor. A demand notice was issued to KBPL on 25.10.2024 by the then Resolution Professional, Mr. Ujwal Kumar Kalita, but no payment or response was received. Subsequently, the company entered liquidation via order dated 20.12.2024, and Mr. Gaggar was appointed as the Liquidator.
Despite further communication by the Liquidator, including a follow-up letter dated 31.12.2024, KBPL not only failed to remit the outstanding dues but also filed a counter claim of ₹2,61,05,984/- on 13.01.2025. This claim was rejected by the Liquidator through an email and formal letter dated 27.01.2025.
In response to the Liquidator’s request for clarification, the Suspended Board of the Corporate Debtor, through emails dated 26.03.2025 and 05.05.2025, categorically alleged that KBPL had manipulated documents and made fraudulent attempts to escape liability. The Tribunal reproduced the relevant portion of the Suspended Board's communication, where it was stated that KBPL had “resorted to sheer lie and have forged or manipulated facts & documents to avoid their liability.”
The Tribunal heavily relied on the ruling of the National Company Law Appellate Tribunal (NCLAT) in Slimline Realty Pvt. Ltd. v. Jigar Bhatt [2024 SCC OnLine NCLAT 685]. It referred to the reasoning in that case, where the Appellate Tribunal held that the language used in Section 33(5) of the IBC is prohibitory in nature and that obtaining prior approval from the Adjudicating Authority is a mandatory requirement. It rejected the argument that the requirement was merely procedural or directory, stating that “use of prohibitory and negative language, even if no consequences are provided, is treated as mandatory.”
Furthermore, the NCLAT had made it clear that there is no requirement under Section 33(5) to provide a hearing or notice to the party against whom legal proceedings are sought. The provision’s purpose, the NCLAT observed, was to ensure judicial oversight and to protect the liquidation estate from unnecessary or frivolous litigation that could impose costs on the Corporate Debtor’s estate. Citing this, the Guwahati Bench held that a similar approach must be adopted in the present case.
After reviewing the detailed submissions and documentary evidence, the NCLT observed that the Liquidator had made diligent efforts to recover the dues and had gathered sufficient material to support the claim. The Tribunal also noted that the attempt by KBPL to file a claim in liquidation was clearly a defensive step, which had already been adjudicated and rejected by the Liquidator.
In conclusion, the Tribunal granted leave to the Liquidator to initiate appropriate legal proceedings against Kamakhya Biofuels Private Limited for recovery of the dues. It also directed that the Liquidator must keep the Tribunal informed about the progress and outcome of such proceedings. The Tribunal, exercising powers under Section 33(5) of the IBC and Rule 11 of the NCLT Rules, disposed of the application and directed the Registry to send email copies of the order to all concerned parties for necessary compliance.
Appearance
For Petitioner(s): Mr. N. Goenka, Adv.
Cause Title: Purshotam Gaggar, Liquidator of Sree Bajrang Infracon Private Limited
Case No: IA (IBC)/42/GB/2025 In CP(IB)/7/GB/2023
Coram: Rammurti Kushawaha [Judicial Member], Yogendra Kumar Singh [Technical Member]
