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 held that an order once reserved for pronouncement cannot be reopened and altered based on a unilateral mention made by a non-party, especially when the affected party has not been heard. The Tribunal found such conduct to be in violation of the principles of natural justice and remitted the matter back for reconsideration.

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The case arose from four applications filed by Satyabrat Behera, the proprietor of Satya Logistics, against four individuals—Ashok Agarwal, Ajay Agarwal, Ankit Agarwal, and Anita Agarwal—who were personal guarantors to M/s Ankit Ispat Private Limited. These petitions were heard by the National Company Law Tribunal (NCLT), Division Bench-II, Chennai, and arguments concluded on February 19, 2025. On that date, the matter was explicitly reserved for orders.

However, on March 21, 2025, the date fixed for pronouncement of the orders, the NCLT dismissed all four petitions. This decision was made following a mention by counsel representing State Bank of India, Central Bank of India, and Federal Bank—none of whom were parties to the four company petitions before Bench-II. The mention raised the pendency of parallel insolvency proceedings against the same personal guarantors before NCLT Bench-I.

The appellant contended that the dismissal of the petitions on the basis of a submission made by unrelated parties, without issuing notice or giving him an opportunity to be heard, was a gross violation of the principle of audi alteram partem. It was pointed out that the banks were not party to the company petitions and that the NCLT should not have taken their statements into account without prior notice or hearing the appellant’s position on the matter.

It was further argued that since the petitions had already been heard and reserved for orders, the NCLT was procedurally barred from reopening the matter unilaterally. The appellant emphasized that the Tribunal ought to have either formally reopened the matter with notice or proceeded to pronounce the judgment strictly on the basis of arguments concluded on February 19, 2025. By accepting the mention and acting upon it on the day fixed for pronouncement, without any communication to the appellant, the NCLT had undermined judicial propriety and natural justice.

The NCLAT found merit in these arguments. It noted that the NCLT had accepted the statements made by the counsel for the banks, who were not parties to the proceedings, on the very day the matter was scheduled solely for the delivery of judgment. It observed that “the Tribunal ought to have either have noticed the Appellant and should have heard him on the issue raised by mention, and then passed an order, if at all required, as per law, and it ought not to have passed an order on the basis of the mention on the date when the Company Petition itself was listed for pronouncement of order.”

Highlighting the procedural impropriety, the NCLAT stressed that the order was rendered on the basis of proceedings entirely alien to the matter which had already been concluded. It reiterated that no new fact should influence an order after a matter has been reserved unless the case is duly reopened and all parties are given a fair opportunity to respond.

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In conclusion, the appellate tribunal quashed the impugned orders dated March 21, 2025, and allowed all four company appeals. The matter was remitted back to the NCLT, Division Bench-II, Chennai, with directions to re-decide the case afresh after granting the appellant an opportunity of hearing. The NCLT has been instructed to take into account the rival contentions regarding the impact of the parallel insolvency proceedings before Bench-I only after following due process.

Appearance

For Appellant: Mr. T.K. Bhaskar, Mr. P. Gowtham, Advocates

For Respondent: Nemo

Cause Title: Satya Behera (Proprietor of Satya Logistics) V. Ashok Agarwal & Ors.

Case No: Company Appeal (AT) (CH) (Ins) Nos. 271, 272, 2773 & 274 of 2025.

Coram: Justice Sharad Kumar Sharma [Member – Judicial], Jatindranath Swain [Member – Technical]