AI Structured Summary
Not yet generated for this judgment
Judgment
[Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial)]
The Company Petition, being CP(IB)/42/9/AMR/2024, M/s. Smartpaddle Technology Pvt Ltd Vs OTIS Textiles Pvt Ltd, was dismissed by the Tribunal by an order passed on 17.06.2025 on the ground of non-compliance of the earlier directions given by the Learned Tribunal and non-appearance of the Appellant on the said date. Seeking its recall/restoration, the Appellant had filed a Restoration Application, being Restoration Application (IBC)/9/2025. It is this application, which has been rejected by the impugned order of 30.07.2025, which is now the subject matter under challenge in the instant Company Appeal.
The Company Appeal is accompanied with a Condone Delay Application, as well as the application seeking condonation of delay in refiling. If we determine the period of limitation from the date when the copy of the order was made ready and was made available to the Appellant i.e., on 05.08.2025, filing of the Company Appeal on 01.08.2025, order, with an exemption application. Owing to the aforesaid, the Company Appeal would be treated to have been filed within time. Accordingly, IA No.1644/2025 would stand allowed and the delay, that has been sought to be condoned would hereby stand condoned. Similarly, IA No.1619/2025, where the Appellant has sought a condonation of 4 days of delay that has been chanced in refiling of the appeal, too would stand allowed and the delay of 4 days in refiling would stand condoned.
For the time being, we are not passing any orders on IA No.1645/2025, where the Appellant has sought an exemption from filing the legible copy of the documents. The same would be considered when the Company Appeal is taken up on merits, if the need so arises.
We proceed to hear the Learned Counsel for the parties on merits. The genesis of the controversy at hand has been that the proceedings under Section 9(2) of the I & B Code, to be read with Rule 11, 34 and 31 of NCLT Rules stood initiated at the behest of the Appellant herein by filing the application before the Learned NCLT, Amaravati Bench. During the proceedings, Learned Tribunal had passed orders on 07.04.2025, 29.04.2025 and 03.06.2025, calling upon the Appellant to produce certain documents which in the opinion of Learned Tribunal were necessary for the purposes of an effective adjudication of the Company Petition. When the matter was taken up on 17.06.2025, Learned Tribunal recorded in the order that despite the grant of several opportunities the Appellant did not produce the required documents on record so as to establish actual delivery of goods and he did not even appear in person or through counsel and came to the conclusion that the Appellant was not interested in pursuing the proceedings of the Company Petition being CP(IB)/42/9/AMR/2024 and on that premise the Tribunal has dismissed the Company Petition itself by the order dated 17.06.2025 on the grounds of being defective and not maintainable in addition to the grounds of want of prosecution due to the absence of the Appellant in the proceedings.
The settled principle is such cases is that when on a date fixed, if the Counsel or the party does not put an appearance, the Court or the Tribunal seized with the proceedings cannot proceed to decide the Company Petition on its merit or finally decide it by closing the same on the same date. This principle which has been laid down by the Hon’ble Apex Court in a Judgment reported in 2023 SCC OnLine SC Page 2541, Benny D’Souza and Others Vs Melwin D’Souza and Ors. The relevant paragraphs being para 5, 6 & 7 of the said Judgment which are extracted hereunder: -
“5.Having heard learned senior counsel for the appellants and learned counsel for the respondents, at the outset, we extract Order XLI Rule 17 of the CPC which reads as under:
“17. Dismissal of appeal for appellant's default:—
(1)Where on the day fixed, or on any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Court may make an order that the appeal be dismissed.
Explanation. - Nothing in this sub-rule shall be construed as empowering the Court to dismiss the appeal on the merits.”
6.The Explanation categorically states that if the appellant does not appear when the appeal is called for hearing it can only be dismissed for non-prosecution and not on merits.
7.However, the impugned judgment is a dismissal of the appeal on merits which is contrary to the aforesaid provisions and particularly the Explanation thereto. On that short ground alone the appeal is allowed the impugned order is set aside.”
The Appellant had filed the recall application praying that the order of 17.06.2025, dismissing the Company Petition may be recalled. The said Restoration Application was numbered as Restoration Application (IBC)/9/2025, and it was dismissed by the impugned order dated 30.07.2025, observing thereof that since the initial order, which was sought to be recalled, i.e., 17.06.2025, was passed, dismissing the Company Petition on grounds of being defective and not maintainable and not solely on grounds of non-prosecution, no Restoration Application would be maintainable because that would amount to reviewing its own order of 17.06.2025, which is not permissible under law.
After having heard the Learned Counsel for the parties, we are of the view that, as per the judicial precedents and the settled procedure contemplated under law, if in any proceedings where any of the parties are called upon to perform a certain act in order to help decide the case, which in the present case was production of certain documents by the Appellant, non-performance of such act either by negligence or deliberate dereliction are to be dealt with by closing the opportunity to perform such act at a later date so that the party indulging in such dereliction will lose his chance to defend himself through such act at a later stage. Thus, if a party does not appear despite being summoned, he is to be set ex-parte; if he fails to produce documents, his opportunity will be closed and such documents, even if produced at a later date, will not be considered for the purposes of deciding the case. Thus, in the instant case, on the said date, the Tribunal at the most could have closed the opportunity of the Appellant to produce the documents on record, which were called for by the orders of 29.04.2025 and 03.06.2025. However, it is seen that Learned Tribunal, instead of closing the opportunity to produce the documents on record, had proceeded to pass an order for dismissal of the Company Petition on the same day itself and that too in the absence of the Appellant or his counsel.
It is a settled law that in any judicial proceedings where the party to the proceedings is not present on the date when the hearing is held, the Tribunal or the Courts thereof seized with the proceedings should refrain itself from dismissing the Company Petition on merits. Propriety demands that the Tribunal, at the most could have dismissed the Company Petition for want of prosecution. Having not done so, the order itself of 17.06.2025, on the face of it, will fall to be within the ambit of Rule 11 of NCLT Rules to be recalled on an application to be preferred by the Appellant, which the Appellant did by filing Restoration Application (IBC)/9/2025, seeking recall of the order of 17.06.2025 and praying that the Company Petition may be heard on its own merits. The said application has been dismissed by the Learned Tribunal by the impugned order of 30.07.2025, observing thereof that the order of 17.06.2025 would be taken as to be the final order dismissing the Company Petition. It is seen that Learned Tribunal has treated the Restoration Application as to be amounting to be a review of its own order and has dismissed the same on the said ground. The recall application thus preferred by the Appellant, being Restoration Application (IBC)/9/2025, was seeking recall of an order which was passed ex-parte in the absence of the Appellant and was not as per the mandate of Rule 48 of the NCLT Rules. If any proceedings are adjudicated upon in the absence of the Appellant, that will amount to be an ex-parte proceedings and that too when there was an apparent flaw on the part of the Tribunal to have proceeded to dismiss the Company Petition on its own merits, not on default which is not as per Rule 48 of the NCLT Rules. The order of 17.06.2025 itself will not amount to be falling within a final merit adjudication of the proceedings, and rather will be a proceedings, which has been decided was ex-parte. In that eventuality, if the proceeding is decided ex-parte in the absence of the Learned Counsel for the parties, then obviously the Restoration Application would be maintainable, and the order sought to be recalled, will not amount to be review of an order, i.e., order of 17.06.2025, because such order has not adjudicated the proceedings on merits and has been passed in the absence of the Appellant or his counsel.
Thus, the application preferred under Rule 11 of the NCLT Rules for seeking recall of the order dated 17.06.2025, would be very well maintainable and cannot be treated as to be review of the order of 17.06.2025 because the said order was not an adjudication on merits, but rather based on procedural flaws because of procedural flaw of the Learned Tribunal. Besides that, in any proceedings, howsoever a party to the proceedings might have derelict in compliance with the procedural orders passed by the Tribunals or the Courts during the proceedings, that itself should not be taken as to be the reason for not to interfere in the proceedings owing to the past conduct of the party to the proceedings who was required to comply with certain directions as per the principles laid down in the matters of Qaiser Sibtain.
On the issue as to whether the order of dismissal of 17.06.2025 could have been passed due to the dereliction on the part of the Appellant of not supplying the documents despite orders of the Tribunal to that effect, it has been held by the Courts that earlier inaction cannot at all be taken as to be the basis for passing of an order holding thereof that the earlier inaction will amount to lack of diligence and lack of interest to pursue the matter on part of the Appellant. The Learned Single Judge of the Hon’ble Allahabad High Court in the Judgment reported in 1996 2 AWC (NOC 2) 2.147, Qaiser Sibtain Vs District Judge, Allahabad & Ors., has held that while an application for recall is being considered, the previous conduct of the applicant to the recall application becomes irrelevant and it is not to be considered for deciding the Restoration Application which has to be decided independently, irrespective of the previous conduct. The aforesaid principle has been laid down in para 6 of the Judgment, which is extracted hereunder: -
“6.In exercise of revisional jurisdiction, High Court never interferes with the concurrent findings of facts unless the same appears to be perverse. The above proposition is well established proposition with which there is no scope for any two opinion. In the present case, the facts have been found by both the courts below against the petitioner, and, therefore, I refrain from interfering with the fact so found. But the fact remains that while considering the question, the revisional court has dealt with the past conduct of defendant No. 11. It is established principle of law that while considering the question of grant of adjournment or recalling of an order, the past conduct is immaterial. The court has to look into the merit of the case confining to the date of the order sought to be recalled was passed. The court has to look out whether sufficient ground has been made out for the default on the very date or not. Looking into the past conduct would be an extraneous consideration which the court should not go into. In that view of the matter, taking into account the past conduct does not seem to me to be fair and correct approach adopted by the learned court below.”
In that eventuality, the dismissal of the recall application on 13.07.2025 by treating it as to be as review application is bad in the eyes of law in the light of the nature of the order dated 17.06.2025 which was sought to be recalled. Having considered the controversy in its entirety, we are of the view that the Tribunal ought to have exercised its inherent powers to meet the ends of Justice by recalling the order of 17.06.2025 and deciding the Company Petition itself on its merits rather than rejecting the Restoration Application and thereby depriving the merit adjudication of the Company Petition. In that eventuality, the impugned order of 30.07.2025 would hereby stand quashed, and as a consequence thereto, the Restoration Application (IBC)/9/2025 is hereby recalled.
Accordingly, the order dated 17.06.2025 will be recalled and the Company Petition being CP(IB) No.42/9/AMR/2024, will be restored back to the records of the Learned NCLT, Amaravati Bench. Learned NCLT, Amaravati Bench is requested to decide the Company Petition itself on its merit. It is hoped and trusted that the Appellant would supply full support to the proceedings before the Tribunal to ensure to decide the Company Petition itself on its merit as expeditiously as possible.