Adjudicating Authority While Dismissing Appeal For Non-Prosecution Cannot Add Direction To Dismiss It On Merits As Well: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that when the appeal is dismissed on the ground of non-prosecution, it cannot be said to be dismissed on merits as well. In this case, the NCLT while dismissing the appeal for non-prosecution added a direction that the appeal is dismissed on merits as well. Brief Facts The present has been filed against an order passed by the NCLT by which an appeal filed by the appellant against the decision of the liquidator was dismissed on the ground that despite sufficient opportunity being given to the appellant, no one appeared therefore the appeal is dismissed for non-prosecution. However, while dismissing the appeal on this ground, the NCLT added that this appeal is dismissed on merits as well. The appellant submitted that Appellant has earlier appeared on four occasions but on the said date cannot appear, however, one proxy counsel appeared. Proxy counsel informed that counsel is indisposed, however, the Adjudicating Authority proceeded and dismissed the appeal for non-prosecution. It was also argued that while dismissing the appeal for non-prosecution, the Adjudicating Authority has also added words “as well as on merits”. The order does not indicate any consideration of merits in the order. Disposal of appeal on merits require consideration of the Adjudicating Authority on merits of the case. In event the appeal was dismissed only for non-prosecution, the Appellant has remedy to file application to recall the order after showing sufficient cause for non-appearance. However, appeal also having disposed on merits, any remedy is not available to the appellant. Observations: The tribunal observed that the NCLT was not justified in adding a direction that the appeal is dismissed on merits as well while dismissing the same for non-prosecution. Accordingly, the impugned order was set aside and the NCLT was directed to consider the said appeal afresh. However, the tribunal cautioned that the tribunal has not expressed any opinion on the merits of the case which can be taken into consideration while deciding the said appeal by the NCLT. Accordingly, the present appeal was allowed. Case Title: Nabard Consultancy Services Pvt. Ltd Versus Dharmendra Kumar, (Official Liquidator for IAP Company Pvt. Ltd.) Case Number: Company Appeal (AT) (Insolvency) No.2196 of 2024 Judgment Date: 10/01/2025 Click Here To Read/Download The Order

Adjudicating Authority While Dismissing Appeal For Non-Prosecution Cannot Add Direction To Dismiss It On Merits As Well: NCLAT

Mohd Malik Chauhan

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