NCLT Imposes Rs. 2.5 Lakh Cost On Personal Guarantor For Delayed Filing Of Reply, NCLAT Delhi Reduces Cost To Rs. 25,000
Pallavi Mishra
15 Feb 2024 4:30 PM GMT
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has reduced the cost imposed by NCLT on Personal Guarantor for 6 days delay in filing of Reply from Rs. 2.5 Lakhs to Rs. 25,000. The Bench opined that the imposition of Rs. 2.5 Lakh cost...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has reduced the cost imposed by NCLT on Personal Guarantor for 6 days delay in filing of Reply from Rs. 2.5 Lakhs to Rs. 25,000. The Bench opined that the imposition of Rs. 2.5 Lakh cost is excessive as delay in filing of Reply to application under Section 95 of IBC was of mere 6 days.
Background Facts
The State Bank of India filed application under Section 95 of IBC, seeking initiation of Insolvency Resolution Process against the Personal Guarantor (“Appellant”) of Borrower.
On 10.01.2024, the NCLT granted one week time to the Personal Guarantor to file response as a final opportunity. The Personal Guarantor filed its Reply on 24.01.2024 i.e. after 6 days of delay.
On 25.01.2024, NCLT imposed a cost of Rs. 2.5 Lakhs upon the Personal Guarantor for late filing of Reply and directed him to deposit the cost within three days.
The Personal Guarantor filed an appeal before the NCLAT against the order dated 25.01.2024, challenging the imposition of excessive cost on delayed filing of Reply.
NCLAT Verdict
The Bench opined that the cost of Rs. 2.5 lakhs is excessive, since there was delay of only 6 days in filing the Reply. Accordingly, the Bench reduced the cost to Rs. 25,000/- and directed the NCLT to take on record the Reply filed by the Personal Guarantor.
“We are of the view that ends of justice will be served in reducing the cost to Rs.25,000/- each. Learned Counsel for the Appellant are allowed 10 days' time to deposit the cost. In result, the impugned order dated on 25.01.2024 in so far as it imposes cost of Rs.2.5 lakhs is substituted by amount of Rs.25,000/-. The Adjudicating Authority shall take the reply of the Appellant on the record before hearing the application.”
The Appeal has been disposed of.
Case title: Rakesh Nayar v State Bank of India
Case No.: Company Appeal (AT) (Insolvency) No. 270 of 2024
Counsel for Appellants: Mr. Aditya Madaan, Mr. Rahul Kapoor and Mr. G.P. Madaan, Advocates
Click Here to Read/Download Order
