Reopening Case Reserved For Orders Without Hearing Affected Party Violates Principle Of Audi Alteram Partem: NCLAT Chennai

The National Company Law Appellate Tribunal, Chennai Bench, comprising Justice Sharad Kumar Sharma (Member – Judicial) and Jatindranath Swain (Member – Technical), has held that an order reserved for the pronouncement cannot be reopened and altered based on a unilateral mention made by a non-party without hearing the affected party. Background of the Case The appellant filed four applications before the adjudicating authority against the four individuals, who were the personal guarantors of M/s Ankit Ispat Pvt. Ltd. Petitions were heard and the arguments were concluded on February 19, 2025, and the matter was reserved for orders. On the date of the pronouncement, which was March 21, 2025, the NCLT dismissed all four petitions. The dismissal came after a mention made by the counsel of financial institutions, i.e., the State Bank of India, the Central Bank of India, and the Federal Bank. In that mention, the counsel highlighted that parallel insolvency proceedings involving the same guarantors were pending before NCLT Bench-I. However, these banks were not parties to the four petitions before Bench-II. Contention of the Appellant The appellant argued that the banks had no locus to influence the outcome of the reserved order. It highlighted that the financial institutions were not party to the petition, thus, the dismissal order should not have been passed based on their mentions. It contended that since the matter was reserved, any submission by the third party should have only been considered after duly serving the notice to the appellant. It highlighted that the dismissal of the petition based on the unilateral mention, without hearing the appellant, amounts to a violation of principles of natural justice. Judgment of the NCLAT The NCLAT allowed the appeal and quashed the impugned order dated March 21, 2025. The tribunal observed that the NCLT had erred in acting upon the submission of the third party. The bench 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.” The bench held that once an order is reserved after the conclusion of the arguments, no new facts should have influenced the order unless the matter was formally reopened and all parties were given notice. The tribunal lastly observed that the respective orders happen to be in violation of principles of natural justice, the same stand quashed, and the matter is remitted back to the tribunal. Case Title: Satya Behera (Proprietor of Satya Logistics) v. Ashok Agarwal & Ors. Case Number: Company Appeal (AT) (CH) (Ins) Nos. 271, 272, 2773 & 274 of 2025. For Appellant: Mr. T.K. Bhaskar, Advocate For Mr. P. Gowtham, Advocate For Respondent: No Appearance Bench: Justice Sharad Kumar Sharma (Member – Judicial) and Jatindranath Swain (Member – Technical) Judgment Date: 26/06/2025 Click Here To Read/Download The Order

Reopening Case Reserved For Orders Without Hearing Affected Party Violates Principle Of Audi Alteram Partem: NCLAT Chennai

Mohd.Rehan Ali

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