The necessary party was impleaded, and the matter was remanded for fresh adjudication regarding the undervalued transaction under the Insolvency and Bankruptcy Code, 2016.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, led by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, reviewed an appeal and observed that the lessee involved in the undervalued transaction should have been given an opportunity to be heard before the Adjudicating Authority issued an order affecting its rights. Consequently, the NCLAT Bench set aside the original order and remanded the matter for fresh adjudication, allowing the appellant to be impleaded as a party.
The National Company Law Appellate Tribunal (NCLAT) addressed an appeal filed against an order dated 05.03.2024, in which the Adjudicating Authority had allowed M.A. 687 of 2019 filed by the Resolution Professional of Sterling Biotech Ltd. The Adjudicating Authority had ruled that the lease transaction involving the Corporate Debtor's land, leased to a related entity at a significantly lower consideration, was an undervalued transaction under Section 45 of the Insolvency and Bankruptcy Code (IBC), 2016. The Authority set aside the lease and directed the lessee to return peaceful and vacant possession of the property within 30 days. However, the appellant, who was the lessee, argued that they were not made a party to the original application and thus had no opportunity to defend their case.
The appellant contended that the lease was executed in its favour by Sterling Biotech Ltd., but they were neither impleaded as a party nor given the chance to file a reply in M.A. 687 of 2019. The Tribunal noted that the order had affected the appellant’s rights, as the directions to vacate the property had been issued without allowing the appellant to present its submissions.
In light of these circumstances, the NCLAT found that the appellant should have been heard in the matter. To ensure that justice was served, the NCLAT set aside the order dated 05.03.2024 and revived M.A. 687 of 2019 for a fresh hearing. The Tribunal directed that the appellant be impleaded as a respondent in the application and granted three weeks to file a reply. The Adjudicating Authority was instructed to fix a date for disposal of the matter after four weeks and expedite the process, considering the application had been pending since 2019. The NCLAT clarified that it did not express any opinion on the merits of M.A. 687 of 2019.
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