The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justices Ashok Bhushan (Chairperson) & Yogesh Khanna (Judicial Member), and Barun Mitra (Technical member) was hearing an appeal and observed that Adherence to principles of natural justice, including the right to a fair hearing, is essential in adjudicatory proceedings.
NCLAT Bench further noted that failure to provide a party with the opportunity to respond to material relied upon against them renders the decision invalid.
National Company Law Appellate Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority to decide afresh after giving all parties a fair opportunity to present their case.
The National Company Law Appellate Tribunal (NCLAT) reviewed an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appeal challenged the order dated 20.12.2023, where the Adjudicating Authority (National Company Law Tribunal, Division Bench, Court No. II, Kolkata) admitted a Section 7 petition filed by UCO Bank (Respondent No. 2) against M/s Ankit Metals and Power Ltd (Corporate Debtor), initiating the Corporate Insolvency Resolution Process (CIRP).
The Appellant, a suspended director, argued that the debt claimed by UCO Bank was time-barred, as the last payment was made in 2015, and there was no signed acknowledgement of the debt after 2015. Respondent No. 2, however, contended that the debt was acknowledged in the Corporate Debtor's balance sheet as of 31.03.2022, and the Chartered Accountant confirmed this before the Adjudicating Authority.
The NCLAT found that while the financial statements relied upon by Respondent No. 2 were unsigned, the Adjudicating Authority had directed the Chartered Accountant to appear personally and provide clarification. The Chartered Accountant confirmed the signed financial statements and the filing of annual returns for the relevant financial year.
However, the NCLAT noted that the Appellant was not allowed to respond to the financial statements submitted by the Chartered Accountant. Adherence to principles of natural justice, including the right to a fair hearing, is essential, and failure to provide such an opportunity rendered the impugned order invalid.
Therefore, the NCLAT allowed the appeal, set aside the impugned order, and remanded the matter back to the Adjudicating Authority to decide afresh after giving all parties a fair opportunity to present their case. The Interim Resolution Professional's expenses were to be paid, and the matter was expected to be completed within two months from the date of appearance before the Tribunal.
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