NCLAT held that the failure to implead the successful auction purchaser as a necessary party violated principles of natural Justice.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal and Justice Sharad Kumar Sharma (Judicial Members) and Jatindranath Swain (Technical Member) was hearing an appeal and observed that the failure to implead the successful auction purchaser as a necessary party violated principles of natural justice, rendering the NCLT's order for a fresh auction invalid, the matter was remitted for proper impleadment and de novo consideration.
The NCLAT's decision was primarily based on the failure to implead the Successful Auction Purchaser/Appellant as a party in the proceedings, despite a specific direction from the Adjudicating Authority. This omission was deemed crucial, as it denied the Appellant the opportunity to present their case and violated the principles of natural justice. As a result, the NCLAT set aside the Adjudicating Authority's order and remitted the matter back for fresh consideration, with instructions for the Petitioner to file an application to implead the Appellant.
In the matter of Comp. App. (AT)(CH)(Ins) No. 79 of 2024, the NCLAT reviewed the appeal related to IA (IBC) No. 346 of 2024 in CP(IB) No. 61/CHE/2021. The case involved a directive from the NCLT, Chennai, which on 30.01.2024, had ordered the petitioner to implead the successful auction purchaser as a respondent in the ongoing proceedings. However, the petitioner failed to file the necessary application for impleadment.
The NCLAT found that this failure to implead the successful auction purchaser deprived the proposed party of the opportunity to present objections, thereby violating the principles of natural justice. It was emphasized that all previous pleadings exchanged without this impleadment could not be considered as providing an adequate opportunity for the concerned party to express its views or grievances.
The NCLT's order dated 09.02.2024 had allowed for a fresh e-auction process, permitting the successful bidder and others to participate - NCLAT determined that this order was flawed because the successful bidder was not properly impleaded as directed earlier - Consequently, the NCLAT set aside the NCLT's order to ensure justice and proper procedure.
The NCLAT remitted the case back to the NCLT for de novo consideration, directing the petitioner to file an interlocutory application to implead the successful auction purchaser within three working days. The NCLT was instructed to take this application on record and pass a reasoned order after providing an opportunity for all parties to be heard.
The liquidator was ordered to postpone the e-auction until a new order was issued by the NCLT. The appeal was allowed, and all connected interim applications were closed.
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