Tribunal grants M/s. Raychem RPG Pvt Ltd seven days to rectify defects in their insolvency petition, imposing a cost of Rs. 50,000.
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) in Chennai has permitted M/s. Raychem RPG Pvt Ltd to rectify procedural defects in their insolvency petition against M/s. Soura Natural Energy Solutions India Pvt Ltd. The Appellate Tribunal, comprising Justice Sharad Kumar Sharma and Mr. Jatindranath Swain, acknowledged procedural lapses but emphasized the importance of judicial remedies.
The case began when M/s. Raychem RPG Pvt Ltd, claiming to be an operational creditor, initiated proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC) in December 2024. However, their application was dismissed due to failure to correct defects pointed out by the NCLT Registry, as per Rule 28(4) of the NCLT Rules, 2016. Despite multiple notifications, the appellant delayed rectifying these defects, leading to the rejection of their petition.
In an appeal, the Tribunal considered the appellant's argument that their previous counsel failed to act on Registry notifications, resulting in delayed rectification. The Tribunal, while critical of the appellant's lack of diligence, recognized the procedural nature of the issue and allowed the rectification of defects within seven days from the order's upload, subject to a cost of Rs. 50,000.
The Tribunal underscored the essence of the IBC, which mandates timely resolution of disputes, and highlighted the need for strict adherence to procedural timelines. It cautioned the appellant to exercise greater diligence in future proceedings to prevent misuse of the legal process.
This ruling emphasizes that while procedural rules are paramount, they should not entirely obstruct access to judicial remedies, provided rectifications are made promptly.
Bottom line:-
Delay in rectifying defects pointed out by the Registry in an insolvency petition cannot deprive the appellant of judicial remedies, provided such rectifications are made promptly within specified timelines and procedural costs are complied with.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Section 9, NCLT Rules, 2016 - Rule 28(4), Rule 63
