Tribunal Allows Hannu Steels Final Opportunity to File Reply in Insolvency Case, Highlighting Importance of Fair Hearing
In a significant decision, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has condoned a seven-day delay in the appeal filed by Hannu Steels Private Limited against Rathi Powertech Global Private Limited. The appeal, arising from a procedural order issued by the National Company Law Tribunal (NCLT), New Delhi Bench-IV, was allowed on grounds of ensuring substantive justice and adherence to principles of natural justice.
The case stemmed from an insolvency application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by Rathi Powertech against Hannu Steels, claiming unpaid license fees. The NCLT had closed Hannu Steels' right to file a reply due to a procedural default by its previous counsel. The Appellate Tribunal, while addressing the procedural lapses, emphasized a liberal interpretation of "sufficient cause" for condonation of delay, particularly when the delay is due to counsel's negligence and not the litigant's fault.
The Tribunal acknowledged the serious civil consequences of insolvency proceedings, such as the commencement of the corporate insolvency resolution process and the declaration of a moratorium, which warranted a fair opportunity for Hannu Steels to present its defense. The Tribunal noted that substantive justice should not be compromised by procedural technicalities, especially when the defense is not frivolous and deserves consideration.
Hannu Steels argued that its inability to file a reply was due to the negligence of its previous counsel, a claim supported by the Tribunal, which highlighted the necessity of balancing procedural diligence with the opportunity for a fair hearing. The Tribunal granted Hannu Steels a final opportunity to file its reply, subject to appropriate conditions, ensuring that the principles of natural justice and the objective of expeditious adjudication under the Insolvency and Bankruptcy Code are maintained.
The Tribunal's decision underscores the judiciary's commitment to ensuring that procedural laws facilitate rather than obstruct justice, reaffirming the doctrine of audi alteram partem (hear the other side) in insolvency jurisprudence.
Bottom line:-
Delay in filing appeal and procedural default in insolvency proceedings - Liberal interpretation of "sufficient cause" for condonation of delay; substantive justice should not be defeated due to procedural lapses if the defence is bona fide and deserving of consideration.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Section 61(2), Section 9; Bharatiya Sakshya Adhiniyam, 2023 - Section 63.
