Procedural Order Challenge Deemed Non-Maintainable, Upholds Adjudicating Authority's Decision
In a significant decision, the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has dismissed an appeal filed by Byju Raveendran, a suspended director of the corporate debtor, challenging a procedural order by the Adjudicating Authority. The appeal was related to the Insolvency and Bankruptcy proceedings involving GLAS Trust Company LLC, which holds a substantial voting share in the Committee of Creditors (CoC).
The case, titled "Byju Raveendran v. GLAS Trust Company LLC," revolved around a procedural order that merely listed an application for hearing on a later date. The appellant sought to challenge the Adjudicating Authority's decision to list the application for hearing, arguing that GLAS Trust's claim, which controlled over 99% of the CoC voting share, lacked proper authorization from all alleged back-end creditors. The appellant contended that there was no privity of contract between the corporate debtor and these creditors.
The Tribunal, comprising Mr. Justice N. Seshasayee and Mr. Jatindranath Swain, reviewed the appeal and concluded that procedural orders do not determine the substantive rights of the parties involved. The Tribunal emphasized that such orders cannot be the basis for maintaining an appeal and thus dismissed the appeal as non-maintainable.
The Tribunal noted that the appellant's concerns regarding the maintainability of GLAS Trust's claims and the urgency surrounding the sale of assets by the resolution professional could be addressed in the substantive proceedings before the Adjudicating Authority. The Tribunal highlighted that the current procedural order did not infringe upon the appellant's substantive rights, rendering the appeal unnecessary.
This decision marks a crucial moment in the ongoing insolvency proceedings, underscoring the importance of distinguishing between procedural and substantive orders in legal challenges. The Tribunal's ruling reinforces the need for parties to wait for substantive decisions before seeking appellate intervention.
The appeal, registered as CA (AT) (CH) (Ins) No.383 of 2026, stands dismissed with no costs. All pending interlocutory applications associated with the case have also been closed.
Bottom Line :
Appeal challenging procedural order of Adjudicating Authority - Tribunal held that procedural orders do not affect substantive rights of parties and therefore the appeal is not maintainable.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016
Byju Raveendran v. GLAS Trust Company LLC, (NCLAT)(Chennai Bench) : Law Finder Doc id # 2963434
