Tribunal Condones Delay, Cites Counsel's Deliberate Non-appearance as Reason for Restoration
In a significant judgment dated September 25, 2026, the National Company Law Appellate Tribunal (NCLAT) Principal Bench in New Delhi has set aside an order by the National Company Law Tribunal (NCLT) Kolkata Bench, which had dismissed an application by Eastern Power Distribution Company of Andhra Pradesh Limited due to non-prosecution. The NCLAT restored the application, allowing Eastern Power to pursue its claim for electricity consumption charges as part of the Corporate Insolvency Resolution Process (CIRP) costs against Daulat Resolution Services Pvt. Ltd.
The case stemmed from Eastern Power's claim for unpaid electricity consumption charges during the CIRP period of the Corporate Debtor, Impex Metal & Ferro Alloys Limited. Initially, NCLT had dismissed Eastern Power's application for non-appearance of its counsel, Mr. Rakesh Kumar Sharma, who was later found to have intentionally defaulted in appearing for the proceedings, thereby misleading the client. The Tribunal noted that the counsel's deliberate non-appearance and misconduct should not penalize the litigant.
In reviewing the appeal, the NCLAT highlighted the applicability of Section 238A of the Insolvency and Bankruptcy Code (IBC) 2016, which extends the Limitation Act, 1963 to proceedings under the IBC, including interlocutory applications. This provision allowed for the condonation of delay in filing the restoration application, originally rejected by the NCLT for being beyond the 30-day limit prescribed under Rule 48 of the NCLT Rules, 2016.
The appellate tribunal emphasized that the litigant should not suffer due to the deliberate absence and misconduct of their counsel. It cited the Supreme Court's stance in similar cases where the fault of the counsel was not to be transferred onto the client, advocating for the advancement of substantial justice.
The NCLAT also addressed the procedural hurdles faced by Eastern Power in changing its counsel due to the absence of a 'No Objection Certificate' from the previous counsel, further complicating their ability to appoint a new legal representative promptly.
This judgment underscores the Tribunal's commitment to ensuring that procedural technicalities do not obstruct substantive justice, particularly when a party's inability to prosecute its case results from the counsel's actions rather than the litigant's negligence.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Restoration of application dismissed for non-prosecution - Litigant should not suffer for deliberate non-appearance and misconduct of engaged counsel - Delay in filing restoration/recall application can be condoned by applying Section 238A of IBC read with Section 5 of Limitation Act - Electricity charges for supply during moratorium claimed as CIRP cost restored for decision on merits.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 14(2), 14(2A), 53(1)(a), 238A; NCLT Rules, 2016 Rule 48; Limitation Act, 1963 Section 5; Advocates Act, 1961 Section 49(1)(c); Bar Council of India Rules Rule 39; Code of Civil Procedure, 1908 Order 3, Rule 4.
