Tribunal emphasizes need for diligent prosecution of insolvency petitions under IBC; rejects restoration despite admitted outstanding dues, citing procedural defaults and delay
In a significant decision dated September 4, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, dismissed the restoration application filed by Cogent Engineers Private Limited, the operational creditor, against KBK Chem-Engineering Private Limited, the corporate debtor. The matter arose under the Insolvency and Bankruptcy Code, 2016 (IBC) and involved the restoration of Company Petition (CP) No. 17/2022, which had earlier been dismissed due to the applicant's repeated non-appearance.
The case history reveals that the original CP was filed in April 2020 but had to be refiled in 2022 due to loss of records during the Covid-19 pandemic. The CP was dismissed ex-parte on May 22, 2024, primarily because Cogent Engineers failed to appear in court despite multiple hearing dates. The applicant attributed its absence to the non-receipt of notices following the transfer of the matter from NCLT Bench-III to Bench-VI. However, the Tribunal found this explanation insufficient, especially since records showed the applicant's presence on some key dates and no satisfactory explanation was provided for the prolonged delay in prosecuting the case.
The applicant further filed a restoration application (Rst. A No. 43/2024) after the dismissal of the CP, which was itself dismissed for default due to non-prosecution on August 28, 2024. The current restoration application (Rst. A No. 89/2025) was filed almost one year later, on August 6, 2025, without adequately accounting for the delay or demonstrating a continuous bona fide intent to pursue the litigation.
The Tribunal underscored the importance of Rule 48 of the NCLT Rules, 2016, which empowers the Tribunal to dismiss petitions due to non-appearance but also allows restoration if sufficient cause for absence is shown within thirty days. In this case, the applicant failed to meet these requirements.
Notably, the applicant claimed that the corporate debtor had acknowledged the outstanding liability in its books and through auditors' confirmations and project completion certificates. However, the Tribunal clarified that such admissions do not excuse procedural non-compliance or delay, especially in insolvency proceedings that are mandated to be expeditiously conducted.
The Tribunal further observed that the corporate debtor is entitled to finality and should not be subjected indefinitely to insolvency proceedings due to the applicant's procedural lapses. A detailed table of hearing dates showed multiple instances of the applicant's absence, reinforcing the Tribunal's conclusion of lack of diligence.
Ultimately, the NCLT dismissed the restoration application, reiterating that this order does not express any opinion on the merits of the outstanding claim itself but solely on the procedural grounds of non-prosecution and delay.
This judgment reaffirms the principle that insolvency proceedings must be pursued with due diligence and that procedural rules are integral to balancing the interests of all parties, including creditors and corporate debtors.
Bottom Line:
Restoration of a Company Petition under Rule 11 of NCLT Rules, 2016 - Dismissal of the petition due to non-appearance and subsequent failure to prosecute restoration applications diligently.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016; Rule 11, Rule 48 of the National Company Law Tribunal Rules, 2016
