Findings Of NCLAT While Remanding Case Can't Operate As Res Judicata When No Conclusive Opinion Is Expressed: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the findings of the Appellate Tribunal in earlier proceedings cannot operate as res judicata when no conclusive opinion was expressed, and the NCLT's order was set aside only for non-consideration of relevant materials and...
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the findings of the Appellate Tribunal in earlier proceedings cannot operate as res judicata when no conclusive opinion was expressed, and the NCLT's order was set aside only for non-consideration of relevant materials and submissions.
The present appeals have been filed against an order passed by National Company Law Tribunal (NCLT) by which it admitted an application under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) and initiated Corporate Insolvency Resolution Process (CIRP) against the corporate debtors.
The Appellants submitted that in Section 7 application filed with regard to Omkara Asset Reconstruction Pvt. Ltd vs. Gstaad Hotels Pvt. Ltd. (“GSTAAD Hotels”), there was no facts pleaded with regard to default in the Term Loan Account and only pleading was with respect to default in ECLGS Facility Nos.1 and 2. Emergency Credit Line Guarantee Scheme (“ECLGS”) Facility were not even due on 15.11.2022.
It was further argued that the amount, which was to be kept in reserved by the Lenders in Debt Service Reserve (“DSRA”) Account , in event the same would have been utilized in repayment of interest and other dues, no default could be there on 15.11.2022.
Per contra, the Respondent submitted that there is no question of excess withdrawal, since any amount, which has been withdrawn by the Lender from the Retention Account was towards the debt obligation. It is not the case of the Appellant that any amount excess to the obligation of the CD has been withdrawn by the Lenders. The allegation of excess withdrawal of Rs.10 crores is misconceived.
The Tribunal observed that the NCLAT's earlier findings operate as res-judicata in the proceedings under section 7 of the IBC cannot be accepted. A perusal of the NCLAT's judgment shows that no conclusive findings were returned.
It further observed that the Appellate Tribunal only held that the order of the Adjudicating Authority cannot be sustained as the relevant materials were not considered while passing the order. Therefore, the findings of the NCLAT in the earlier order do not operate as res-judicata.
The Tribunal observed that the amount of Rs.10,35,88,444/- claimed by the Appellant was transferred by the lenders towards debt obligations and represented sums exceeding the owners' profit during the relevant period. Withdrawal of this amount was an obligation of the lenders to operate the Hotels and CMA. It is not the case of the Appellant that the lenders withdrew the amounts in excess for servicing their loans and facilities. As per clauses of the Agreement, if the Retention Account lacked sufficient funds to meet the debt obligations, the corporate debtor is bound to arrange funds from other sources.
The Tribunal held that the Adjudicating Authority after considering the statement of accounts and other materials from both the parties held that the date of default was 15.11.2022 and upheld the recall notice. All these factors along with other circumstances, it was held that resolution of the corporate debtors were required. Accordingly, the impugned orders were affirmed.
Case Title:Deepak Raheja & Anr. Versus Omkara Assets Reconstruction Pvt. Ltd. & Anr.
Case Number: Company Appeal (AT) (Insolvency) No. 1039 of 2025
Judgment Date: 19/08/2025