Litigants Can't Be Forced To Argue On Merits When They Did Not File Reply To RP's Report U/S 99 Of IBC: NCLAT

The present appeal has been filed against an order passed by the National Company Law Tribunal (NCLT) New Delhi by which an Application filed by the Appellant was rejected.

The Appellant submitted that when counsel for Appellant has appeared for husband and informed about his illness and time was allowed and matter was fixed for 27.01.2025, there was no occasion for learned counsel for the Appellant to not appear in the case of the wife whose non appearance is noted.

It was further argued that the Appellant has made out sufficient case for recall of both the orders, which was not considered as a sufficient cause.

Per contra, the Respondent submitted that ample opportunity was given to file reply to the report of the Resolution Professional but Appellant had not filed the reply and was not present on 06.12.2024 when the case was called.

The Tribunal observed that the sequence of events shows that both the matters were listed together. Counsel appeared and sought time which came to be recorded in the petition filed against the Husband. But in another petition, the court passed an ex-parte order noting no one appeared. The recall application which is duly supported by an affidavit shows that due to illness of the husband, she could not meet the counsel and prepare the reply which has been clearly noted in the Application.

Based on the above, the Adjudicating Authority in the impugned order has failed to address the statement of the counsel that he appeared in both the cases but due to husband's illness she could not prepare her reply. Instead the Adjudicating Authority noted that the Appellant was asked to present her defence and sought adjournment. The present is the case where both husband and wife had provided guarantee to the bank and both the cases were proceeding together and jointly listed. An ex-parte order was passed which was followed by an admission order of the application under section 95 of the IBC again on grounds of non-appearance.

The Tribunal held that since the Appellant did not even file a reply to the Resolution Professional's report submitted under section 99 of the IBC, requiring her to argue on merits of the Application was not justified. There is no finding that she was absent without cause. Accordingly, the impugned orders were set aside.

Case Title: Nandini Choudhary Versus Canara Bank and Ors.

Case Number: Company Appeal (AT) (Insolvency) No. 814 of 2025

Judgment Date: 18/08/2025

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