NCLT’s Allowance to Withdraw Section 94 Application Gives No Assurance on the Maintainability of Future Re-Filing

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  • Last Updated on 9 October, 2024

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NCLT application maintainability

Case Details: Gursev Singh v. IDBI Bank - [2024] 167 taxmann.com 204 (NCLAT-New Delhi)

Judiciary and Counsel Details

  • Ashok Bhushan, Chairperson Barun Mitra & Arun Baroka, Technical Member
  • A.S. Likhari, Adv. for the Appellant.
  • Harsh Garg, Pulkit Goyal, Ms Nishi Chaudhary, Ms Yashartha Gupta & Mayuresh Rishabh, Advs. for the Respondent.

Facts of the Case

In the instant case, the CIRP against the corporate debtor was commenced. Later, the appellant-personal guarantor of the corporate debtor filed an application under section 94 before the Adjudicating Authority (NCLT), which was dismissed by the NCLT for non-compliance.

Subsequently, the appellant filed an application for recall and restoration of the application. The NCLT permitted the appellant to withdraw the restoration application with the liberty to re-file. Accordingly, the appellant filed a fresh application under section 94 of the IBC.

The NCLT, by the impugned order, held that the subsequent application filed by the appellant was not maintainable. Thereafter, an appeal was made before the National Company Law Appellate Tribunal against the order passed by the NCLT.

It was noted that no liberty to file a fresh petition was granted when the order dismissing the application for non-compliance was passed; thus, the NCLT had not granted any liberty to file a fresh petition.

Further, it was noted that the liberty to re-file was granted at the appellant’s request to withdraw the petition with the liberty to re-file under section 94. However, the NCLT had not expressed any opinion as to whether the application which was to be re-filed by the appellant under section 94(1) would be maintainable or not.

NCLAT Held

The NCLAT held that at a time of withdrawal of restoration application, only liberty was granted to re-file as per law. Further, liberty by withdrawing a restoration application could not be treated to be liberty to file a fresh application under section 94(1), wiping out the earlier order dismissing the application for non-compliance. Therefore, there was no error in the impugned order of the NCLT rejecting the application.

List of Cases Reviewed

  • Order of NCLT (Chandigarh) in Company Petition (IB) No. 60/Chd/HP/2024], dated 17.05.2024 [2024] 167 taxmann.com 203 (NCLT – Chd.) (para 18) affirmed.

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