Company Appeal at Behest of Shareholder not Maintainable: NCLAT [Read Order]

The Chennai bench of the National Company Law Appellate Tribunal(NCLAT) the company appeal at the behest of the shareholder would not be maintainable.

Park Energy Private Limited, the appellant challenged the impugned order of 18.10.2022, that was passed by the NCLT, Chennai bench, in CP(IB) No. 106(CHE)/2021, consequent to which, the application filed under Section 7 of the I & B Code, 2016, by the Financial Creditor State Bank of India was admitted and the Corporate Debtor, Bhadreshwar Vidhyut Private Limited, was directed to be admitted to CIRP proceedings, subject to the terms and conditions as it has been given in the impugned order under challenge.

The status of the Appellant is that, of the “shareholder” of the Corporate Debtor. When the company petition was taken up, a preliminary objection was raised, that, the company appeal at the behest of the shareholder would not be maintainable, since they do not have any locus as such nor they have any independent right to be agitated in the proceedings, which are drawn under Section 7, 9, or 10 of the I & B Code, 2016.

The matter was heard at length by this bench on 31.07.2023 and the judgment was delivered on 17.11.2023, holding thereof that though there is merit in the contention of the Appellant that a shareholder being an aggrieved person under Section 61 of the I & B Code, 2016, will have locus to challenge admission of the application preferred under Section 7 of the I & B Code, 2016.

In view of the findings given by another co-ordinate Bench of NCLAT in the matter of Niraj Vadakkedathu Paul that a shareholder has no locus to challenge an order issued in Section 7 proceedings, a larger Bench may be constituted to decide the issue of whether a shareholder/promoter falls within the ambit of ‘Aggrieved Person’ as provided under Section 61 of the Code and whether he has the locus to challenge an order of Admission of a Section 7/Section 9 Application. The larger Bench of three members was accordingly constituted for the said purpose.

The larger bench, by judgment rendered on 22.07.2025, while dealing with the issue and answering the reference made, has ultimately come to a conclusion, that the company appeal would not be maintainable at the behest of the shareholder. After, the said question was answered by the larger bench, the Company Appeal was directed to be taken up on its own merits.

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Subsequent thereto, Counsel for the Respondent made a mention on 01.08.2025 that since the larger bench has already laid the question to rest by its judgment dated 22.07.2025, that, the company petition would not be maintainable at the behest of the shareholder, that is the Appellant herein, in this instant company appeal, the appeal deserves to be dismissed.

On 05.08.2025, when the matter was taken up, even after repeating the call, none appeared for the Appellant. On the contrary, it was informed by the Counsel for the Respondent, that the Appellants had not appeared on the previous occasion, that, as far the listing of the case on 05.08.2025 is concerned, they have already intimated the Appellant via their e-mail communication so as to ensure their appearance, and that, despite of the aforesaid communication, the Appellants were not present. In these eventualities, we had proceeded to reserve the case for orders.

Justice Sharad Kumar Sharma, Member (Judicial) and Jatindranath Swain, Member (Technical) observed that, the company appeal at the behest of the shareholder would not be maintainable.

The company appeal would automatically stand dismissed, on the ground of being ‘not maintainable’ at the behest of the Appellant, the shareholder.

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