NCLAT sets aside NCLT Order as Appellant Not Heard, remands Settled Insolvency Matter [Read Order]
The NCLAT held that the issue of settlement must be dealt with in accordance with the law by the Adjudicating Authority
NCLAT Mumbai, NCLT Order, NCLAT sets aside
NCLAT Mumbai, NCLT Order, NCLAT sets aside
In a recent ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, set aside an order of the National Company Law Tribunal (NCLT), Mumbai Bench, and remanded the matter back, citing a violation of the principles of natural justice.
The appeal was preferred by Mehul Harish Gosar against the NCLT, Mumbai Bench's order dated 08.05.2025, which had admitted M/s. Parorch Developers LLP into the Corporate Insolvency Resolution Process (CIRP) on an application by a financial creditor.
Counsel for the appellant contended that the NCLT had admitted the company to CIRP without providing an opportunity of hearing. He further submitted that the appellant had since fully settled the dues of the financial creditor who had initiated the proceedings. The counsel for the respondent confirmed that the settlement had taken place.
A bench comprising Justice N. Seshasayee (Judicial) and Mr. Arun Baroka (Technical) agreed that the appellant had not been heard on merits, and the impugned order was liable to be set aside on this ground alone. While acknowledging that the financial debt had been settled between the parties, the Tribunal observed that since the CIRP had already commenced, the Interim Resolution Professional (IRP) might have received other claims which could not be ignored.
Referring to the Supreme Court's decision in Glas Trust Company LLC vs. Byju Raveendran & Others, the NCLAT held that the issue of settlement must be dealt with in accordance with the law by the Adjudicating Authority.
Consequently, the NCLAT allowed the appeal, set aside the NCLT's order admitting the company to CIRP, and remanded the matter back to the NCLT, Mumbai Bench. The Tribunal directed that the parties are at liberty to approach the Adjudicating Authority with their settlement plea, and the matter would be decided as per law. No costs were imposed.
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