NCLT must give reasons for reliefs not granted: NCLAT remands Katariya Infraproject matter [Read Order]

In a recent ruling, the National Company Law Appellate Tribunal (NCLAT) held that an adjudicating authority (National Company Law Tribunal (NCLT)) must provide explicit reasons for refusing to grant reliefs sought by a party and cannot simply ignore them.

Katariya Infraproject Pvt. Ltd. & Anr., the appellant, approached the NCLAT challenging an order passed by the Adjudicating Authority (NCLT). The appeal stemmed from an application where the appellant had prayed for various reliefs and concessions.

The appellant's counsel argued that while the NCLT's order noted the reliefs that were granted, it completely failed to consider or provide any reasons for refusing several other reliefs specifically listed in Annexure-H to the application. They contended that this lack of reasoning was a procedural failure, preventing them from understanding the basis for the refusal and their right to an effective remedy. To illustrate this, they had filed a comparative chart showing the reliefs sought but not considered.

The NCLAT also heard the counsel for the respondent, who was representing the liquidator.

The NCLAT bench, comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Member, Technical), agreed with the appellant's submissions. Upon perusing the record, the bench observed that the impugned order from the Adjudicating Authority indeed showed no consideration of the reliefs claimed in Annexure-H and offered no reasons for their refusal. The Tribunal held that in the interest of justice, this failure to provide reasons was a significant flaw.

Consequently, instead of simply deciding the appeal itself, the NCLAT remanded the matter back to the Adjudicating Authority. It directed that the appellant be allowed to file a fresh application specifying the reliefs it still wished to pursue.

The Adjudicating Authority was then instructed to consider this new application and pass a fresh, reasoned order without being influenced by its previous order, and to do so expeditiously. The appeal was disposed of with these directions.

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