NCLAT imposes Rs. 2 lakh costs on appellant for improperly altering court records during refiling

NCLAT dismissed the appeal with costs after the appellant improperly removed challenged orders from the court record and substituted them with a new order during refiling. The tribunal noted that court records cannot be altered without permission once filed. Despite the appellant's apology and claim of inexperience as a young lawyer registered in 2019, the tribunal imposed Rs. 2 lakh costs payable to respondent within 30 days, with contempt proceedings available for non-compliance.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

• Whether an appeal initially filed against two specific impugned orders can be validly refiled by removing those orders and substituting a different order not originally challenged, without prior permission of the Court.
• Whether such alteration of the appeal record during refiling constitutes a permissible correction of defects or an impermissible tampering with court records.
• The consequences of such alteration on the maintainability of the appeal and the appropriate judicial response.
• The procedural safeguards and principles governing refiling of appeals and related pleadings before the Tribunal.
• The liability of the appellant for costs arising from frivolous or improper litigation conduct.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of removing initially challenged orders and substituting a new order during refiling of appeal

Relevant legal framework and precedents: The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), which provides the appellate jurisdiction of the Tribunal. Procedural rules under the NCLT Rules, 2016 govern the filing and refiling of appeals. The principle that once an appeal is filed, the record becomes the property of the Court and cannot be altered unilaterally by parties without Court permission is well-established in judicial practice and precedents.

Court's interpretation and reasoning: The Tribunal noted that the appeal was initially filed challenging two specific orders dated 29.07.2024 and 30.07.2024. However, upon refiling to cure registry objections, the appellant removed these impugned orders and instead challenged a different order dated 02.08.2024, which was not part of the original appeal. The Tribunal observed that this practice of substituting impugned orders during refiling is improper and tantamount to tampering with the Court's record.

Key evidence and findings: The Registry confirmed that the initial appeal was against the two earlier orders, but the refiled appeal omitted them and appended the later order. The appellant's counsel admitted the mistake and tendered an unconditional apology, citing inexperience.

Application of law to facts: The Tribunal emphasized that once an appeal is filed, the pleadings and documents form part of the Court record and cannot be changed by the parties at will. Refilling is only permitted to remove defects pointed out by the Registry, not to alter the cause of action or impugned orders. The substitution of orders changed the cause of action and rendered the appeal against the original orders infructuous.

Treatment of competing arguments: The respondent contended that the appeal was not maintainable as the original impugned orders were removed and a new order was challenged without following due process. The appellant's counsel accepted the error but requested leniency. The Tribunal declined to condone the practice but refrained from imposing punitive measures on the counsel due to his apology and inexperience.

Conclusions: The appeal challenging the orders dated 29.07.2024 and 30.07.2024 was dismissed as infructuous because the appellant replaced those orders with a different order dated 02.08.2024 during refiling without Court sanction.

Issue 2: Consequences of improper alteration of appeal record and procedural safeguards

Relevant legal framework and precedents: The judicial system is predicated on the principle of mutual trust and integrity of pleadings. The Tribunal Rules and case law prohibit unauthorized amendments or additions to pleadings after filing without Court approval. The sanctity of Court records is paramount to prevent abuse of process.

Court's interpretation and reasoning: The Tribunal expressed strong disapproval of the practice of altering appeal records during refiling. It emphasized that allowing such interpolation would encourage endless modifications and undermine the judicial process. The Tribunal highlighted that all pleadings and documents must be filed strictly as per procedure, and any new documents or changes require prior permission.

Key evidence and findings: The Tribunal noted that this malpractice has been observed in multiple cases, causing concern about judicial propriety. The appellant's counsel's conduct was viewed as negligent, though not malicious.

Application of law to facts: The Tribunal directed the Registry to ensure strict compliance with procedural norms during refiling, so no changes to pleadings or documents are made without Court authorization. It also warned parties and counsel about the consequences of such conduct.

Treatment of competing arguments: While the appellant sought leniency, the Tribunal balanced this with the need to maintain procedural discipline and issued a stern warning to prevent recurrence.

Conclusions: The Tribunal dismissed the appeal and imposed costs on the appellant for causing unnecessary litigation and procedural irregularity. It mandated strict registry vigilance to prevent future occurrences.

Issue 3: Opportunity to challenge the newly appended order and costs imposed

Relevant legal framework and precedents: The appellant retains the right to challenge any order by filing a separate appeal or application in accordance with law. The Tribunal has discretion to impose costs for frivolous or improper litigation conduct under its procedural rules.

Court's interpretation and reasoning: Although dismissing the appeal as infructuous, the Tribunal granted the appellant liberty to challenge the 02.08.2024 order by following proper procedure. It imposed a cost of Rs. 2 lakhs payable to the respondent for contesting frivolous litigation caused by the appellant's conduct.

Key evidence and findings: The appellant's counsel's apology and inexperience were noted, but the cost was imposed to deter such conduct and compensate the respondent.

Application of law to facts: The Tribunal balanced justice and procedural propriety by allowing a fresh challenge while penalizing the improper refiling practice.

Treatment of competing arguments: The appellant did not contest the cost imposition. The respondent's request for costs was accepted as justified.

Conclusions: The appellant is liable to pay costs within 30 days, failing which the respondent may seek enforcement through appropriate proceedings.

3. SIGNIFICANT HOLDINGS

"Once a case is filed online or by way of hard copy, it becomes record of the court and if the said record is given back to the parties concerned for removing the defects and for refiling, no change, at any cost can be brought about, without taking an order from the court, in case there happens to be a mistake on account of an error of omission or commission."

"If such type of practice is allowed to be continued in this court then there shall be no end to making interpolations and changes in the pleadings or various applications filed because entire working of the court is based upon mutual trust."

"The appeal which was initially filed against the order dated 29.07.2024 and 30.07.2024 has become infructuous and therefore the impugned order dated 02.08.2024 which has been appended with the appeal at the time of refiling cannot be looked into for the purpose of redressal of any grievance."

"We still give an opportunity to the Appellant to challenge the order dated 02.08.2024 in accordance with law because it is a separate cause of action."

"The appeal is thus dismissed with cost of Rs. 2 lac which shall be paid by the Appellant by way of a bank draft to the Respondent within 30 days from today."

Core principles established include the inviolability of the Court record once an appeal is filed, the prohibition on unauthorized alterations during refiling, the necessity of adhering to procedural safeguards, and the imposition of costs to deter frivolous or improper litigation conduct.

The final determination was that the appeal challenging the original orders was dismissed as infructuous due to improper substitution of the impugned order during refiling. The appellant was granted liberty to challenge the substituted order separately and was directed to pay costs to the respondent.

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