Abatement on Insolvency: appeals abate where a corporate debtor is adjudicated insolvent unless a successor seeks continuance.

Where a corporate appellant has been adjudicated insolvent by the NCLT, Rule 22 of the CESTAT (Procedure) Rules provides that an appeal abates unless a successor-in-interest or legal representative applies for continuance within the prescribed period; absence of such an application results in the appeal being treated as infructuous and disposed of. The operative effect is that appeals pending against an appellant adjudicated insolvent will abate for non-continuance by successors, and tribunals may dispose of those appeals as infructuous without further adjudication on merits.

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Issues: Whether the appeal should abate in view of the corporate debtor/appellant being adjudicated as insolvent by the NCLT and Rule 22 of the Customs Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 permitting abatement unless continuation is sought by successor-in-interest.

Analysis: The Tribunal noted the NCLT Mumbai order dated 22.06.2021 declaring the corporate debtor insolvent and approving a resolution plan. Rule 22 of the CESTAT (Procedure) Rules, 1982 provides that where a party is adjudicated as an insolvent or a company is being wound up, the appeal shall abate unless an application for continuance is made by or against the successor-in-interest or other legal representative within sixty days or such further period as the Tribunal may allow for sufficient cause. No application for continuance by a successor-in-interest or legal representative was placed on record for continuation of the present appeal. The Tribunal relied on precedent treating appeals in similar circumstances as abating and being disposed of as infructuous.

Conclusion: The appeal abates and is disposed of as infructuous for non-continuance following the adjudication of the appellant as insolvent under the NCLT; the appeal is therefore abated and disposed of.

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