Appeal Found Maintainable; Case Remanded for Tribunal to Consider NCLT Order Dated August 9, 2024

The HC held that the appeal was maintainable and that the subsequent NCLT order dated 09 August 2024 must be considered. The matter was remanded to the Tribunal to allow both parties to address this development. If the Appellant's arguments succeed, the issue may be resolved at the Tribunal level; if not, the Appellant may challenge the Tribunal's order on these grounds. The Respondent also retains the right to appeal. The HC emphasized that denying the Respondent an opportunity to respond to the new facts would be inappropriate. The Tribunal was directed to decide the remanded appeal expeditiously, by 31 December 2025. The appeal was disposed of accordingly.

---

---

ISSUES:

Whether a subsequent development, specifically the NCLT's order approving a resolution plan under the Insolvency and Bankruptcy Code, can be taken into consideration in an appeal under Section 35G of the Central Excise Act, 1944.Whether such a subsequent development, not raised before the Appellate Tribunal, constitutes a substantial question of law involved in the appeal.Whether the appeal can be disposed of on the ground of the subsequent NCLT order by setting aside the Appellate Tribunal's impugned order without providing an opportunity to the Respondent to make submissions.

RULINGS / HOLDINGS:

The Court held that the question of taking into account the NCLT's subsequent order "could not have been raised before the Tribunal," and therefore, "such a question cannot be said to be involved in the present Appeal."Despite the above, the Court recognized that "this subsequent development in the form of NCLT's order dated 09 August 2024 cannot be ignored" given the provisions of the Insolvency and Bankruptcy Code and relevant Supreme Court precedent.The Court ruled that the matter is remanded to the Tribunal to consider the subsequent development, allowing the Respondent to make submissions and present relevant material, thus rejecting disposal of the appeal solely on the basis of the NCLT order without hearing the Respondent.

RATIONALE:

The Court applied Section 35G of the Central Excise Act, which requires that a substantial question of law must ordinarily have arisen and been raised before the Appellate Tribunal to be involved in the appeal before the High Court.The Court relied on the legal framework under the Insolvency and Bankruptcy Code and the Supreme Court's interpretation in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, which holds that past liabilities may stand extinguished upon approval of a resolution plan by the NCLT.The Court noted that earlier High Court decisions did not consider whether a subsequent development not raised before the Tribunal could be entertained, highlighting a doctrinal nuance regarding the timing and admissibility of such issues in appeals under Section 35G.The Court emphasized the principles of natural justice by ensuring both parties have the opportunity to address the impact of the subsequent NCLT order before the Tribunal, thereby avoiding premature disposal of the appeal.

---