2025 (12) TMI 1675 - AT - Companies Law

Company petition dismissed after party's absence and missed document-filing directions; Rule 11 recall allowed, restoration ordered for decision on merits.

Whether a recall/restoration application under Rule 11 of the NCLT Rules was maintainable against an order dismissing a company petition when the ... Non-compliance of the earlier directions given by the Learned Tribunal and non-appearance of the Appellant - Rejection of restoration application - HELD THAT:- As per the judicial precedents and the settled procedure contemplated under law, if in any proceedings where any of the parties are called upon to perform a certain act in order to help decide the case, which in the present case was production of certain documents by the Appellant, non-performance of such act either by negligence or deliberate dereliction are to be dealt with by closing the opportunity to perform such act at a later date so that the party indulging in such dereliction will lose his chance to defend himself through such act at a later stage. Thus, if a party does not appear despite being summoned, he is to be set ex-parte; if he fails to produce documents, his opportunity will be closed and such documents, even if produced at a later date, will not be considered for the purposes of deciding the case. Thus, in the instant case, on the said date, the Tribunal at the most could have closed the opportunity of the Appellant to produce the documents on record, which were called for by the orders of 29.04.2025 and 03.06.2025. It is a settled law that in any judicial proceedings where the party to the proceedings is not present on the date when the hearing is held, the Tribunal or the Courts thereof seized with the proceedings should refrain itself from dismissing the Company Petition on merits. Propriety demands that the Tribunal, at the most could have dismissed the Company Petition for want of prosecution. Having not done so, the order itself of 17.06.2025, on the face of it, will fall to be within the ambit of Rule 11 of NCLT Rules to be recalled on an application to be preferred by the Appellant, which the Appellant did by filing Restoration Application (IBC)/9/2025, seeking recall of the order of 17.06.2025 and praying that the Company Petition may be heard on its own merits - if the proceeding is decided ex-parte in the absence of the Learned Counsel for the parties, then obviously the Restoration Application would be maintainable, and the order sought to be recalled, will not amount to be review of an order, i.e., order of 17.06.2025, because such order has not adjudicated the proceedings on merits and has been passed in the absence of the Appellant or his counsel. Thus, the application preferred under Rule 11 of the NCLT Rules for seeking recall of the order dated 17.06.2025, would be very well maintainable and cannot be treated as to be review of the order of 17.06.2025 because the said order was not an adjudication on merits, but rather based on procedural flaws because of procedural flaw of the Learned Tribunal. Besides that, in any proceedings, howsoever a party to the proceedings might have derelict in compliance with the procedural orders passed by the Tribunals or the Courts during the proceedings, that itself should not be taken as to be the reason for not to interfere in the proceedings owing to the past conduct of the party to the proceedings who was required to comply with certain directions as per the principles laid down in the matters of Qaiser Sibtain [1996 (2) TMI 612 - ALLAHABAD HIGH COURT]. The Tribunal ought to have exercised its inherent powers to meet the ends of Justice by recalling the order of 17.06.2025 and deciding the Company Petition itself on its merits rather than rejecting the Restoration Application and thereby depriving the merit adjudication of the Company Petition - the impugned order is quashed and the restoration application is recalled. Issues: Whether the restoration/recall application under Rule 11 challenging dismissal of the company petition (which was passed in the absence of the party) was maintainable and whether the impugned order rejecting the restoration application should be quashed and the petition restored for adjudication on merits.Analysis: The Tribunal had dismissed the company petition on a date when the party and counsel were absent and had recorded defects and non-prosecution as grounds. Established principles require that where a party is absent on the date fixed, the forum may dismiss for non-prosecution or close opportunities (for producing documents) but should not finally decide the matter on merits in the absence of the party. An order passed ex-parte or on procedural grounds permitting recall or restoration is amenable to recall under Rule 11 and related inherent powers. Past conduct of a party prior to the date of the impugned order is generally not a relevant consideration when deciding a recall/restoration application; the focus is on whether sufficient ground is shown for the default on the date the order was passed. The impugned order treated the restoration application as a review of the earlier order and rejected it on that basis, which ignored the ex-parte character and procedural infirmity of the dismissal and precluded exercise of recall powers.Conclusion: The impugned order rejecting the restoration application is quashed. The earlier order of dismissal is recalled and the company petition is restored for fresh adjudication on merits.Ratio Decidendi: Where a tribunal dismisses proceedings in the absence of a party by effectively adjudicating on merits rather than dismissing for non-prosecution or closing opportunities, such an order is ex-parte/procedural and is susceptible to recall under Rule 11 and the tribunal's inherent powers; past conduct prior to the impugned order is not a bar to restoration.