2026 (1) TMI 275 - SCH - IBC

Rectification bids after quashed tribunal orders: fresh Rule 154 application allowed, mindful of Section 420 consequences; appeals dismissed.

The dominant issue was whether, after quashing certain impugned NCLT orders, the affected parties should be permitted to seek rectification. The SC ... Seeking a rectification of the order which has to be decided exclusively on its merit - Section 420 of the Companies Act, 2013 - HELD THAT:- Para 19 of the impugned judgment should protect the interest of both the sides. Civil appeal dismissed. Issues: Whether paragraph 19 of the impugned judgment should be maintained/clarified so as to permit respondents to file a fresh application under Rule 154 of the NCLT Rules for rectification of the order, to be decided on its merits taking into account the legal consequences flowing from Section 420 of the Companies Act, 2013.Analysis: The Court examined paragraph 19 of the impugned judgment which provided that quashing the impugned orders would not prevent the respondents from filing a fresh application under Rule 154 of the NCLT Rules for rectification; such an application would have to be decided exclusively on its merits and by taking into consideration the legal consequences arising under Section 420 of the Companies Act, 2013. The Court considered the interplay between the procedural mechanism for rectification under Rule 154 and the substantive consequences of allegations covered by Section 420, and evaluated whether preserving paragraph 19 would appropriately protect the interests of both parties while allowing merits-based determination in future proceedings.Conclusion: Paragraph 19 of the impugned judgment is to be maintained as framed, thereby preserving the respondents' ability to file a fresh application under Rule 154 of the NCLT Rules for rectification which must be decided on merits with due regard to the legal consequences of Section 420 of the Companies Act, 2013. The civil appeals are dismissed.