2026 (3) TMI 924 - AT - IBC

Audi Alteram Partem: accepting a non party mention without notice breaches procedural fairness and mandates fresh hearing.

Acceptance of a mention by a non-party after arguments and reservation, without prior intimation or opportunity to the petitioners, breaches the audi ... Violation of principles of natural justice - deprived of being heard by the Tribunal - failure to afford the petitioners a hearing on the matter relied upon by the mention results in a procedural impropriety - Apparent derogation of established and the settled principles of being in violation of the provisions of IBC, and that the orders suffer from the principles of Audi Alteram Partem. Principles of natural justice - HELD THAT:- The Tribunal accepted and acted upon a mention made by counsel for financial institutions who were not parties to the Company Petitions and took the contents of that mention into account without prior intimation to or hearing of the appellants. The matters before Bench II had been argued and reserved for orders; the acceptance of a late mention by a non party on the date fixed for delivery of judgment, without notice to the appellants, amounted to reopening the case and deprived the appellants of an effective opportunity of hearing. For these procedural defects the orders were found to be in breach of the audi alteram partem principle and could not stand. [Paras 4, 6, 9, 12, 13] The impugned orders were held to be in violation of the principles of natural justice and therefore quashed; the matters were remitted to the NCLT, Bench II, Chennai for fresh decision after giving the appellants an opportunity to be heard on the issues raised by the mention. Final Conclusion: The appeals were allowed to the extent that the impugned orders were quashed for breach of natural justice and the matters remitted to the NCLT, Bench II, Chennai to be redecided afresh after hearing the parties. Issues: Whether the impugned orders dated 21.03.2025 dismissing the Company Petitions were vitiated by breach of principles of natural justice by accepting a mention made by a person not party to the proceedings without notice to, or hearing of, the petitioners after arguments had been concluded and the judgment reserved.Analysis: Relevant legal framework includes the audi alteram partem principle and the requirement that parties be given an opportunity to be heard before a judicial or quasi-judicial authority decides an issue affecting their rights. Where arguments have concluded and judgment is reserved, intervening facts or representations which may affect the decision ordinarily require prior intimation to the parties and an opportunity to address the Tribunal. Acceptance of a mention by a non-party that introduces a material fact without notice to the petitioners engages procedural fairness and judicial propriety. In such circumstances, a failure to afford the petitioners a hearing on the matter relied upon by the mention results in a procedural impropriety amounting to violation of natural justice and warrants quashing of the impugned orders and remittal for fresh consideration after hearing the parties.Conclusion: The impugned orders dated 21.03.2025 are quashed for violation of principles of natural justice. The matters are remitted to the adjudicating authority for fresh hearing and decision after giving the petitioners an opportunity to be heard on the issues raised by the mention. The appeals are allowed in favour of the appellants.