2026 (3) TMI 1249 - AT - IBC

Procedural fairness in company appeals allowed a final chance to file counter affidavits despite earlier missed opportunities.

NCLAT held that, despite repeated prior opportunities having been left unutilised before the NCLT, the closure of time to file counter affidavits could be ... Right to be heard as facet of procedural fairness - multiple earlier opportunities were granted and not availed of - Whether the appellants should be afforded a final opportunity to file Counter Affidavits despite earlier opportunities having lapsed. Right to be heard as facet of procedural fairness - HELD THAT:- It is settled down by the Hon’ble Apex Court in the judgment of Mohinder Singh Gill & Another V The Chief Election Commissioner, New Delhi & Others [1977 (12) TMI 138 - SUPREME COURT], that an opposite party to the proceedings cannot, during the course of argument or by way of a pleading in the shape of counter, can, develop a case which has been not taken into consideration by a Tribunal, while deciding an issue and which was not the ground for deciding the matter. The opposite party to the proceedings will have to confine his argument to the findings which has already been recorded and cannot go beyond it or carve out a new case at an Appellate stage. Respondents cannot expand the scope of argument beyond the grounds on which the impugned orders were passed; those additional contentions were not accepted as a basis to deny the appellants the final opportunity granted. The Tribunal recognised that procedural rules are handmaidens of justice and that rigid adherence to time-frames for filing a Counter Affidavit should not be used to defeat a party's ability to mount an effective defence. While noting the appellants' lack of diligence and multiple earlier opportunities not availed, the Tribunal exercised its appellate discretion to balance equities and granted a final limited opportunity to file Counter Affidavits, holding that such relief is appropriate to secure fair adjudication rather than to reopen merits already decided by the NCLT. [Paras 8, 9, 10] Appellants granted ten days as a last opportunity to file Counter Affidavits; appeals disposed of subject to that opportunity and pending interlocutory applications treated as closed. Final Conclusion: The Tribunal, while recording the appellants' lack of diligence, granted them a final ten-day opportunity to file Counter Affidavits in the respective company petitions and disposed of the appeals subject to that opportunity; respondents were not permitted to rely on fresh grounds not forming the basis of the impugned orders, and all pending interlocutory applications stand closed. Issues: Whether the opportunity to file counter affidavits, which was closed by the NCLT, could be reopened by the Appellate Tribunal and counter affidavits permitted to be filed in the company appeals.Analysis: The appeals raised a common factual and legal question about reopening the forfeiture/closure of the opportunity to file counter affidavits. The Tribunal noted that the NCLT record showed multiple earlier opportunities were granted and not availed of, but also observed that respondents did not rely on any grounds before the NCLT justifying the impugned orders by reference to reasons not recorded in those orders. Principles limiting an opposite party at appellate stage from expanding or inventing new grounds beyond the reasons recorded in the impugned order were applied. The Tribunal also applied the equitable principle that procedural time limits and forfeiture rules operate as handmaidens of justice and should not be used mechanically to deny a litigant an effective opportunity to be heard, having regard to precedents holding rigid time bars may be relaxed to meet ends of justice.Conclusion: The Appellants are granted a final opportunity of ten days to file counter affidavits; failing which the consequences of the impugned orders will follow. The company appeals are disposed of subject to this grant of opportunity. The Tribunal censured the appellants' lack of diligence but provided relief in the interests of justice.