TaxTMI 
TaxTMI 
2025 (7) TMI 287
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.... Bench, Court - IV ("Adjudicating Authority") in Rst. A (IBC) No. 73(MB)2024 filed in C.P. (IB) N0. 631 (MB) 2024. 2. M/s GBL Chemical Ltd., who is the Corporate Debtor, is the Respondent herein. 3. The Appellant submitted that it is a Non-Banking Financial Company (NBFC) duly registered with the Reserve Bank of India, engaged in providing short-term loans to clients. The Appellant contended that in January 2024, the Respondent, M/s GBL Chemical Ltd., approached the Appellant for a short-term business loan of Rs. 7,03,00,000/- at an interest rate of 10.21% per annum, to be repaid in six instalments of Rs. 1,19,16,667/- each, commencing from 08.02.2024 over a 120-day period. The Appellant further submitted that the terms, were incorporated in a Facility Agreement dated 24.01.2024, executed by the Respondent, its Director, Mr. Ramakant Shankarmal Pilani, and its parent company, M/s Ganesh Benzoplast Ltd., as co-borrowers. A demand promissory note and letter of continuity dated 19.01.2024 were also executed in favour of the Appellant. 4. The Appellant contended that while the Respondent paid the first two instalments on 13.02.2024 and 01.03.2024, it defaulted on the instalmen....
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.... learning of the dismissal through its newly engaged counsel, it promptly filed an application on 29.10.2024 under Rule 48(2) r/w Rule 11 of the National Company Law Tribunal Rules, 2016, seeking restoration of the Section 7 Application. The Appellant contended that the application was registered as Rst. A (IBC) No. 73(MB)/2024 ("Restoration Application"). The Appellant further submitted that on 27.11.2024, the Adjudicating Authority directed it to serve a copy of the Restoration Application on the Respondent's counsel, adjourning the matter to 22.01.2025. The Appellant submitted that it duly complied with the Adjudicating Authority's direction by serving the Restoration Application on the Respondent's counsel. The Appellant further submitted that both parties were heard on 22.01.2025, when the Restoration Application was taken up for consideration. 10. The Appellant contended that during the hearing on 22.01.2025, it advanced the following submissions before the Adjudicating Authority: (a) The Additional Affidavit dated 26.09.2024, e-filed on 27.09.2024, was based on the Adjudicating Authority's order dated 04.09.2024 but was lying under defects due to registry objecti....
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....es in complying with the Adjudicating Authority's directions and pursuing its case diligently. The Respondent contended that the Adjudicating Authority rightly dismissed the Restoration Application due to the Appellant's non-compliance with the order dated 04.09.2024, and non-appearance on 30.09.2024, as recorded in the Impugned Order. 17. The Respondent submitted that the Restoration Application was filed beyond the mandatory 30-day period prescribed under Rule 48(2) of the NCLT Rules, 2016. The Respondent contended that the dismissal order was passed on 30.09.2024, and the advance copy of the Restoration Application was served on the Respondent only on 25.11.2024, well beyond the permissible period. The Respondent asserted that the Appellant's failure to file an application for condonation of delay renders the Restoration Application time-barred and incapable of consideration by the Adjudicating Authority. 18. The Respondent submitted that the Adjudicating Authority, vide its order dated 04.09.2024, directed the Appellant to file three specific documents within two weeks i.e. by 18.09.2024, to substantiate its Section 7 Application. The Respondent contended that the Appella....
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....bursal of Rs. 7,03,00,000/- was made to a fraudulent account not belonging to the Respondent. 25. The Respondent asserted that the validity of these documents is under challenge in Commercial Suit No. 1169 of 2024 before the Commercial Court, Mumbai. The Respondent submitted that it denies receiving any Demand-cum-Acceleration Notice or paying instalments, as alleged by the Appellant. The Respondent contended that these issues, while not central to the Appeal, highlight the Appellant's mala fide intent and the lack of credible evidence supporting its Section 7 Application. 26. The Respondent submitted that the merits of the alleged debt are not relevant to the present Appeal, which concerns the procedural lapses in the Restoration Application. The Respondent contends that the Adjudicating Authority's dismissal was based on the Appellant's failure to substantiate its claim, not the substantive merits of the debt. 27. The Respondent submitted that the Adjudicating Authority's dismissal aligns with established legal principles: a. Nathu Prasad v. Singhai Kapurchand (1976 AIR (MP) 136) mandates that restoration under Rule 48(2) requires sufficient cause for non-appear....
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....he legal counsel for the Respondent was available. The Adjudicating Authority also observed that based on the request of the Appellant itself, Appellant was given two weeks' time for filing agreement between the parties along with the financial statement in the year 2023-24 and NeSL certificate by way of an additional affidavit. However, the same additional affidavit was not filed by the Appellant before the Adjudicating Authority. As such, the Adjudicating Authority concluded that the Appellant was not serious for prosecution of his case and dismissed the case of the Appellant accordingly. 31. We have noted that it is the case of the Appellant that its the then counsel appearing on behalf of the Appellant/ Financial Creditor, did not appear before the Adjudicating Authority on 30.09.2024 and also did not intimate the Appellant. It is further the case of the Appellant that it kept on chasing with the then counsel and subsequently, he appointed new counsel only after which he came to know that his case was dismissed for non- prosecution. 32. As regard, the non-filing of the additional affidavit, the Appellant submitted that it filed an additional affidavit on 26.09.2024, howev....
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....se not to file the agreement of loan between the two parties, financials of 2023-2024 to substantiate the claim/debt and NeSL certificate. On the 30.09.2024 the Bench had taken a view thatneither the FC was represented nor the crucial documents evidencing the right of the FC were filed despite giving an opportunity to the FC to do so. Therefore, the CP was dismissed for non-prosecution. 4. The Restoration IA filed by the FC against the dismissal the case was posted on 27.11.2024 and adjourned to 22.01.2025. We observe that till today the FC has not filed the necessary documents to established its claim. The FC has filed restoration application but has failed to cure the defects in the Original petition despite several opportunities. We therefore, deem it fit to dismiss the restoration IA." (Emphasis Supplied) From above, it is seen that the first three paras bring out earlier facts and in only last para no. 4, the Adjudicating Authority has recorded that the Appellant has not filed necessary documents to establish its claim and thus dismiss the Appellant's restoration application, since, the Appellant could not cure the defects in the original petition despite ....
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....fects, which according to the Appellant was due to non-active participation of the then counsel of the Appellant, who did not take necessary action for curing defects or brought to the notice of the Appellant. We further take into consideration that this was curable defects and could not affect the merit of the case. 39. We find that the Tribunal can allow the restoration application, if sufficient cause is made out by the litigants. In the present case, the reasoning given by the Appellant was non-appearance of the counsel and thereafter non-curing the defects, could have been treated as sufficient cause. 40. We note that it is for the Tribunal to decide whether the sufficient cause has been made out by the Appellant while perusing the restoration application or not, however, the same cannot be purely treated as discretional. 41. We note that as per the Rule 48 of the NCLT Rules, 2016, if sufficient cause is made out, and is within the stipulated 30 days, the Tribunal is obligated to restore the same. The Rule 48 of the NCLT Rules, 2016 reads as under: - "Rule 48 (2): Where the petition or application has been dismissed for default and the applicant files an appl....