TaxTMI 
TaxTMI 
2026 (9) TMI 1931
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....city in itself forms and is contained under Entry 38 of List III of the Seventh Schedule to the Constitution of India. Being an entity performing its duties as ensured to be taken under the Constitution and acting as a distribution agency under the Electricity Act, 2003, thus the Appellant performs a statutory function. 2. The Appellant is before us, being aggrieved by the impugned order dated 13.11.2025 passed by the learned NCLT, Kolkata Bench in I.A. No. 1570 of 2024, which was arising out of I.A. No. 1061 of 2021 that was preferred in C.P. (IB) No. 176/KB/2018. 3. The brief facts of the controversy at hand are that, the Appellant, which is a statutory distribution licensee responsible for the supply of electricity in the State of Andhra Pradesh performs a public duty of supplying essential services to its consumers. The Corporate Debtor, M/s Impex Metal & Ferro Alloys Limited, was a consumer within the ambit of Section 2(15) of Electricity Act, 2003, for the electricity supplied by the Appellant under its registered supply connection number. However, the Corporate Debtor due to debt and default by an Order dated 01.03.2018 of the Adjudicating Authority was placed under th....
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....arrying manufacturing activities and also in terms of the order dated 05.10.2021 passed in I.A. (IBC) 748/KB/2021. 7. The Ld. Adjudicating Authority while considering IA (IBC) 748/KB/2021filed in C.P.(IB)No.176/KB/2018, vide its order dated 05.10.2021 observed that the distribution company of the electricity i.e., the Appellant herein, would be eligible to claim the CIRP cost for the energy supplied and consumed during the moratorium period, and the charges which were assessed to be Rs. 20,72,84,722/-, which remained due to be paid. 8. In C.P.(IB)No.176/KB/2018 preferred against the Corporate Debtor, Respondent No.2 was appointed as the Interim Resolution Professional. Consequent upon the imposition of the moratorium under Section 14 of the I&B Code and the Appellant after getting the knowledge of the appointment of the IRP, which was intimated vide communication dated 21.03.2018, a request was made that since the electricity already supplied by the Appellant and consumed by Corporate Debtor, falls under the essential services and, under law, it could not be terminated, hence the appellant would be entitled to consumption charges for the actual electricity consumption during ....
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....that was addressed to the Liquidator, admitted the fact that the electricity consumed by the Corporate Debtor was for carrying out the manufacturing activities, which were being persistently pursued by the Corporate Debtor based on the electricity that was supplied by the Appellant. Based upon the order dated 05.10.2021, the Liquidator was put to notice regarding remittance of the balance amount of Rs. 20,72,84,722/- payable towards actual consumptions of electricity. The Appellant, had also sent a letter on 13.11.2021 with complete details and sought payment from the Liquidator. But since there was no remittance of the said amount within reasonable time despite email communication, the Appellant on 01.12.2021 had to file I.A. No. 1061/2021 praying for the following reliefs: "i) Direct the Liquidator to pay CIRP Costs running into Rs.20,72,84,722 (Rupees Twenty Crores Seventy-Two Lakhs Eighty-Four Thousand Seven Hundred Twenty-Two) payable upfront under Section 53 (1) (a) and in terms of order dated 05.10.2021 passed by this Hon'ble Tribunal inIA No. (IBC) 748 (KB) of 2021. ii) Pass any order or orders as deem fit in the present circumstances of the case." ....
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....ecting necessary information, the Appellant engaged Mr. Rakesh Kumar Sharma, as its Advocate on Record. It is the case of the Appellant, that at the time of his engagement as a counsel for the Appellant, in the proceedings of the company petition. The counsel Mr. Rakesh Kumar Sharma, has projected that he operates his professional activities both from Kolkata, as well as from his chambers in Delhi and has an office at 45/8/A, Moor Avenue, Regent Park, Kolkata - 700040 too. Further, as per the Appellant, that the said counsel informed that he had regular practice before the NCLT, Kolkata, and assured that the case of the Appellant would be diligently pursued and owing to the aforesaid practice and assurance, for which there was no reason to disbelieve, the appellant engaged Mr. Rakesh Kumar Sharma who appeared on their behalf. The said application has been preferred as I.A. No. 1061/21 filed through Mr. Rakesh Kumar Sharma, praying for the relief that has already been extracted above. 17. The Appellant contends, that after inducting Mr. Rakesh Kumar Sharma, as their counsel for the purpose of filing and pursuing of I.A. No. 1061/2021,and after sufficiently long period of almost t....
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....ce of a NOC from the earlier counsel, Mr. Rakesh Kumar Sharma, the Appellant was incapacitated from engaging another counsel. While opposing the application, the Respondent's case has been that the restoration application deserves dismissal because the absence of the counsel is deliberate and the Appellant cannot take any advantage of the mistake committed by earlier counsel in not appearing in the proceedings before the Tribunal that was held on 08.11.2023. 21. The Respondent contended that the Restoration Application I.A. No 1570 of 2024, was barred by time, on the ground that as per the provision contained under Rule 48 of the NCLT Rules, it prescribes 30 days' time from the date of the order of dismissal. It is submitted that since the I.A. No. 1061/2021 was dismissed on 08.11.2023 and the Restoration Application No.1570 of 2024, itself was preferred on 25.07.2024, hence there is a delay of about seven and a half months from the date of dismissal. The Ld. Tribunal, while considering the implications of Rule 48 of the Rules, and particularly the aspect of limitation contained under sub-rule (2) of Rule 48, ultimately came to the conclusion, that since the restoration applicat....
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....he earlier Counsel, which was an intentional act of the Counsel, who had deliberately permitted the proceedings to be dismissed for want of prosecution and that is what which could be clearly understood from the grounds pleaded by the appellant in the restoration application preferred by the appellant, being I.A. No.1570 of 2024 seeking recall of the Order dated 08.11.2023. If the application in itself is taken into consideration, the appellant had quite specifically come up with the case that, they were deliberately misled by the earlier Counsel Mr. Rakesh Kumar Sharma, that he had an office in Kolkata and they had been regularly appearing before the NCLT in various other company matters, which later on proved to be otherwise. It was the case of the appellant that owing to the misrepresentation that was made by Mr. Rakesh Kumar Sharma of ensuring that he used to pursue the proceedings before the NCLT, Kolkata, the matter was entrusted to him by the appellant, which was later on proved to be otherwise. Even looking it from prospective of the distance constraints as the appellant was stationed in Andhra Pradesh and there was no reason for him to initially not to believe to the state....
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....ppellant. 26. Because of the aforesaid fact, the restoration application did contain all these conditions and had pleaded that on various dates for example 16.06.2023, 25.07.2023, 31.08.2023, 27.09.2023 and lastly on 08.11.2023. It shows that Mr. Rakesh Kumar Sharma through his associate Mr. Nishant Sharma has lastly appeared on 24.04.2023. That itself shows that the earlier Counsel has lacked his interest in the matter and the case before the NCLT preferred by the appellant it mostly remained unrepresented, which necessitated the appellant to engage another Counsel. Hence by way of reiteration, it could be said that in those cases where a litigant who engages the Counsel and has reposed confidence on him, it is later because of the conduct of the Counsel, if the Counsel does not appear on the dates to pursue the matter on behalf of the litigant engaging him, there would be a complete snapping of trust between the Counsel and the litigant and in that eventuality, the circumstances in the instant case, in which the petition was dismissed for want of prosecution, would show that it was not because of the fact of any dereliction or inadvertent mistake on part of the Counsel, but ra....
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....e, that despite of several persuasions, he was unable to get the no objection certificate from the earlier Counsel till July, 2024, its only when Mr. Rakesh Kumar Sharma, the earlier Counsel refused to grant the no objection certificate, on the ground that his bills were not fully paid. In these peculiar circumstances, the appellant cannot be shouldered with the responsibility of his Counsel's non-appearance on 08.11.2023 and thus filing of the subsequent application, though it might have been filed belatedly with a delay of seven and a half months, but was still required to be considered on its merits because the Tribunal ought to have rationally considered that these type of situations which do practically occur in the present ethical set up of this noble profession of advocacy, and when despite all precautions taken by the appellant to obtain no objection certificate because it was the need of law as per Rule 39, because until and unless the same was done, the subsequent Counsel had shown his reluctance to accept the brief and to appear and file a restoration application. 30. The learned Counsel for the appellant had argued that though it is a case of a deliberate absence by ....
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....this matter which may discourage such a tendency, would it not bring justice delivery system into disrepute. What is the fault of the party who having done everything in his power and expected of him would suffer because of the default of his advocate. If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. The problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate omission, or misdemeanour of his agent. The answer obviously is in the negative. Maybe that the learned advocate absented himself deliberately or intentionally. We have no material for ascertaining that aspect of the matter. We say nothing more on that aspect of the matter. However, we cannot be a party to an innocent party suffering injustice merely because his chosen advocate defaulted. Therefore, we allow this appeal, set aside the order of the High Court both dismissing the appeal and refusing to recall that order. We direct that the appeal be restored to its original number in the High Court and be disposed of according to law. If there is a ....
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....to be in force until determined with the leave of the Court by a writing signed by the client or the pleader, as the case may be, and filed in Court or until the client or the pleader dies, or until all proceedings in the suit are ended so far as regard the client. Explanation: For the purposes of this sub-rule, the following shall be deemed to be proceedings in the suit- (a) an application for the review of decree or order in the suit. (b) an application under Section 144 or under Section 152 of this Code, in relation to any decree or order made in the suit. (c) an appeal from any decree or order in the suit, and (d) any application or act for the purpose of obtaining copies of documents or return of documents produced or filed in the suit or of obtaining refund of moneys paid Into the Court in connection with the suit. (3) Nothing in sub-rule (2) shall be construed- (a) as extending, as between the pleader and his client, the duration for which the pleader is engaged, or (b) as authorizing service on the pleader of any notice or document issued by any Court other than the Court for which the pleader was engag....
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....m him. Normally a lawyer is expected to grant his consent unless there are sufficient and cogent reasons for him to decline the same, if, however, the lawyer does not given his consent then there is nothing to prevent the client from approaching the Court to determine the vakalat of the counsel previously representing him. Without determining the vakalat a fresh counsel cannot be engaged. 14. As per the Bar Council of India Rules quoted above every lawyer owes a duty to his colleague not to appear in any matter in which vakalat has already been filed by some other counsel. This is a salutary provision to maintain the dignity of the profession. This should not be by passed. In any event the client has a remedy even if the counsel does not give his no objection. He can always apply to the Court giving his reasons why the consent could not be produced and why he has to engage a new counsel. The Bar Council of India Rules are in consonance with the Rules framed by this Court referred to above as well as the provisions of the Code of Civil Procedure." 35. As per the ratio, that has been laid down in the matters of "Rafiq and another (Supra) as to what would be the impact whe....
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....as justified for the reason being that the same was preferred beyond the period prescribed under Sub-Rule 2 of Rule 48 of the NCLT Rules, 2016. The reason assigned by the learned Tribunal is that since the appellant came to know about the inability of the Counsel in the beginning of the year 2023, when the Counsel had started not appearing in the proceedings and hence the appellant should have acted in diligence and should have been vigilant by then only changing another Counsel and hence in the absence of taking effective steps to change the Counsel due to his absence in 2023, it was observed that the appellant had derelicted in not diligently pursuing the proceedings when the knowledge of the conduct of appellant's Counsel of non-appearance was attributed to him quite prior in time. 37. The view taken by the learned Tribunal about the appellant's knowledge in the beginning of the year 2023 regards to the proceedings and the Counsel's inability to appear or not to appear prior to 08.11.2023, that itself cannot be derived back for the purposes of considering of the instant Restoration Application for recall of an Order, which has been passed at a much subsequent stage that is on....
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.... not vigilant therein, which has resulted into a dismissal of the petition. 39. Primarily, the learned Tribunal while dealing with the said matter of V-Con Integrated Solutions Pvt. Ltd. (supra) particularly the observation which has been made in para - 45, while determining the aspect whether the litigation could be made to suffer because of the Counsel's mistake had rather shifted upon that the appellant was not vigilant therein by not contacting the Counsel, which has resulted into a dismissal of the petition. The said principal may not be factually applicable in the instant case, because here there is no question of lack of diligence on part of the appellant when the Counsel himself who has intentionally not participated in the proceedings due to his expected professional fee, which was said to be due to be paid by the appellant. (This may be altogether a different aspect having no bearing in the instant company appeal). The ratio given in the said Judgment of V-Con Integrated Solutions Pvt. Ltd. (supra), as relied by the learned Counsel for the respondent, is not dealing with the issue from the factual perspective as to how a situation would be dealt where the learned Couns....
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....ding the principal proceedings as per the Preamble, does not and it never at any place of the Code eradicate or cloud to dilute the effect of the implications of the applicability of Section 238A of the Code. Section 238A of the Code, which is extracted hereunder deals with the aspect of application of the law of limitation over the proceedings those are regulated by the Code, but quite obviously its not in relation to those provisions contained in the Code, which restricts or contains a self-contained provision governing the aspect of limitation. Section 238A of the I&B Code reads as under:- "238A. Limitation.-The provisions of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be." 42. The implication of Section 238A, if it is read with precision, the language of the provision itself is quite explicit when it uses the word "as far as may" to apply to "proceedings or appeals" and further the expression given therein "as the case may be". The three expressions as specificall....
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....terlocutory proceedings or exclusively to the main proceedings. If that be not so, the specific concept of deciding the principal proceedings in a time frame, will not apply to the proceedings, which are contained and covered under Section 238A, which is inclusive of the interlocutory proceedings i.e. the restoration application too. 44. It is because of this reason, Section 238A also uses the word "as the case may be". That means there has to be a correlated judicial analysis as to whether the principals or aspect of limitation is required to be considered while reading these three expressions together, "as far as may", "proceedings" and "as the case may be". "As far as may" is an exception in relation to the general proceedings, which is inclusive of the interlocutory proceedings and further it is a discretion vested with the Tribunal depending upon the circumstances and situation of the case to consider the grant of benefit of limitation. 45. If in those circumstances, where the provisions of Section 238A is made applicable, it will attract the application of Section 5 of the Limitation Act. If we read the provisions contained under Section 5 of the Limitation Act, which i....
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....after having gone through the application, it cannot be ruled out that in this professional era of cut throat competition, such type of situations do occur where professionals owing to certain misunderstandings and times due to hard core grudges or monetary disputes normally do not effectively pursue the proceedings and which ultimately falls upon the litigant whose cause is defeated because of their professional breach, and their unilateral decision not to appear, though despite the fact that Vakalatnama which is a trust reposed by litigants still continues. In these situations, the litigant cannot be blamed and be made to suffer due to the deliberate act of Counsel. 49. In the instant case, as we have already discussed that it is not the negligence of the Counsel, because negligence would have been where he intended to discharge his responsibility, but was refrained because of certain inevitable reasons to appear. This was not the situation in this case. The situation herein was where there was a deliberate intended conduct on the part of the Counsel, to ensure not to appear and if this is the situation, then quite obviously, its knowledge cannot be said to be attributed to th....
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.... in order to contend that the application preferred for recall of the Order under Rule 48 would not be maintainable. Sub-Rule 2 of Rule 48 of the Rules, which contemplates filing of an application though it prescribes for an upper time limit of 30 days, but if we see the provision in itself, it does not prescribe that an application for recall of an Order cannot be entertained after the expiry of 30 days' period or nor does the provision restrict or create a bar in filing of any application beyond a said period. That means in those eventualities, the provisions of limitation as contemplated under Section 238A of the I&B Code, would be applicable and if that be so, Section 5 would apply, and if Section 5 of Limitation Act is made applicable, in those eventualities, the gravamen of determining the aspect of limitation has had to be rational and not in a deprivation of a right of the party to the proceedings, of his constitutional right to litigate. In the instant case, because of the reason that the lis has not yet been decided on merits and the same is pending consideration, and it is only because of the dismissal of the restoration application, the appellant is before us. 52. In....