Lawstreet Journal

The Failure of NCLAT to Look into a Very Vital Aspect On NCLT’s Specific Finding, Vitiates NCLAT’s Order: Supreme Court

Lawstreet Journal 31 Mar 2022 6:17am

Image courtesy: Lawstreet Journal Judiciary The Failure of NCLAT to Look into a Very Vital Aspect On NCLT’s Specific Finding, Vitiates NCLAT’s Order: Supreme Court

The Supreme Court Bench comprising Justices Hemant Gupta and V. Ramasubramanian, on 29th March’2022 held that the failure of NCLAT as the first appellate authority to look into a vital aspect of the matter regarding which NCLT had already recorded a specific finding of fact, would vitiate its order. 

"The failure of the NCLAT as the first appellate authority to look into a very vital aspect such as this, vitiates its order, especially when NCLT has recorded a specific finding of fact on this."

The Supreme Court bench had allowed an appeal challenging the order of NCLAT which reversed the order of the NCLT wherein the Adjudicating Authority had held that Section 9 of the Insolvency and Bankruptcy Code, 2016 had a limitation period attached to it.  The Supreme Court bench has remanded the matter back to NCLAT for a renewed consideration upon material facts and necessary principles of law.

In the instant case, on 20.04.2018, the operational creditor, herein the appellant, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against one M/s. Arpita Filaments Pvt. Ltd before the National Company Law Tribunal. 

The operational creditor claimed that they had sold fabrics to the corporate debtor, which was irregular in making payments. A demand notice under Section 8 of the Code was issued, but it was not heeded to. The corporate-debtor raised four major objections, one of them being the issue of limitation i.e. time bar attached to filing of the said application. 

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Tagged: NCLAT   Supreme Court of India  
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