01Facts
The Respondent filed a Company Petition (CP No. 1693/2019) alleging oppression and mismanagement, which was dismissed in default on 24.10.2019
p. 2A first restoration application (MA No. 3954/2019) was dismissed for non-appearance on 19.12.2019
p. 2Subsequently, a second restoration application (CA No. 874/2020) seeking restoration of both the first application and the main petition was dismissed for non-prosecution on 02.11.2021
p. 2The Respondent then filed a third restoration application (CA No. 545/2022). By an order dated 22.10.2024, the NCLT Mumbai allowed this third application, restoring the main petition subject to costs, despite recording that it was "not satisfied as to the genuineness of reasons" for non-prosecution provided in the Respondent’s medical affidavits
p. 3The Appellants challenged this "jumping of the queue," arguing the main petition could not be restored while the dismissals of the prior restoration applications remained effectively unaddressed on merits
p. 302Issues
i.1. Whether the NCLT was legally justified in restoring a Company Petition dismissed five years prior when it expressly recorded dissatisfaction with the reasons provided for non-prosecution
p. 4ii.2. Whether the NCLT erred in "jumping the queue" by restoring the main petition directly instead of first adjudicating the restoration of the previously dismissed restoration applications
p. 3, 403Law Applied
The court applied procedural principles governing the restoration of petitions dismissed in default (analogous to Order IX of the CPC and NCLT Rules).
The core principle established is that costs cannot substitute for "sufficient cause"; if a tribunal is not satisfied with the reasons for non-appearance, it cannot restore a matter simply on the basis of the gravity of the underlying substantive claims or the status of the parties
p. 4Furthermore, procedural propriety requires that when a chain of restoration applications exists, the tribunal must restore the immediate preceding application and examine the reasons for each prior dismissal, including issues of limitation, rather than restoring the main petition in a summary manner
p. 404Reasoning
The NCLAT observed that the NCLT had reached a contradictory conclusion by admitting it was not satisfied with the Respondent's medical explanations for the delay and non-prosecution, yet restoring the petition to avoid "miscarriage of justice" based on the Respondent’s 50% shareholding
p. 3The Tribunal held that if the reasons for non-appearance are found wanting, costs alone cannot suffice to grant restoration
p. 4The NCLAT reasoned that the NCLT improperly "jumped the queue" by restoring the main petition while the orders dated 19.12.2019 and 02.11.2021 (dismissing the first and second restoration attempts) were still pending or their merits unexamined
p. 3The Tribunal emphasized that procedural discipline requires a step-by-step restoration of the applications, where the reasons for each failure to prosecute and the impact of limitation are dealt with separately
p. 405Holding
The NCLAT partly allowed the appeal and modified the impugned order
p. 5It held that the NCLT's order shall be restricted to allowing the third restoration application only to the extent of restoring the second application (dismissed on 02.11.2021)
p. 4The restoration of the main Company Petition was set aside, and the matter was remanded to the NCLT for fresh, separate consideration of the first and second restoration applications on their merits
p. 5The costs imposed by the NCLT were set aside, with liberty granted to the NCLT to levy fresh costs if the main petition is eventually restored after proper adjudication
p. 5Original Court PDF
M/S Aiko Builders Pvt Ltd And Ors & Ors.vsM/S Aloukik City Llp And Ors & Ors.
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