Reply filing opportunity may be restored to secure adjudication on merits where no grave prejudice is caused.

In brief

The question

Whether the Adjudicating Authority was justified in refusing to recall the order closing JSB Cement’s right to file its reply in the Section 7 proceedings.

The court held

The appeal was disposed of by restoring JSB Cement’s opportunity to file its reply, subject to costs.

It also directed

JSB Cement was directed to file the reply, with an advance copy to the respondent, by 18 September 2026.

Catalyst Trusteeship Limited was permitted to file a rejoinder by 21 September 2026.

Both parties were directed to appear before the Adjudicating Authority on 21 September 2026 and cooperate in the early disposal of the Section 7 petition; the respondent was not to seek an adjournment on that date.

JSB Cement was further directed to deposit ₹50,000 in the Prime Minister’s Relief Fund within three working days.

01Facts

Catalyst Trusteeship Limited had initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) in CP (IB) No. 41 of 2026 against JSB Cement LLP.

¶ 1–10, 15–17

On 27 July 2026, the Adjudicating Authority directed the parties to complete their pleadings by the next hearing date, 4 August 2026.

¶ 1–10, 15–17

JSB Cement did not file its reply, asserting that it had repeatedly sought documents from the respondent necessary for preparing the reply.

¶ 1–10, 15–17

On 4 August 2026, the Adjudicating Authority closed JSB Cement’s right to file its reply.

¶ 1–10, 15–17

JSB Cement thereafter filed IA No. 159 of 2026 seeking recall of that order and restoration of its right to file a reply, but the application was dismissed on 10 September 2026.

¶ 1–10, 15–17

The present appeal challenged that dismissal.

¶ 1–10, 15–17

02Issues

i.Whether the Adjudicating Authority was justified in refusing to recall the order closing JSB Cement’s right to file its reply in the Section 7 proceedings.

¶ 15–18

ii.Whether JSB Cement should be granted a final opportunity to file its reply, subject to costs and procedural safeguards, where doing so would not cause grave prejudice to the respondent.

¶ 18–20

03Law Applied

The Appellate Tribunal applied the principle that, where practicable and where no grave prejudice would be caused to the opposing party, disputes should ordinarily be adjudicated on their merits after providing the parties a reasonable opportunity to be heard and to file pleadings.

¶ 18

It also considered the requirement that proceedings under Section 7 of the IBC be conducted expeditiously, while holding that expedition does not automatically justify denial of a procedural opportunity where the opportunity can be granted without prejudicing the other party.

¶ 13, 17–18

The Tribunal further relied on its power to impose costs and issue case-management directions while granting a final opportunity to file pleadings.

¶ 20–22

Provisions in the judgment · 1 · Linked ones open on LawLens

Insolvency and Bankruptcy Code, 2016. Section 7

04Reasoning

The Tribunal noted that the direction to complete pleadings was issued only on 27 July 2026 and that JSB Cement’s right to file its reply was closed at the very next hearing on 4 August 2026.

¶ 12–17

Although the respondent relied on the summary and expeditious nature of Section 7 proceedings and contended that the relevant documents had already been supplied with the petition, the Tribunal found that JSB Cement had moved the recall application before the next effective stage of the proceedings and had asserted that its reply was ready.

¶ 12–17

Balancing the need for expedition against the right to a fair opportunity to present its case, the Tribunal concluded that granting one final opportunity would not cause grave prejudice to Catalyst Trusteeship Limited, particularly since the respondent could file a rejoinder and the proceedings could continue on a fixed schedule.

¶ 18–21