Case Note & Summary
The Appellant, M/s. Devi Engineering & Construction Private Limited, was the Corporate Debtor in proceedings under CP (IB) No. 1/7/AMR/2025 initiated by three Financial Creditors (Respondents). On 13.06.2025, the Adjudicating Authority forfeited the Appellant's right to file a counter and reserved the petition for orders. The Appellant filed IA (IBC)/179/2025 seeking recall of that order. However, on 10.07.2025, the Adjudicating Authority rejected the recall application on the ground that in a parallel proceeding initiated by an Operational Creditor, M/s. Sidhvi Infrastructure Projects Limited, vide CP (IB) No. 34/9/AMR/2021, CIRP had already been directed to commence against the Corporate Debtor on 07.07.2025 and an Interim Resolution Professional (IRP) had been appointed. Therefore, the main Company Petition had become infructuous, and consequently, the recall application also became infructuous and unsustainable. Aggrieved, the Appellant filed the present appeal before the National Company Law Appellate Tribunal (NCLAT), Chennai. The NCLAT, after hearing the parties, found no merit in the appeal. The Tribunal observed that the Adjudicating Authority had correctly held that the main petition had become infructuous due to the parallel CIRP, and thus the recall application could not survive. The appeal was dismissed, and all pending IAs were closed.
Headnote
A) Insolvency and Bankruptcy Code - Recall Application - Infructuous Proceedings - Section 7, Insolvency and Bankruptcy Code, 2016 - The Corporate Debtor's right to file counter was forfeited and the petition reserved for orders. The recall application was rejected on the ground that a parallel CIRP had already been initiated against the same Corporate Debtor by an Operational Creditor, rendering the main petition infructuous. The Appellate Tribunal held that once the main petition becomes infructuous, the recall application also becomes infructuous and unsustainable. (Paras 1-3) B) Insolvency and Bankruptcy Code - Parallel Proceedings - CIRP Commencement - Section 7, Insolvency and Bankruptcy Code, 2016 - The Adjudicating Authority noted that in a parallel proceeding initiated by an Operational Creditor, CIRP had been directed to commence on 07.07.2025 and an IRP appointed. Consequently, the Company Petition under Section 7 became infructuous. The Appellate Tribunal upheld the rejection of the recall application as the main petition was no longer maintainable. (Paras 2-3)
Issue of Consideration
Whether the rejection of the recall application by the Adjudicating Authority was justified when the main Company Petition had become infructuous due to commencement of CIRP in parallel proceedings.
Final Decision
The appeal is dismissed. The order dated 10.07.2025 rejecting IA (IBC)/179/2025 is upheld. All pending IAs are closed.
Law Points
- Recall application becomes infructuous if main petition is infructuous due to parallel CIRP commencement
- Forfeiture of right to file counter does not automatically warrant recall if subsequent events overtake proceedings
