Litigants Cannot Blame Previous Counsel For Own Inaction: NCLT Kochi Refuses To Recall Ex Parte Order

The National Company Law Tribunal (NCLT) at Kochi has refused to recall an ex parte order passed against individuals accused of oppression and mismanagement in Green Hearts Private Limited, finding that they failed to diligently contest the proceedings despite repeated opportunities.

“The litigant is under a bounden duty to remain vigilant and diligent in pursuing his/their cause and the proceedings arising therefrom,” Judicial Member Vinay Goel observed.

"The Applicant has sought to shift the entire burden upon the previous counsel without placing on record any cogent, credible, or substantive material in support of such allegations. Mere attribution of blame to the erstwhile counsel cannot absolve the Applicant of their own responsibility and obligation to prosecute the matter diligently. Consequently, the Applicant is liable to suffer the consequences arising from their negligence, inaction, and laches," the tribunal added.

The tribunal dismissed an application filed by Sandeep Sadanandan, Kollannur Jose Ligi Mariya, Smitha Kurian and Purandod Shaniban, who are respondents in a company petition alleging oppression and mismanagement in relation to Green Hearts Private Limited.

“The jurisdiction under Rule 11 of the NCLT Rules, 2016 is limited and cannot be exercised as a substitute for appellate remedy,” the Tribunal held.

The applicants had sought recall of the ex parte order and permission to file their counter affidavit in the main company petition, contending that the order was passed due to lack of proper representation caused by medical issues faced by their earlier counsel.

According to them, they realised the actual procedural status of the matter only after contempt proceedings were initiated for alleged non-compliance with the ex parte order.

They then engaged new counsel and argued that there was no wilful negligence or default on their part.

Relying on Rule 11 of the NCLT Rules, 2016 and the Supreme Court's decision in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, they argued that the Tribunal could recall the order to prevent miscarriage of justice.

Opposing the plea, the original petitioner argued that the applicants had been given sufficient opportunities to participate in the proceedings and that the recall application was merely an impermissible attempt to seek review of a final order.

Referring to the case history, the tribunal noted that the applicants had entered appearance in February 2024 and were repeatedly granted time to file their reply affidavit but failed to do so.

Their right to file a reply was eventually closed in September 2024.

The tribunal also noted that the applicants later entered appearance through counsel in the main company petition but still did not challenge the ex parte order before the National Company Law Appellate Tribunal within the limitation period.

“It is a settled principle that where a statutory remedy of appeal is available, a party cannot ordinarily invoke the inherent jurisdiction of this Tribunal to reopen or re-agitate matters already decided,” it said.

Holding that the recall application amounted to abuse of process, the tribunal dismissed it with costs of ₹25,000, directing the amount to be deposited with the National Defence Fund.

For Applicants: Advocate Ahamed Iqbal

For Respondents: Advocate Akhil Suresh and Representative of RoC