NCLT Kochi Restores Winding-Up Petition After 3-Year Delay, Notes Provisional Liquidator Already Appointed

The National Company Law Tribunal (NCLT) at Kochi restored a winding-up petition dismissed for non-prosecution despite a delay of over three years, noting that a Provisional Liquidator had already been appointed and the company's affairs were under the tribunal's supervision.

A coram of Judicial Member Vinay Goel held that dismissal without adjudication on merits could create uncertainty regarding the status of the company and its assets.

“This Tribunal is guided by the principles of natural justice, and procedural absence should not defeat substantive justice, especially in proceedings relating to winding up where the interests of several stakeholders are involved and the jurisdiction exercised by this Tribunal is in the nature of custodia Legis over the assets of the Company.” it added

Kunjumoosa and Ahammed Sharief filed a restoration application seeking restoration of a company petition earlier dismissed for non-prosecution.

The applicants, along with Abdu Rahiman, were Directors of Baksons (India) Pvt. Ltd., a company that never commenced operations and whose name had been struck off from the Register of Companies.

In the earlier proceedings, the Tribunal had, by order dated April 9, 2021, directed winding up of the company and appointed a provisional liquidator to take charge of its affairs and submit a final report.

The applicants submitted that the company had no liabilities and only one immovable property as its asset. Although details were provided to the provisional liquidator, no further updates were received. They were later informed that the petition had been dismissed in July 2021 for non-prosecution.

The applicants contended that they had no notice of the hearings or dismissal and were under the bona fide belief that the liquidation process was ongoing.

Upon learning of the dismissal, they filed the restoration application along with a petition for condonation of delay.

Observing that the application was filed after a lapse of more than 3 years, the Tribunal stated:

“In ordinary cases, such a prolonged delay would require strict scrutiny.”

However, taking note of the peculiar facts, the Tribunal observed:

“However, the peculiar circumstances of the present case reveal that a Provisional Liquidator had already been appointed by this Tribunal prior to the dismissal of the Petition, thereby bringing the affairs and assets of the Company under the supervision of this Tribunal.”

It further held:

“The dismissal of the Petition without adjudication on the merits, particularly when liquidation had already been initiated through the appointment of a Provisional Liquidator, may create uncertainty about the status of the Company and its assets and affairs.”

The Tribunal held that, considering the explanation offered for the dismissal, the stage of the proceedings, and the need to ensure proper supervision over the company's affairs, the petition deserved to be restored in the interest of justice. Accordingly, the application was allowed subject to payment of costs of Rs 50,000.

The Tribunal also granted liberty to the applicants to move appropriate applications, including for replacement of the provisional liquidator.

For Applicants: CS Vivek Kumar

For RoC: Representative of RoC