Pending Suit Against Company Under Liquidation Requires NCLT Leave To Proceed: Patna High Court

The Patna High Court has held that a pending commercial suit involving a company under liquidation cannot proceed without leave of the National Company Law Tribunal (NCLT).

"once a winding up order is passed, no suit or other legal proceedings shall be commenced or if pending at the date of the winding up order, shall be proceeded with, by or against the company except with the leave of the Tribunal and subject to such terms that the Tribunal may impose,” a Bench of Justices Rajeev Ranjan Prasad and Sunil Dutta Mishra observed.

The Bench made the observation while setting aside a judgment passed by the Principal District Judge-cum-Commercial Court, Muzaffarpur, in a dispute involving Tecpro Systems Limited, which was under liquidation.

Aneja Constructions was an approved sub-contractor of Tecpro for civil works relating to the coal handling system package at Muzaffarpur TPP, Stage-II. The works were subject to a contract between Tecpro and Kanti Bijlee Utpadan Nigam Limited (KBUL), now known as NTPC Limited.

After KBUL terminated its contract with Tecpro, Aneja claimed outstanding dues for the work it had carried out. It also claimed that KBUL had seized the gate passes required for carrying its machinery, raw materials and equipment from the project site.

Aneja accordingly filed a title suit seeking, among other reliefs, specific performance of the contract, release of outstanding amounts and items, and a permanent injunction. The suit was later transferred to the Commercial Court and registered as Commercial Case No. 1 of 2019.

During the pendency of the suit, Tecpro faced insolvency proceedings before the NCLT, New Delhi. A resolution plan was approved but there was subsequent non-compliance with its implementation. Following proceedings before the NCLT and a resolution passed by the Committee of Creditors, the NCLT ordered liquidation of Tecpro on January 16, 2020.

The High Court noted that the NCLT's liquidation order was apparently not within the knowledge of the plaintiff or KBUL and was therefore not brought to the notice of the Commercial Court. The Commercial Court, unaware of the liquidation order, proceeded to consider the suit on merits and passed its judgment on December 16, 2025.

The issue came to light before the High Court during the appeal. The Bench noted that the liquidation proceedings had commenced while the commercial suit was pending.

The High Court examined Sections 278 and 279 of the Companies Act, 2013 along with Section 33(5) of the Insolvency and Bankruptcy Code, 2016. It held that the commercial suit pending before the Commercial Court could not have proceeded without leave of the Tribunal.

The Court also noted that Tecpro, arrayed as defendant no.4, was not represented before the Commercial Court as no notice had been served upon its liquidator.

During the appeal, Aneja's counsel sought to contend that the suit could have proceeded against KBUL alone. The High Court rejected the contention, holding that the reliefs sought were against KBUL and Tecpro jointly.

The bench observed, “In our opinion, by deleting defendant no.4 in suit, the plaintiff cannot maintain the suit for the reliefs prayed therein. There would be no question of maintaining the present appeal by deleting the defendant no.4 (under liquidation).”

The High Court accordingly set aside the December 16, 2025 judgment passed by the Commercial Court and remitted the matter for fresh consideration.

However, it directed that the Commercial Court may proceed to consider the suit afresh if the NCLT, New Delhi grants leave to Aneja to proceed with the suit.

For Appellants: Advocates Nikhil Kumar Agrawal, Aditi Hansaria, Sidhant Goel, Astha Singhal, Urvashi Singh and Chitra Dwivedi

For Respondents: Advocates Sanjana Srivastava, Aditya Raman and Tuhin Shankar