Litigant Cannot Suffer For Counsel's Deliberate Non-Appearance: NCLAT Restores Electricity Dues Claim

The National Company Law Appellate Tribunal (NCLAT) has observed that litigants should not be made to suffer when lawyers, because of professional misunderstandings, grudges or monetary disputes, stop effectively pursuing their cases.

The tribunal noted that such conduct can ultimately defeat a litigant's cause. It held that a litigant cannot be blamed for the “deliberate act of Counsel” when the Vakalatnama continues to remain in force.

“...in this professional era of cut throat competition, such type of situations do occur where professionals owing to certain misunderstandings and times due to hard core grudges or monetary disputes normally do not effectively pursue the proceedings and which ultimately falls upon the litigant whose cause is defeated because of their professional breach, and their unilateral decision not to appear, though despite the fact that Vakalatnama which is a trust reposed by litigants still continues. In these situations, the litigant cannot be blamed and be made to suffer due to the deliberate act of Counsel,” the tribunal observed.

The observation came while allowing an appeal filed by Eastern Power Distribution Company of Andhra Pradesh Limited against an order of the National Company Law Tribunal, Kolkata Bench.

A coram of Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey heard the appeal.

The NCLT had rejected the company's application seeking restoration of a claim after it was dismissed for want of prosecution. The NCLAT held that the circumstances showed deliberate non-appearance by the company's earlier counsel, rather than ordinary negligence.

The dispute arose from a claim by the electricity distribution company for ₹20.72 crore towards electricity consumed by Impex Metal & Ferro Alloys Limited during the insolvency process. The company had filed an application before the NCLT seeking payment of the amount as part of the insolvency process costs.

The application came up before the NCLT on November 8, 2023. None appeared for the electricity distribution company, following which the application was dismissed for non-prosecution. The dismissal was not on the merits of the claim.

The company later sought recall of the order. Its case was that its earlier counsel, Rakesh Kumar Sharma, had stopped participating in the proceedings and had not provided a no-objection certificate, making it difficult to engage another counsel.

The company also claimed that there had been a professional dispute with the earlier counsel. The NCLAT, after examining the circumstances, distinguished deliberate non-appearance from ordinary negligence by counsel.

The tribunal explained that negligence would involve a counsel intending to discharge his responsibility but being prevented from appearing by an unavoidable circumstance. It found that this was not the situation in the present case.

Instead, the NCLAT held that the circumstances pointed to a deliberate decision by the earlier counsel not to appear. It also observed that, in such circumstances, the litigant could not reasonably be expected to know that the counsel intended not to appear.

The tribunal also considered Rule 39 of the Bar Council of India Rules. The provision generally prevents a new advocate from entering an appearance where another advocate is already on record unless the earlier advocate gives consent. If consent is not available, the new advocate must seek the court's permission.

The NCLAT noted that the appellant had claimed that the earlier counsel did not provide the required no-objection certificate. It held that this circumstance had to be considered while examining the delay in seeking restoration.

The tribunal also relied on the Supreme Court's judgment in Rafiq v. Munshilal, which dealt with the question of whether a litigant should suffer because of the default of an advocate. The NCLAT applied that principle to the circumstances before it.

On limitation, the NCLAT held that the restoration application could not be treated in the same manner as a proceeding where the underlying dispute had already been finally decided. Here, the electricity company's claim had not been adjudicated on merits and its application had only been dismissed for want of prosecution.

The tribunal held that Section 238A of the Insolvency and Bankruptcy Code, which applies the Limitation Act to proceedings before the NCLT and NCLAT “as far as may be”, had to be read with Section 5 of the Limitation Act. Section 5 permits delay to be condoned where sufficient cause is shown.

The NCLAT held that the delay in filing the restoration application could therefore be considered to meet the ends of justice. It found the reason given by the NCLT for rejecting the restoration application to be uncalled for.

The tribunal consequently allowed the appeal and quashed the NCLT's November 13, 2025 order.

It also recalled the November 8, 2023 order dismissing the electricity company's application. The restoration application was allowed, and the NCLT was directed to consider the original claim on its merits.