Suspended Director Cannot Cure Incompetent Appeal Through Belated Amendment: NCLAT

The National Company Law Appellate Tribunal (NCLAT), Delhi, has held that a suspended director cannot cure an incompetent appeal filed in a company's name after insolvency proceedings begin by subsequently amending it to pursue the appeal in his individual capacity after the limitation period expires.

“Decisions concerning procedural defects, including cases where a competent appeal suffered from an irregularity in its presentation or authorisation, cannot be applied to a case where the person instituting the appeal in the name of the Corporate Debtor lacked authority to do so after commencement of CIRP,” the tribunal held.

The bench of Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey dismissed an appeal filed by Anuj Rana, the majority shareholder and former director of Neelkantham Systems Private Limited, challenging the National Company Law Tribunal (NCLT), Cuttack's order admitting insolvency proceedings against the company.

The dispute arose from supplies of HDPE pond liners, non-woven geotextile fabric and geocells for an NTPC Eco Park project at NTPC Badarpur in New Delhi. Supplier Virendra Prakash Gupta claimed ₹1.46 crore in outstanding principal and ₹9.68 lakh in interest.

The NCLT admitted Gupta's insolvency petition on January 30, 2025. Rana filed an appeal in the company's name on February 11, 2025, after the corporate insolvency resolution process (CIRP) had commenced and an interim resolution professional (IRP) had been appointed.

Rana subsequently sought permission to amend the appeal and pursue it in his individual capacity as a former director. The NCLAT allowed the amendment on April 22, 2025.

Rana argued that the original appeal had been filed within the limitation period and that the amendment merely corrected the description of the appellant. He also contended that objections concerning the quality of the supplied material constituted a genuine pre-existing dispute.

Gupta opposed the appeal, arguing that the company's management had vested in the IRP under the Insolvency and Bankruptcy Code once CIRP commenced. Rana, as a suspended director, therefore lacked authority to institute an appeal in the company's name.

The NCLAT relied on the Supreme Court's decision in Nitendra Kumar Tomer, Suspended Director, Ambro Asia Private Limited v. Unox S.P.A. & Anr., delivered on April 10, 2026.

It held that the original appeal was incompetent from the outset because Rana had filed it in the company's name after management had vested in the IRP. The subsequent amendment could not retrospectively cure that defect.

The tribunal noted that although the original appeal was filed within 30 days of the NCLT's order, the amendment allowing Rana to pursue it in his individual capacity came after the 30-day limitation period and the additional 15-day period available for condonation of delay under Section 61(2) of the IBC had expired.

The NCLAT also examined Rana's contention that the supplied material did not meet the contractual specifications. Test reports recorded the HDPE pond liner's thickness as 1.51 mm against the specified 2 mm. Another report recorded its tear strength as 153.8 N, against the figure of 314 N cited in the purchase-order specifications.

However, the tribunal noted that NTPC had not raised a quality-related complaint about the material. It also considered that the IRP had arranged for the remaining work to be completed using material available at the site.

The tribunal further noted that Clause 8 of the purchase order provided for a 12-month warranty, contrary to Rana's claim that the warranty period was five years. It held that laboratory tests commissioned by Rana without the resolution professional's authorisation did not conclusively establish the existence of a genuine pre-existing quality dispute.

“The issues raised by the Appellant are in the nature of moonshine defence, and not bonafide pre-existing disputes,” the tribunal observed.

Holding that the appeal failed on maintainability and that there was no ground to interfere with the NCLT's findings even on merits, the NCLAT dismissed the appeal and affirmed the NCLT's order. It made no order as to costs.