Personal Difficulties Of Counsel Not “Sufficient Cause” To Restore Insolvency Petition: NCLT Chandigarh

The National Company Law Tribunal (NCLT) at Chandigarh recently observed that a counsel's personal difficulties, including childcare responsibilities as well as technical glitches, do not amount to “sufficient cause” for repeated non-appearance in insolvency proceedings under the Insolvency and Bankruptcy Code.

Dismissing a third application seeking restoration of an insolvency petition filed by True Steels Private Limited, the Tribunal said the IBC is a time-bound code that requires strict diligence from operational creditors.

A coram of Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal observed that a “restoration of a restoration” application reflects a “lack of seriousness and carelessness” in prosecuting insolvency proceedings.

The insolvency petition, filed by True Steels against Inox Wind Limited in 2019, was dismissed for non-prosecution on January 8, 2024.

A first application seeking restoration of the insolvency petition was also dismissed on October 23, 2024, after there was no appearance for the applicant.

The present application, the Tribunal noted, marked the “third tier of litigation arising solely from the Applicant's failure to diligently prosecute the matter.”

The applicant's counsel explained her absence on October 23, 2024 by citing “extenuating circumstances” involving her three-month-old infant and assured the tribunal of diligence going forward.

Rejecting this explanation, the tribunal held that personal difficulties of counsel, including childcare responsibilities, as well as technical glitches, cannot justify repeated defaults in insolvency proceedings governed by strict statutory timelines.

The bench further remarked that such conduct “indicates a total neglect on the part of the Applicant.”

The tribunal also held that the restoration application was not maintainable, as it had been signed and verified only by the advocate, without any specific authorisation from the operational creditor.

In the absence of locus standi, the tribunal dismissed the application seeking restoration of insolvency plea

For Applicant: Advocate Ekakshra Mahajan

For Respondent: Advocate Rajat Khanna