Recall Amounting to Review Not Permissible After Dissolution: Applications Dismissed for Non-Prosecution Cannot Be Revived Under IBC
- REEDLAW
- 4 hours ago
- 3 min read
REEDLAW Legal News Network reports: In a decisive ruling reinforcing finality of insolvency proceedings, the Appellate Tribunal held that an application dismissed for non-prosecution cannot be resurrected through recall or condonation of delay once the order has attained finality and liquidation proceedings have culminated in dissolution. The Tribunal clarified that any attempt to revive such proceedings would amount to an impermissible review, which is alien to the scheme of the Insolvency and Bankruptcy Code, 2016.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), while adjudicating a Company Appeal, held that an application dismissed for non-prosecution could not be revived through a recall or delay-condonation mechanism after the order had attained finality and the connected liquidation proceedings had culminated in dissolution. Relying on RCC E-Construct Pvt. Ltd. v. J. Ramkumar, the Appellate Tribunal reaffirmed that the power of recall cannot be exercised to indirectly reopen proceedings rendered infructuous by a final dissolution order under Section 54 of the Insolvency and Bankruptcy Code, 2016.
The Appellate Tribunal examined a company appeal arising from the rejection of an application seeking condonation of delay and revival of an interlocutory application that had earlier been dismissed for non-prosecution during the liquidation of the Corporate Debtor. The Corporate Insolvency Resolution Process had been initiated at the instance of the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, and upon failure to receive any resolution plan, the Corporate Debtor had been ordered into liquidation. Multiple changes occurred in the appointment of the Liquidator, with the Appellant assuming charge much after the dismissal of the interlocutory application.
The dispute pertained to the alleged wrongful inclusion of the plant and machinery of the Corporate Debtor in a sale conducted during the liquidation proceedings of another company operating from the same premises. An application had been filed before the Adjudicating Authority seeking restraint on such sale, deposit of sale proceeds, and investigation into the auction process. The said application, despite specific directions for personal appearance of the then Liquidator, was dismissed for non-prosecution. No steps were taken to challenge or revive the order at that stage.
After his appointment, the Appellant sought revival of the dismissed application by filing a recall application along with a prayer for condonation of substantial delay, contending that the earlier Liquidator had failed to diligently prosecute the matter and that revival was necessary to safeguard the value of the Corporate Debtor’s assets. The Adjudicating Authority rejected the application, holding that entertaining it would amount to reviewing an order that had attained finality, particularly when, in the interregnum, the liquidation proceedings of the other company had culminated in dissolution under Section 54 of the Code read with the Liquidation Process Regulations.
The Appellate Tribunal affirmed the impugned order and held that once an application had been dismissed for non-prosecution and the connected proceedings had reached finality due to dissolution, the same could not be indirectly reopened through a recall or revival application. The Tribunal reiterated that it has no power of review and that the device of recall cannot be permitted to be used to circumvent the finality of judicial orders or to resurrect proceedings rendered infructuous by subsequent statutory events. In support of this principle, reliance was placed on the decision in RCC E-Construct Private Limited v. J. Ramkumar and Others, REEDLAW 2025 NCLAT Chn 10540, wherein it was held that recall cannot be invoked as a mechanism to revive proceedings that have otherwise attained finality under the IBC framework.
Mr. R. Sugumaran, Party-In-Person, appeared for the Appellant.
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