NCLAT orders re-hearing of APL Apollo's insolvency plea against Tanisha Scaffolding

18 Jun 2024 , 10:52 AM

The National Company Law Appellate Tribunal (NCLAT) has ordered the NCLT to rehear APL Apollo Tubes’ bankruptcy petition against one of its customers, Tanisha Scaffolding. A two-member court slammed the Bengaluru bench of the National Company Law Tribunal (NCLT) for rejecting APL Apollo Tubes’ claims based on a “hypothetical interpretation”.

The NCLAT stated that the tribunal “should refrain from stepping into the shoes of a litigating party by substituting their own finding in the absence of there being any pleading evidence” .

The appellate panel has directed the NCLT to make every effort to resolve the proceedings as soon as feasible.

The NCLAT ruling followed an appeal filed by APL Apollo Tubes against an order issued by the NCLT on September 9, 2019, dismissing its insolvency plea filed as an operating creditor against Tanisha Scaffolding.

Tanisha Scaffolding marketed the items manufactured by APL Apollo Tubes. Some amounts against supplies were not remitted and were needed to be paid, consequently APL Apollo Tubes filed an insolvency petition.

The NCLT denied this, stating that the debt was not due because the appellant provided no documentary proof establishing that the amount was due and payable.

However, the appellate tribunal stated that the NCLT drew this inference solely based on a hypothetical interpretation of the invoices’ contents, with no evidence or pleas to the contrary.

“There was no occasion for the NCLT to draw an inference in the absence of there being any pleading to the contrary made by the Respondent as to what implications the Purchase Order would have over the Demand Notice and the prior invoices, which were issued by the Appellant, with regard to the amount due to be paid by the Appellant,” it stated.

Furthermore, despite multiple opportunities, Tanisha Scaffolding has not filed any objections or even a written declaration to challenge it in the NCLAT proceedings.

Setting aside the verdict, the NCLAT stated that tribunals formed under a legislation while adjudicating between the parties must confine their findings to the range of respective pleadings and evidence produced by the parties.

“Tribunals or Courts are not expected to substitute their own stand or finding in support of either of the parties before them until there is a pleading raised before it to contradict the pleading raised by the other side in support of their cause.

“We are of the view that it would meet the ends of justice if the Impugned Order dated September 5, 2019, is quashed and the matter is remitted back to the NCLT, Bangalore Bench, to decide afresh after providing an opportunity to the Respondent to file their objection to the Application under section 9 and to decide the same afresh,” the NCLAT stated.

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