NewsStocksNCLAT Quashes NCLT Order Against Culver Max Entertainment, Directs Fresh Hearing in Insolvency CaseNCLAT Quashes NCLT Order Against Culver Max Entertainment, Directs Fresh Hearing in Insolvency Case
The National Company Law Appellate Tribunal (NCLAT) has set aside an NCLT order that rejected Culver Max Entertainment's insolvency plea against Rechargekit Fintech. NCLAT found procedural irregularities in NCLT's decision and directed a fresh hearing within two months. The appellate tribunal emphasized that NCLT should have provided Culver Max an opportunity to rectify defects in its application before dismissal, as per Section 9(5)(ii) of the Insolvency & Bankruptcy Code.
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The National Company Law Appellate Tribunal (NCLAT) has provided relief to Culver Max Entertainment (formerly Sony Pictures Network India) by setting aside an NCLT order that rejected the broadcaster's insolvency plea against an Odisha-based fintech firm. The appellate tribunal found procedural irregularities in the lower tribunal's decision and has directed a fresh hearing of the matter.
NCLAT's Key Findings
The two-member NCLAT bench, comprising Justice Yogesh Khanna (Member, Judicial) and Ajai Das Mehrotra (Member, Technical), observed that the NCLT should have provided Culver Max an opportunity to rectify defects in its application before dismissal. The tribunal noted that this opportunity was not given in the present case, making the NCLT's order legally flawed.
| Case Details | Information |
|---|---|
| Original Order Date | April 30, 2024 |
| NCLAT Order Date | December 10, 2024 |
| Respondent | Rechargekit Fintech |
| NCLT Bench | Cuttack |
| Timeline for Fresh Hearing | Within two months |
Original NCLT Decision
On April 30, 2024, the NCLT dismissed the Section 9 application filed by Culver Max Entertainment against Rechargekit Fintech. The dismissal was based on the ground that no resolution was passed by the company ratifying the action, and no decision of the Board of Directors was placed on record in the case. This technical deficiency led to the application being rejected on maintainability grounds.
NCLAT's Directive for Fresh Proceedings
The NCLAT has remanded the matter back to the Cuttack bench of the NCLT with specific instructions. "Without expressing any opinion on the merit of the appeal, we set aside the impugned order and remand the matter to the NCLT to provide an opportunity to the appellant to cure the defects in authorisation and thereafter, the matter may be heard on merits," stated the NCLAT in its four-page order.
The appellate tribunal emphasized that this exercise should be completed preferably within two months, ensuring timely resolution of the matter.
Legal Framework and Procedural Requirements
The case highlights the importance of procedural compliance under Section 9(5)(ii) of the Insolvency & Bankruptcy Code. This provision grants NCLT the power to reject incomplete applications but mandates that applicants be given notice to rectify defects within seven days of receiving such notice from the adjudicating authority.
Culver Max had contended before the NCLAT that the NCLT should have granted time for filing a fresh Board Resolution or authorization as provided under the proviso to Section 9(5)(ii) of the IBC, instead of outright dismissal. The NCLAT agreed with this contention, stating it was the duty of the NCLT to put the appellant on notice for rectifying application defects.
The NCLAT's decision reinforces the principle of procedural fairness in insolvency proceedings, ensuring that technical defects do not prevent parties from having their cases heard on merit when rectification opportunities exist under the law.
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