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2025 Supreme(Online)(NCLT) 2207
NATIONAL COMPANY LAW TRIBUNAL
Ms. Lakshmi Gurung, Member (Judicial), Sh. Charanjeet Singh Gulati, Member (Technical)
EPC Operational Creditors Association – Appellant
Versus
EPC Constructions India Ltd. – Respondent
I.A. 1332/2024|C.P. No. (IB) 1832/MB/C-III/2017
For the Appellants/Petitioners:Mr. Deepak Khosla, Advocate, Shriya Agarwal
For the Respondents:Mr. Gaurav Joshi, Senior Advocate, a/w. Abhishek Swaroop, Aditya Vikram Singh, Shriraj Khambeta, Naman Jain and Ronak Doshi
A single member of the NCLT can exercise authority under Section 419(3) of the Companies Act provided there is prior administrative approval, and the doctrine of corporate veil is not applicable in the absence of clear fraud.
Headnote:(A) Companies Act, 2013 - Section 419(3) - Order sought to be recalled on the ground of being coram non judice as it was passed by a single member instead of a bench - The tribunal upheld that the admission order was validly passed and is not a nullity, establishing that a single bench can operate with authorization from the President of NCLT. The Applicants' contention for lifting the corporate veil was rejected due to insufficient evidence of fraud or impropriety. (Paras 1, 22, 46, 67)
(B) Corporate Veil - Piercing the corporate veil entails exceptional circumstances, which were not established in this case - Separate legal entity of companies is to be maintained unless fraud or specific legal provisions justify lifting it. (Paras 58, 60)
(C) Locus Standi - Operational creditors do not possess the standing to intervene or challenge admissions under the IBC process if not actual parties or claims made out. (Paras 70-76)
Findings of Court:
The tribunal confirmed the validity of the earlier admission order under Section 7 of the I&B Code and clarified the limits of locus standi of operational creditors.
Issues: Validity of the admission order and the basis for lifting the corporate veil.
Ratio Decidendi: The court ruled that the admission order was legally sound, asserting that administrative orders granting single member authority should not be questioned, reaffirming separate corporate personhood barring extraordinary claims of misconduct.
Result: Application dismissed.
| Table of Content |
|---|
| 1. application to recall prior order as nullity. (Para 1 , 2 , 3) |
| 2. failure to demonstrate illegality in the single member's order. (Para 4 , 5) |
| 3. arguments around the composition and jurisdiction of the nclt. (Para 14 , 15 , 21 , 22 , 23) |
| 4. court's authority to limit corporate veil lifting. (Para 60 , 65) |
| 5. dismissal of application due to lack of maintainability and delay. (Para 70 , 74 , 78) |
1. The present Interlocutory Application is filed by the Association of Operational Creditors of EPC Constructions India Limited (Corporate Debtor) to recall the order dated 20.04.2018 with all consequential effects, having been passed Coram Non Judice in breach of the mandatory provisions of Section 419 (3) of the Companies Act, 2013 . Following prayers have been sought by the Applicants:
a. Acting ex debito justitiae, recall (i.e. recall, simpliciter, and not ‘review with ensuing recall’) the originating order dated 20-04-2018 passed in this CP purporting it to be an order passed under Section 7 of the Code, on grounds of it having been passed by a Ld. Single Member (Judicial) acting singly and not by a ‘Bench’, and thereby having been passed coram non judice by virtue of its being in breach of the mandatory provisions of Section 419 (3) of the Companies Act (2013), and thereby being a ‘nullity’ in law, which is void ab initio as if non est, and furthermore, by applying the principles of fondamento sublato cadit opus, apply the recall with all its consequential effects, including recall of all orders passed subsequent to 20-04-2018, declaring them all to be equally null and void ab initio as if non est.
b. Consequently : Consider the Section 7 petition afresh, but by lifting the ‘corporate veil’, only alongwith (i.e. concurrently with) petitions to be moved by the lenders against ‘all’ the guarantors / contributories, which guarantors / contributories, whether de jure or de facto, by lifting of the ‘corporate veil’, be deemed to be the entire ‘Ruia Family’ / ‘ESSAR Group’ worldwide, and, inter alia, the individuals and Companies named as Respondent Nos. 5-90 (excluding Respondent Nos. 16-18 & No. 27), and such other individuals / entities as may be found by this Tribunal to be liable for the debts and/or liabilities of the Corporate Debtor for any other reason, including the 240 Companies set out in the OrganoGram filed by Arcelor Mittal USA LLC and made reference of in para 21 of the Order dated 25-03-2019 of the High Court of Justice (Queen’s Bench Division), Commercial Court (London) – Annexure 38 – Arcelor Mittal USA LLC vs. ESSAR Steel Ltd & ESSAR Capital (UK) Ltd – [2019] EWHC 724 (Comm). – read with the other 300 companies / names made reference of in the order dated 17-05-2017 passed by the Supreme Court of the State of New York (County of New York – Part 33) in the case of Barclays Bank PLC v. Essar Global Fund Ltd . 2017 N.Y. Slip Op. 31092 (Index No.157086/2016) (Annexure 34).
2. Upon the company petition filed by IDBI Bank under section 7 of the Insolvency and Bankruptcy Code, 2016 (Code), M/s EPC Constructions India Limited (Corporate Debtor) was admitted to Corporate Insolvency Resolution Process (CIRP) vide order dated 20.04.2018. The said admission order was passed by NCLT, Mumbai Bench presided by Learned Single Member (Judicial), Mr. M. K. Shrawat. The CIRP activities could not culminate into resolution plan and currently, the Corporate Debtor is in liquidation.
3. The admission order dated 20.04.2018 is sought to be recalled on the ground that the aforesaid order is a ‘nullity’ in law as it was passed by a learned single Member (Judicial), acting singly, meaning thereby, that he was acting coram non judice and, therefore, the said order dated 20.04.2018 is void ab initio and non est.
Submissions by the Applicants
4. Submission in respect of Prayer ‘a’
4.1 It is submitted that a member sitting singly does not comprise a ‘Bench’, thus, Ld. Single Member (Judicial) was acting in contravention of Section 41
