Suspended director filed in the company name after CIRP began; NCLAT says the appeal was never competent
Applying Nitendra Kumar Tomer, a three-member bench holds that a cause-title amendment allowed nearly three months after the NCLT Cuttack admission order could not revive an incompetent appeal, and finds no pre-existing dispute over HDPE pond liner supplied for the NTPC Badarpur Eco Park.
Twelve days after the NCLT, Cuttack Bench, admitted Neelkantham Systems Private Limited into the corporate insolvency resolution process on a ₹1.56 crore operational claim, its director and majority shareholder Anuj Rana filed an appeal in the company’s name. By then an interim resolution professional controlled the company. On 22 April 2025 the National Company Law Appellate Tribunal let him amend the cause title and carry on in his own name. In a judgment of 15 October 2026 written by Indevar Pandey, Member (Technical), sitting with Justice Sharad Kumar Sharma, Member (Judicial), and Arun Baroka, Member (Technical), the Principal Bench held that the amendment changed nothing: an appeal brought in the company’s name by a suspended director after CIRP began was incompetent from the outset, and the competent form arrived only after the limitation period under Section 61(2) of the Insolvency and Bankruptcy Code had run out. On the merits too, the bench found no pre-existing dispute.
A pond at Badarpur, two purchase orders and ₹1.46 crore unpaid
Neelkantham Systems, based in Korba, Chhattisgarh, was executing Phase II of the Eco Park at NTPC’s Badarpur plant in New Delhi: horticulture, landscaping, civil works and art and sculptural installations. The pond at the park needed a base of 2.00 mm thick plain black virgin HDPE liner in 3 metre width, 150 GSM non-woven geotextile polyester fabric with a tensile strength of 8 KN/M, and geocell with a weld distance of 712 mm and depth of 75 mm.
The company sourced these from M/s Virendra Textiles, a Noida proprietorship of Virendra Prakash Gupta. Purchase Order No. A07P14 of 9 May 2022 covered 4,50,000 square metres of geotextile and 40,000 square metres of geocell. Purchase Order No. A07P28, issued in November 2022, covered 1,75,000 kg of the HDPE liner. The orders carried the relevant portions of NTPC’s own purchase order, required manufacturer test certificates with each invoice and asked for SKU and ASTM codes on the bills. Rana’s counsel put the liner order at ₹110 per kg, or ₹2,27,15,000 including GST, and said the invoices described the goods only as plastic sheet HDPE pond liner, without the virgin grade, ASTM standard or SKU.
Virendra Textiles raised invoices between 6 July 2022 and 27 November 2023. Its ledger showed payments of ₹2,07,14,776 and an unpaid principal of ₹1,46,58,247, with nothing paid between 28 November 2023 and 15 April 2024. Rana’s account differed: ₹2,59,30,225.29 payable, ₹2,06,33,776 paid, and ₹52,96,449.29 outstanding subject to proper invoicing and test documentation, with quantities beyond the orders disputed.
Thickness 1.51 mm against 2 mm: the reports and the letters
Two Eurofins Spectro reports sat at the centre of the quality case. Report No. D230114033 of 23 January 2023 recorded the liner’s thickness at 1.51 mm against the specified 2.00 mm. Report No. A1D230214024 of 23 February 2023 recorded tear strength of 153.8 against the figure of 314 in the purchase order specifications. On 21 February 2023 NTPC officials questioned the method and units used in the testing; on 1 March 2023 corrected particulars went to NTPC.
Letters followed. On 11 September 2023 Neelkantham wrote to the supplier about quality, delayed supply and liquidated damages; Virendra Textiles disputed the allegations. On 14 December 2023 Neelkantham repeated that payment depended on inspection, approval and contractual compliance. On 8 January 2024 Virendra Textiles sought release of the outstanding amount and approached NTPC. The supplier then issued a demand notice under Section 8 of the Code, dated 14 February 2024 on the appeal’s list of dates, while the NCLT recorded Form 3 and Form 4 notices of 21 and 27 February 2024. Neelkantham replied on 6 March 2024, citing defective material, mismatch with specifications, delayed supply and breach of the purchase order.
The Section 9 application, CP (IB) No. 36/CB/2024, was filed on 6 May 2024 for ₹1,56,26,446, made up of ₹1,46,58,247 principal and ₹9,68,199 interest, with the date of default given as 12 February 2024. NTPC wrote to Neelkantham on 30 April 2024 asking it to resolve the balance payment; Neelkantham replied on 25 May 2024 that payment was withheld over quality issues and the absence of valid test reports. On 30 January 2025 the Cuttack bench admitted the application, recording in paragraph 21 that no quality dispute had been raised before the demand notice. Ashutosh Khemani became the resolution professional.
Filed in time, but in the wrong name
The appeal was filed on 11 February 2025 in the name of Neelkantham Systems, through Anuj Rana described as its director. On 10 April 2025 Rana moved IA No. 2408 of 2025 to substitute himself as appellant. The Tribunal allowed it on 22 April 2025 over Virendra Textiles’ objection, and passed an interim order the next day. The resolution professional was impleaded as second respondent on 23 December 2025 and on 6 February 2026 was directed to file an affidavit on the state of the NTPC site and whether the principal employer had any quality objection.
Virendra Textiles, through Alok Kumar Kuchhal, challenged maintainability on the strength of the Supreme Court’s judgment of 10 April 2026 in Nitendra Kumar Tomer, Suspended Director, Ambro Asia Pvt. Ltd. v. Unox S.P.A., 2026 INSC 356, and this Tribunal’s decision of 16 April 2026 in Dhanlaxmi Electricals v. HDFC Bank. Once the Section 9 application was admitted and the IRP appointed, it argued, management vested in the IRP under Section 17(1)(a), and a suspended director could not institute an appeal in the company’s name.
Rana’s counsel, led by Raj Kamal Singh, answered that the 22 April 2025 order was a judicial order passed after hearing the parties, never challenged before the Supreme Court, and now final; that Dhanlaxmi Electricals was a two-member decision not binding on a three-member bench; that Rules 16, 22 and 26 of the NCLAT Rules, 2016 exist to cure defects of authorisation and description at the scrutiny stage; and that Rana’s standing rested on his status as majority shareholder and personal guarantor. He cited a long line of authority treating misdescription of parties as curable, among them Varun Pahwa v. Renu Chaudhary and Jai Jai Ram Manohar Lal v. National Building Material Supply, together with CIT v. Vatika Township on prospective operation of law and Kailash v. Nanhku on procedure as the handmaid of justice. Nitendra Kumar Tomer, he said, could not be applied retrospectively to unsettle a concluded interlocutory order.
Why the 22 April amendment could not save the appeal
The bench drew the line between a defective proceeding and an incompetent one. A procedural defect in an otherwise competent proceeding may be cured, and the cure may relate back to the date of filing. The position is different where the person who instituted the proceeding had no authority to do so in the name of the entity concerned; there the question is anterior to curability, namely whether a maintainable proceeding ever existed. Section 17(1)(a) vests management of the corporate debtor in the IRP from the date of appointment. The suspended board does not cease to exist, but its authority to act for the company is taken away.
That, the bench said, is no longer res integra. In Nitendra Kumar Tomer the Supreme Court dealt with the same sequence, a suspended director appealing in the company’s name after CIRP and then seeking to amend the cause title, and held that such an appeal was not merely defective but “wholly incompetent and not maintainable in its very inception”. The director could have appealed in his own name, but only within the thirty days allowed by Section 61(2), with a further fifteen days available on sufficient cause.
The chronology then decided the point. The admission order was dated 30 January 2025 and the appeal filed on 11 February 2025, within thirty days, but in the company’s name. The legally competent form, an appeal by Rana in his own capacity, came into existence only on 22 April 2025, after both the initial period and the condonable period had expired. The relation-back argument failed because, as the Supreme Court had held, “relation back presupposes the existence of a competent proceeding capable of being amended”. Section 61(2) sets a strict outer limit and does not contemplate converting an incompetent proceeding into a competent appeal by changing the identity of the appellant.
Nor did the Tribunal’s own order of 22 April 2025 help. In Nitendra Kumar Tomer the Supreme Court was likewise faced with unchallenged orders permitting amendment, and held that they could not override the statutory mandate once limitation under Section 61(2) had expired. The finality of an interlocutory order cannot sustain a proceeding the statute does not permit. Procedural rules exist to advance justice, the bench acknowledged, but who controls the corporate debtor after CIRP and when an appeal must be filed are substantive statutory requirements, not matters of form.
The quality dispute measured against Mobilox
Because the merits had been argued at length, the bench examined them as an alternative. The test from Mobilox Innovations v. Kirusa Software asks whether there is a plausible contention requiring further investigation, as opposed to a patently feeble legal argument or a spurious, hypothetical or illusory dispute, without a mini-trial. Sabarmati Gas v. Shah Alloys adds that the dispute must be real and genuine, not a sham defence. Correspondence or an assertion of breach does not by itself settle the matter; its nature, timing and substance must be weighed.
The NCLT had done that weighing. On the missing SKU and ASTM codes, it noted that the invoices lacked them but that Neelkantham had not shown the supplier was specifically required to print them on the invoice of 25 November 2022, and that the codes appeared in the manufacturer test certificates attached to the invoices. On the test reports, it found that the problem identified in February 2023 was the units used to calculate tensile and tear strength, and that corrected material went to NTPC on 1 March 2023. It therefore did not treat the testing episode as evidence of a continuing dispute over the goods.
The bench gave Rana part of his point. The letters of 11 September and 14 December 2023 and the reply of 6 March 2024 meant he could not be said to have raised his whole defence only after insolvency began. But correspondence does not automatically clear the Mobilox threshold, and the 2023 reports were themselves part of what the NCLT had considered before concluding that the issue had been rectified. The competing assertions about test certificates, warranty documents and codes might raise questions of contractual performance, but at the Section 9 stage the enquiry is confined to whether the defence is a real pre-existing dispute. Finding no perversity or material irregularity in the NCLT’s assessment, the bench declined to interfere.
Material generated after CIRP began could not retrospectively create a pre-existing dispute. On 19 March 2025, with the resolution professional in charge, Rana obtained samples of the supplier’s material and took them to a laboratory himself. The resulting reports said the results related only to the items tested, carried disclaimers at paragraphs 12.5 and 13.1 against use in court without the laboratory’s written permission, and were commissioned without the resolution professional’s authority, which the bench held was beyond Rana’s remit under Section 14. The 2023 reports were different: they pre-dated CIRP and could not be dismissed as post-insolvency documents, though sampling objections might go to their weight.
The money question: ₹1.56 crore, a twelve-month warranty and liner laid without complaint
The resolution professional’s affidavit supplied the rest. In March and April 2025 he learnt of NTPC’s work order of 3 February 2022 and, since the former management had not handed over records, filed an application under Section 19(2). NTPC told him that 2,000 square metres of liner had been installed by the erstwhile management as on 28 February 2025. He had the remaining 2,000 square metres laid by a third-party applicator in April and May 2025 using the material already at site. NTPC raised no complaint about the quality of the supplier’s material; its only request was for speedy completion.
On warranty, Rana said the goods carried a five-year guarantee; Virendra Textiles said the purchase order of 9 May 2022 gave twelve months, the last invoice was dated 27 November 2023, and no quality complaint was made within that period. The bench checked Clause 8 of the purchase order at page 238 of the appeal paper book and found a warranty of twelve months only. With the principal of ₹1,46,58,247 and interest of ₹9,68,199 admittedly unpaid, debt and default were both proved, and the bench described the objections as a “moonshine defence” rather than bona fide pre-existing disputes. Rana’s point that the company sustains itself and holds arbitration claims said to exceed ₹35 crore did not alter that. The supplier’s request for exemplary costs was not granted.
Order
The appeal failed at the threshold on maintainability under Sections 17(1)(a) and 61(2) of the Code as declared in Nitendra Kumar Tomer. On merits, the bench found no ground to interfere with the NCLT’s conclusion that the material did not disclose a pre-existing dispute of the kind contemplated in Mobilox. Company Appeal (AT) (Insolvency) No. 553 of 2025 was dismissed and the admission order of 30 January 2025 affirmed, with no order as to costs. Pending interlocutory applications were closed.