The National Company Law Appellate Tribunal has affirmed that the right to file a detailed parawise reply in proceedings under Sections 241 and 242 of the Companies Act, 2013, cannot be denied merely because of prior procedural lapses or the absence of an express liberty in a remand order. This judgment reinforces the foundational principle that procedural rigidity must yield to the imperative of natural justice in corporate disputes involving allegations of oppression and mismanagement.
Background & Facts
The Dispute
The dispute arose from competing petitions under Sections 241 and 242 of the Companies Act, 2013, alleging oppression and mismanagement by directors of Golden Rolls Private Limited. The Appellants (Respondents in the original company petition) are members of the Anand family, while the Respondents (Petitioners in the company petition) are members of the Bhasin family. Both families hold shares in Golden Rolls Private Limited, and tensions over corporate governance led to multiple litigations before the National Company Law Tribunal (NCLT).
Key Facts
- The Respondents filed Company Petition CP/36(ND)/2024 on 10.02.2024, seeking relief under Section 242(2)(b) for forced sale of shares and under Section 242(2)(i) for refund of Rs. 1.50 Crores each as undue gains by Directors Narender Kumar Bhasin and Utsav Bhasin.
- The Appellants filed a short reply on 02.08.2024 but did not file a detailed parawise reply.
- On 09.10.2025, the NCLT dismissed CP/36(ND)/2024 not on merits, but by relying on the dismissal of a separate petition, CP-109(ND)/2023, filed by the Appellants.
- The Appellants appealed to NCLAT as Company Appeal (AT) No. 309 of 2025.
- On 16.12.2025, the NCLAT set aside the dismissal order, holding that CP/36(ND)/2024 had never been heard on merits and remanded it for fresh adjudication.
- On 10.03.2026, the Appellants filed IA No. 140/2026 seeking permission to file a detailed parawise reply to CP/36(ND)/2024.
- The NCLT rejected IA No. 140/2026 on 29.05.2026, citing Rule 55 of the NCLT Rules and prior opportunities to file replies.
- The Appellants filed the present appeal (Company Appeal (AT) No. 229/2026) challenging the rejection of IA No. 140/2026.
Procedural History
- 10.02.2024: Company Petition CP/36(ND)/2024 filed by Respondents before NCLT.
- 02.08.2024: Appellants filed a short reply to the petition.
- 09.10.2025: NCLT dismissed CP/36(ND)/2024 by relying on dismissal of CP-109(ND)/2023.
- 16.12.2025: NCLAT remanded CP/36(ND)/2024 for fresh adjudication on merits, observing that it had never been heard on merits.
- 10.03.2026: Appellants filed IA No. 140/2026 seeking permission to file a detailed parawise reply.
- 29.05.2026: NCLT rejected IA No. 140/2026.
- 28.03.2026: Company Appeal (AT) No. 229/2026 filed before NCLAT.
- 30.06.2026: NCLAT delivered judgment allowing the appeal.
The Parties' Positions
Appellants (Anand Family): Argued that the remand order revived the proceedings de novo, entitling them to file a full reply under Rule 41 of the NCLT Rules. They emphasized that the prior short reply was insufficient and never considered by the NCLT. They relied on Section 424 and the principles of natural justice.
Respondents (Bhasin Family): Contended that Rule 55 barred any pleading after reply, and that the Appellants had already been granted opportunities to file replies on 29.04.2024 and 22.07.2024. They argued that the remand order did not expressly permit filing of a reply, and that allowing it would cause undue delay.
Relief Sought
The Appellants sought: (1) quashing of the NCLT’s order dated 29.05.2026 rejecting IA No. 140/2026; (2) direction to permit filing of a detailed parawise reply to CP/36(ND)/2024; and (3) restoration of the right to present a complete defence before the NCLT.
The Legal Issue
The central question was whether a party to a company petition remanded for fresh adjudication has an absolute right under Section 424 of the Companies Act and Rule 41 of the NCLT Rules, 2016 to file a detailed parawise reply, even if a prior short reply was filed and the remand order did not expressly grant liberty to do so.
Arguments Presented
For the Appellant
The Appellants relied on Section 424, which mandates that the Tribunal shall be guided by the principles of natural justice and may regulate its own procedure. They argued that Rule 2(19) defines "pleadings" to include "reply," and Rule 41 specifically provides for filing a reply to a company petition. They contended that a "short reply" does not constitute a legally sufficient reply under Rule 41, and that the remand order revived the proceedings de novo, resetting the procedural stage. They cited Qaiser Sibtain v. District Judge to argue that past conduct cannot bar a legitimate procedural right.
For the Respondent
The Respondents argued that Rule 55 prohibits pleadings after reply, and that the Appellants had already availed multiple opportunities to file replies on 29.04.2024 and 22.07.2024. They contended that the remand order did not expressly permit filing of a reply, and that allowing it would violate the finality of proceedings. They further argued that the Appellants’ delay in seeking a detailed reply was dilatory and prejudicial.
The Court's Analysis
The NCLAT undertook a detailed analysis of Section 424, Rule 2(19), Rule 41, and Rule 55 of the NCLT Rules, 2016. It held that the purpose of Section 424 is to ensure a fair hearing, and that the Tribunal’s powers under Section 424(2)(h) include the authority to permit pleadings necessary for justice. The Court emphasized that the term "reply" under Rule 2(19) refers to a substantive reply, not a cursory or short response.
"The law has not classified a distinction between a short reply or a reply. A short reply as filed without filing a parawise reply to the main petition cannot, according to the interpretation given by the Respondents to Rule 55, be treated as to be a reply to the main petition."
The Court rejected the Respondents’ reliance on Rule 55, noting that the rule bars pleadings subsequent to reply by the petitioner, not the respondent’s right to file a proper reply. It held that Rule 55 is directory, not mandatory, and must yield to the overriding principle of natural justice.
The Court further held that a remand order under Section 421 revives proceedings de novo, and that the appellate tribunal’s silence on permitting pleadings cannot be construed as a prohibition. The Court cited Qaiser Sibtain to affirm that past conduct, including prior failure to file a detailed reply, is immaterial when assessing a procedural application.
"When there is revival of a proceedings after an order of remand, any order or action taken prior to the order loses its relevance and the same cannot be derived, for the purposes of deciding the instant application, because it is the settled principle of law that... the court has to look into the merit of the case confining to the date of the order sought to be recalled was passed."
The Court concluded that denying the Appellants the opportunity to file a detailed reply would render the remand order meaningless and violate the spirit of Sections 241 and 242, which require full adjudication of allegations of oppression and mismanagement.
The Verdict
The Appellants succeeded. The NCLAT set aside the NCLT’s order dated 29.05.2026 rejecting IA No. 140/2026. The Court allowed the Appellants to file a detailed parawise reply to CP/36(ND)/2024 within two weeks from the date of uploading of this judgment. If the reply is not filed within this period, the opportunity shall stand closed, and the NCLT may proceed ex parte. There was no order as to costs.
What This Means For Similar Cases
Filing a Reply After Remand Is a Right, Not a Privilege
- Practitioners must now treat any remand order under Section 421 as a reset of procedural timelines, entitling parties to file all pleadings permitted under Rule 41, regardless of prior submissions.
- A "short reply" does not satisfy the requirement of a substantive reply under Rule 41; a parawise reply remains mandatory for a fair hearing.
- Courts and Tribunals cannot deny a reply on grounds of delay or prior conduct when the proceedings are remanded for merits.
Rule 55 Cannot Be Used to Deny Fundamental Fairness
- Rule 55 prohibits pleadings after a reply has been filed - not the filing of a proper reply itself.
- The phrase "subsequent to reply" refers to the petitioner’s subsequent pleadings, not the respondent’s right to file a complete reply.
- Tribunals must interpret Rule 55 flexibly to avoid undermining natural justice under Section 424.
Procedural Flexibility Is Mandatory in Corporate Disputes
- Allegations of oppression and mismanagement require full factual development; summary disposal is impermissible.
- Tribunals must prioritize substance over technicality, especially when the remand order explicitly directs hearing on merits.
- Any attempt to use procedural rules to stifle a party’s defence will be struck down as contrary to the spirit of the Companies Act.
