Bombay High Court Dismisses Writ Petition Against NCLT Order, Imposes Costs for Court Time Wastage

Writ petition challenging order reserved by NCLT deemed non-maintainable under Article 226, as appellate remedy under IBC already pursued.

In a significant ruling, the Bombay High Court has dismissed a writ petition filed by Shripal Sevantilal Morakhia challenging an order by the National Company Law Tribunal (NCLT), Mumbai Bench, which had reserved the matter for order. The division bench, comprising Justices R.I. Chagla and Farhan P. Dubash, concluded that the writ petition was not maintainable under Article 226 of the Constitution of India, as the petitioner had already availed the appellate remedy provided under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016.

The petitioner, represented by Mr. Pratik Sarkar and Ms. Khirbha S.G., sought to quash the NCLT order dated 4th August 2025, wherein the matter had been reserved for order. The petitioner also aimed to stay the implementation of a resolution plan approved by the NCLT on 7th May 2025. The petitioners’ counsel argued that the order should be pronounced within 30 days as per Rule 150 of the National Company Law Tribunal Rules 2016, citing a previous judgment by the same court.

However, the respondents, represented by a team of senior counsels including Mr. Ashish Kamat, pointed out that the petitioner had already filed an appeal under Section 61 of the IBC before the National Company Law Appellate Tribunal (NCLAT). The NCLAT had issued an order on 21st August 2025, noting that the matter had been reserved for order and stating that the order, once pronounced, should be recorded in the ongoing appeal.

The High Court, agreeing with the respondents, emphasized that the order reserved by the NCLT had not been pronounced, thus making it inappropriate for challenge under Article 226. The court further highlighted that the appellate remedy under the IBC had been pursued by the petitioner, and the NCLAT was already seized of the matter, rendering the writ petition redundant.

In a stern rebuke, the court imposed a cost of Rs. 50,000 on the petitioner for insisting on arguments despite being informed of the petition's non-maintainability, thus wasting judicial time. The cost is to be paid to the Indian Red Cross Society, Mumbai.

The dismissal of the writ petition reaffirms the judiciary's stance on the hierarchy of legal remedies and the appropriateness of appellate procedures in insolvency cases. This decision underscores the importance of exhausting available appellate remedies before resorting to constitutional writs, ensuring judicial efficiency and adherence to procedural law.

Bottom Line:

Writ Petition challenging an order reserving the matter for order is not maintainable under Article 226 of the Constitution of India when an appellate remedy under Section 61 of the Insolvency and Bankruptcy Code, 2016 has already been availed.

Statutory provision(s): Article 226 of the Constitution of India, Section 61 of the Insolvency and Bankruptcy Code, 2016, Rule 150 of the National Company Law Tribunal Rules 2016.

Shripal Sevantilal Morakhia v. National Company Law Tribunal, Mumbai Bench, (Bombay)(DB) : Law Finder Doc Id # 2797211