NCLT Erred in Dismissing Decree Plea Under Section 424(3) | NCLAT

Case Details: Bhagyodayam Company v. George Gomez - [2025] 174 taxmann.com 984 (NCLAT-Chennai)

Judiciary and Counsel Details

• Sharad Kumar Sharma, Judicial Member & Jatindranath Swain, Technical Member
• Philip Mathew & M.A. Shaji, Advs. for the Appellant.
• B. Ashok Shenoy & Arjun R. Naik, Advs. for the Respondent.

Facts of the Case

In the instant case, a petition was filed invoking sections 241 and 242 of the Companies Act, 2013, against the appellant/company, alleging various acts of oppression and mismanagement.

The NCLT found the board’s actions in violation of court orders and the company’s Articles of Association and directed the appointment of an interim administrator by consensus. An administrator was appointed, and he filed an Execution Petition under section 424 (3) of the Companies Act, 2013, before the NCLT along with an auditor’s report and prayed for recovery.

The NCLT dismissed the said petition with liberty for the appellant to file specific Miscellaneous Applications so that the Tribunal could pass executable orders amounting to a decree or a deemed decree for purposes of recovering the amount due to be paid.

The appellant filed a Miscellaneous Application under section 424 (3) of the Act, praying to pass a decree to realise the said amount. The NCLT vide the impugned order dismissed them, holding it lacked the power to issue decrees under Order XX of the CPC.

It was noted that the formulation of the decree may not itself create an impediment for the appellant to get an order executable under the provisions of section 424(3) of the Act, and the NCLT, instead of rejecting applications, should have carved out a reasonable exception by modulating the relief.

The NCLAT observed that the word “decree’’ as used in the application should have been treated as an `order’ which was intended to be prayed for execution in accordance with the provisions contained under the Companies Act, 2013.

NCLAT Held

The NCLAT held that the relief sought for by appellant in the application was to be modified to pass an order that was executable under section 424 (3), and the order passed in favour of appellant under sections 241 and 242 of the Act was directed to be executed.

List of Cases Reviewed

• Order passed by the NCLT in MA (C/ACT)/42/KOB/2022 in TCP/21/KOB/2019, dated 2-12-2022, (Para 38) modified.