Article 226 Writ Petition Not Maintainable Against NCLT Recall Order When Statutory Appeal Under Section 61 IBC Is Available: Karnataka High Court

"If the jurisdiction under Article 226 of the Constitution of India is exercised in the case of present nature, it would amount to breaching the normal stream of judicial proceedings." Karnataka High Court has held that a writ petition under Article 226 of the Constitution of India is not maintainable against an order of the National Company Law Tribunal recalling its earlier disposal order and reviving insolvency proceedings, as an efficacious alternate appellate remedy is provided under Section 61 of the Insolvency and Bankruptcy Code, 2016.

Justice T.P. Vivekananda dismissed a writ petition filed by a corporate debtor, observing that questions concerning whether the tribunal possessed the jurisdiction to recall its order or whether such revival was hit by limitation must be raised before the National Company Law Appellate Tribunal rather than through extraordinary writ jurisdiction.

The respondent financial creditor initiated Corporate Insolvency Resolution Process proceedings against the petitioner under Section 7 IBC for a debt of over Rs 178 crore. While an OTS proposal was under consideration, the tribunal admitted the petitioner into insolvency on January 10, 2024, but subsequently disposed of the petition on January 11, 2024, granting liberty to file a claim before the IRP appointed in an already pending insolvency petition filed by Canara Bank against the same debtor. Following an OTS settlement between Canara Bank and the debtor, those proceedings were terminated, preventing the respondent from lodging its claim. The respondent then sought recall of the disposal order and revival of its original petition under Section 60(5) read with Rule 11 of the NCLT Rules, which the tribunal allowed, prompting the corporate debtor to invoke writ jurisdiction.

The court was called upon to determine whether a writ petition under Articles 226 and 227 of the Constitution of India is maintainable against an order of the NCLT recalling an earlier order and restoring a company petition, notwithstanding the statutory remedy of appeal available before the NCLAT under Section 61 of the IBC. The court was also called upon to decide whether the NCLT inherently lacked jurisdiction to revive the insolvency petition in the absence of explicit liberty granted at the time of disposal.

IBC is a complete and self-contained code providing comprehensive appellate remedies

Examining the statutory framework of the Insolvency and Bankruptcy Code, the High Court emphasized that the enactment functions as an exhaustive, self-contained regime containing an express appellate forum under Section 61. Bypassing this structured hierarchy to invoke extraordinary writ jurisdiction undermines the legislative framework governing corporate insolvency resolution.

The court held that bypassing the statutory forum interferes directly with the orderly conduct of insolvency disputes.

"It is not in dispute that the IBC is a self-contained Code. The remedy of appeal against an order passed by the NCLT is specifically provided in the code itself. If the jurisdiction under Article 226 of the Constitution of India is exercised in the case of present nature, it would amount to breaching the normal stream of judicial proceedings."

Tribunal's jurisdiction to recall orders cannot be characterized as inherent lack of jurisdiction

Addressing the petitioner’s contention that the NCLT's recall order suffered from patent lack of jurisdiction, the bench distinguished the Supreme Court's ruling in Embassy Property Developments Private Limited v. State of Karnataka. The court noted that while public law remedies outside the IBC are amenable to writ scrutiny, intra-tribunal procedural recalls do not fall in the same bracket.

The court pointed out that the tribunal had originally disposed of the creditor's application on the assumption that its claim would be adjudicated before the IRP in the parallel proceedings, an assumption defeated when those proceedings abruptly concluded under an OTS.

"The NCLT while passing the order dated 11.01.2024 disposing of the petition filed by the respondent permitting it to put forth its claim before the IRP appointed in CP(IB) No.117/BB/2023... did not anticipate that the insolvency proceedings initiated by the Canara Bank would get terminated on account of the OTS between the petitioner and the Canara Bank. Therefore, it is in the said circumstances, neither the respondent sought liberty to revive the petition nor the Court has granted such liberty."

Under these circumstances, the court held that an act of court prejudicing a party could justify recall, ruling out any prima facie inherent absence of jurisdiction that could justify bypassing Section 61 IBC.

Questions regarding limitation and recall powers fall squarely within appellate scrutiny of NCLAT

The High Court reiterated the established exceptions governing the bypass of statutory alternative remedies laid down in Whirlpool Corporation and Godrej Sara Lee Ltd, finding that none of the four exceptional parameters applied to the present proceedings.

Issues regarding whether the respondent approached the tribunal belatedly after a six-month delay or whether Rule 11 could be invoked for substantive revival are matters for the appellate forum to adjudicate.

"Whether the NCLT had jurisdiction to entertain the application for recalling or whether the application filed by the respondent for seeking recalling and restoration of the petition filed by it was beyond the period of limitation could also be a ground in a statutorily provided appeal before the NCLAT. The said aspects need not be gone into in a writ petition filed under Article 226 of the Constitution of India. If the writ petition of the present nature is entertained providing of alternative remedy of appeal under the statute would become otiose."

Concluding the matter, the High Court dismissed the writ petition, reserving liberty to the corporate debtor to approach the NCLAT by preferring a statutory appeal under Section 61 IBC. The bench extended its subsisting interim stay for three weeks to enable the debtor to seek interim protection from the appellate tribunal and permitted the debtor to seek exclusion of time spent before the High Court under Section 14 of the Limitation Act.

Date of Decision: November 3, 2026