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M/S Wizaman Impex Pvt. Ltd. vs. Kedrion Biopharma Inc.

Civil Appeal · 2022 INSC 159Decided 7 Feb 2022
Civil Appeal No. 466 of 2022
Dinesh Maheshwari · Vikram Nath

Background

Kedrion Biopharma, a pharmaceutical supplier, claimed that Wizaman Impex (its Indian distributor) owed it about USD 9,01,000 and filed an insolvency application against Wizaman as an "operational creditor" under Section 9 of the Insolvency and Bankruptcy Code. The National Company Law Tribunal (NCLT) rejected the application as time-barred, since none of the documents on record showed a valid "acknowledgment of debt" that would restart the limitation clock. On appeal, Kedrion sought and was allowed by the National Company Law Appellate Tribunal (NCLAT) to introduce fresh email evidence, not originally placed before the NCLT, which the NCLAT then relied on to reverse the NCLT and admit the insolvency case against Wizaman.

Decision Breakdown

The Supreme Court held that the NCLAT's approach was procedurally unfair: it granted permission to bring in the new emails only in its final order, while simultaneously using those very emails, without giving Wizaman (the corporate debtor) any real opportunity to respond to them, to overturn the NCLT's decision. At the same time, the Court held the emails could not simply be disregarded, since they were relevant material bearing on whether the debt had been duly acknowledged within the limitation period. It therefore set aside the NCLAT's order only to the extent it admitted the insolvency application, kept intact the part allowing the emails onto the record, and sent the matter back to the NCLT to decide afresh: this time considering the new emails, but after giving Wizaman a fair opportunity to be heard on them.

Lesson Learnt

An appellate tribunal cannot admit crucial new evidence and simultaneously decide the case in the same order without giving the opposing side a genuine chance to respond to that evidence: a fair hearing on new material is a basic procedural requirement, even when the underlying issue (like whether an insolvency claim is time-barred) is a technical one.

Official source (sci.gov.in)View Judgment (PDF)

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