NCLAT sets aside NCLT order; Culver Max insolvency petition to be reheard in fintech case

The National Company Law Appellate Tribunal (NCLAT) has overturned a previous ruling by the National Company Law Tribunal (NCLT) that had dismissed an insolvency petition filed by Culver Max Entertainment against an Odisha-based fintech company Rechargekit Fintech, directing a fresh hearing on the matter. 

In its decision, the appellate body determined that the tribunal of first instance should not have rejected the petition outright due to formal deficiencies in the filing without first allowing the broadcaster to address those issues. Instead, the case has been remitted back to the Cuttack bench of the NCLT for reconsideration on its merits after procedural defects are remedied. 

The original application was filed by Culver Max under Section 9 of the Insolvency and Bankruptcy Code (IBC) against Rechargekit Fintech. In April 2024, the NCLT declined to admit that petition on the basis that the broadcaster had not placed on record a valid board resolution or clear authorisation supporting the filing. 

On appeal, Culver Max argued that the adjudicating authority ought to have given it an opportunity to cure the technical defect, as permitted under the IBC’s procedural provisions, rather than dismissing the application on a maintainability ground. The NCLAT agreed, saying that the applicant must be afforded a chance to rectify shortcomings before the insolvency plea is rejected. 

A two-member bench of the appellate tribunal, consisting of Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member), ruled that the earlier order was legally unsound on this narrow procedural point and did not pass judgment on the substance of the insolvency claim itself. 

In its order, NCLAT noted that once defects are cured, the NCLT should consider the Culver Max petition afresh, preferably within a stipulated timeframe, effectively giving the broadcaster a renewed opportunity to pursue insolvency proceedings under the code.