Keshav Ashok Punj vs Union Of India Ministry Of Corporate ...

IN THE MATTER OF: Keshav Ashok Punj ...Appellant Versus Union of India, Ministry of Corporate Affairs ...Respondent Present: For Appellant : Mr. Amir Arsiwala, Ms. Neha Arya and Ms. Shivani Kumbhojkar, Advocates.

For Respondent :

WITH Company Appeal (AT) No. 162 of 2026

IN THE MATTER OF: Sandhya Ashok Punj & Ors. ...Appellants Versus Union of India, Ministry of Corporate Affairs ...Respondent Present: For Appellants : Mr. Amir Arsiwala and Ms. Neha Arya, Advocates.

For Respondent : Adv. Harsh Paratap Shahi, Adv. Hitaishi Tulsian and Adv. Adrchisman Bhattacharyya, Advocates.

Mr. Pradeep Yadav, Mr. Durga Dutt and Mr. Z Orenvungo, Ezung, Advocates.

ORDER

(Hybrid Mode)

07.08.2026 : The Section 469 of the Companies Act, basically deals

with the procedural aspects as to how the Tribunal would be functioning

while dealing with the proceedings, which are instituted before it. The

provisions of the NCLT Rules would be equally applicable to the proceedings, which are drawn before the learned NCLT under provisions contained under

the Companies Act.

2. The instant Company Appeals, challenge the impugned Order, passed

on 26.02.2026 by the learned NCLT, Ahmedabad. It is a common order,

which has been simultaneously put to challenge in the connected Company

Appeal, being Comp. App. (AT) No. 162 of 2026. The effect of the impugned

Order had been that the learned Tribunal, while considering and testing the

proprietary of the substitution application being I.A. No. 28(AHM)/2026, that

was preferred in Company Petition 7(AHM)/2025, has allowed the

substitution application. It directed to bring on record the heirs of the

deceased Respondent No. 2. The Appellant happens to be the heirs of the

deceased Late Mr. Ashok Yoginder Punj original Respondent No. 2 Rule 53

of the NCLT Rules prescribes that in an eventuality where, in a pending

proceedings before a Bench, a party to a case dies or is adjudged insolvent,

or in cases of Company being wound up; the proceeding shall not abate, but

would rather be continued by or against the executor, administrator or other

Legal Representatives of the parties, by or against the assignee receiver,

liquidator, as the case may be.

3. Learned Tribunal, by invoking this provision contained under Rule 53

of NCLT Rules, had passed the impugned Order, which is identically

involved consideration in both the Company Appeals, as a consequence to

which the IA has been allowed, directing the substitution to be carried and

the heirs, that is, inter alia the Appellant herein, have been directed to be

brought on record in the proceedings of the Company Petition.

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4. It is this Order which is challenged by the Appellant, who are the heirs

of the deceased Late Mr. Ashok Punj, the original Respondent No. 2 to the

Company Petition, which was taken up under Section 241, 242, 246 & 339

of the Companies Act. The solitary ground, which has been taken by the

Appellant while putting a challenge to the impugned Order had been that,

prior to the consideration of the substitution application being

IA/28/AHM/2026, no notices were issued to the Appellant or the proposed

heirs.

5. The question that, would be relevant to be considered is as to whether

at all issuance of a notice on substitution application, was required prior to

its consideration by the NCLT. The original proceeding was initiated by the

Government of India, Ministry of Corporate Affairs, invoking the provisions

contained under Section 241, 242 & 246 to be read with Section 339 of

Companies Act, 2013 wherein the deceased Respondent No. 2, Late Mr.

Ashok Yoginder Punj, the predecessor of the Appellant's, was shown to have

been inducted as a managing director of the Respondent No.1 company,

w.e.f. 01.11.2003. In the Company Petition, it was contended by the Union

of India, that apart from that the deceased, there were other whole-time

directors also who were part of the promoters group, who were found to have

indulged in the act of oppression and mismanagement.

6. In that eventuality, if any one member of the promoters group meets

with the sad demise, the provisions contained under Rule 53 will

automatically come into play, for the reason that whatsoever rights or

liabilities the deceased had in Respondent No. 1, will automatically flow to

3 of 6 the heirs of the deceased under law of succession, who have been sought to

be made as a party to the proceedings by way of a substitution.

7. More particularly, looking to the nature of relief, which was sought in

the Company Petition, that was in the shape of a declaration of the following

nature: -

"...A. Declare that Respondent Nos. 2 to 8 were parties to the carrying on of the business of Respondent No. 1 with a fraudulent purpose and/or with a view to defraud its creditors and hold Respondent Nos. 2 to 8 to be personally liable without limitation of liability to contribute such amounts as this Hon'ble Tribunal may deem fit towards all the debts and liabilities of Respondent No. 1;

B. Permit the Petitioner to liquidate the assets and properties of Respondent Nos. 2 to 8 and apply the same towards discharging the debts and liabilities of Respondent No. 1..."

8. Looking to the nature of relief, and more particularly when it pertains

to conduct of a fraudulent act at the hands of the deceased Respondent No.

2, of whom the Appellants are the heirs, when it engages with a question of

determining an aspect of fraud that has been alleged by to the creditors at

the hands of the Respondent Nos. 2 to 8, that includes the deceased too as

Respondent No. 2. The determination will always involve fastening of a

personal liability without there being any restrictions to it, for the purposes

to contribute such amount as the Tribunal may deem fit for if all the debts

and liabilities are settled upon final adjudication.

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9. Owing to the nature of relief that, was sought and the circumstances

there were under consideration, calling a fraudulent act of the Respondents

who were the directors of the Company i.e., Respondent No. 1, who are said

to be engaged in duping the creditors, the heirs become a necessary party to

be substituted because once the Appellant, in the capacity of being the heir

of the deceased Late Mr. Ashok Yoginder Punj. It is essential that if any

rights or liability which would accrue upon the determination of the

proceedings of the Company Petition, can be determined, only after

providing an opportunity of hearing to the heirs of the deceased Respondent

No. 2. For that purpose there has to be an identified entity upon whom the

rights/liabilities could be fastened upon adjudication, for that substitution

becomes inevitable.

10. Hence, merely because of non-issuance of notice on the substitution

application is not so fatal that, it could prejudice any one of his/her right in

the proceedings of the Company Petitions, which could require interference

by us in the exercise of our appellate jurisdiction.

11. During the course of argument, we posed a specific question to the

learned counsel for the Appellant, whether they deny themselves to be the

heirs of the deceased! They admitted the fact that they are the heirs. They

further admitted the fact that, looking to the nature of dispute involved and

for an effective adjudication, since whatsoever right the deceased had, that

would automatically under law of succession devolve upon the heirs, they

become the necessary party to the proceedings and they are required to be

heard.

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12. Besides that, since merely carrying out the substitution of the heirs of

the deceased is a statutory mandate under Rule 53 NCLT Rules, and it does

not cause any immediate prejudice to the Appellant, because of the

observations made in the impugned Order, where the heirs are thus directed

to be substituted, have been called upon to file their reply to the amended

petition, as well as to the main petition, all defences are still open for them

to be agitated before the learned Tribunal. Because heirs upon substitution

have their own right to file written objection, that could still be availed by

the Appellant.

13. Hence, we are of the view that, since substitution has been carried out

as prescribed by the law and it only facilitates an effective adjudication; no

interference is called for in the exercise of our appellate jurisdiction. Thus,

the Appeal lacks merits and the same is accordingly dismissed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Indevar Pandey] Member (Technical) rashmi/rr

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