Introduction:

In Punjab National Bank v. Atin Arora & Anr. [2025 LiveLaw (SC) 27], the Supreme Court addressed the necessity of raising objections to jurisdiction at the earliest under Section 21 of the Code of Civil Procedure (CPC), 1908. The bench, comprising Chief Justice Sanjiv Khanna and Justice Sanjay Kumar, clarified that belated jurisdictional objections cannot be entertained unless they cause injustice. The case arose from the Calcutta High Court’s decision to set aside the National Company Law Tribunal’s (NCLT) order rejecting a recall application filed by the Respondent under Section 21 CPC. This recall application challenged the jurisdiction of the NCLT, Kolkata, in admitting an insolvency petition initiated by Punjab National Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.

Arguments of Both Sides:

The appellant, Punjab National Bank (PNB), argued that Respondent No. 2’s objection to the NCLT’s jurisdiction was invalid as it was raised belatedly. PNB contended that the company’s registered office was in Kolkata when the proceedings began, and the respondent had failed to notify the bank about its address change to Cuttack. Furthermore, Respondent No. 2 actively participated in the NCLT, Kolkata proceedings without raising objections. PNB argued that under Section 21 CPC, objections to jurisdiction must be raised promptly at the first instance, citing precedents such as Harshad Chiman Lal Modi v. DLF Universal Ltd. and Subhash Mahadevasa Habib v. Nemasa Ambasa Dharmadas. The appellant also highlighted the limited jurisdiction of High Courts under Article 227, arguing that the Calcutta High Court erred in setting aside the NCLT’s dismissal of the recall application.

Conversely, Respondent No. 2 asserted that the NCLT, Kolkata, lacked jurisdiction as the company’s registered office had shifted to Cuttack before the insolvency proceedings commenced. The respondent claimed that the failure to object earlier was due to their lack of awareness about the proceedings. They relied on Section 21 CPC to justify their recall application, arguing that jurisdictional issues go to the root of the matter and can be raised even at a later stage if injustice is evident. The respondent challenged the NCLT’s findings and approached the Calcutta High Court under Article 227 to overturn the NCLT’s dismissal of the recall application.

Court’s Judgment:

The Supreme Court, after a detailed examination, set aside the Calcutta High Court’s decision and upheld the NCLT’s rejection of the recall application. The Court emphasized the principle under Section 21 CPC that jurisdiction objections must be raised at the earliest, and failure to do so precludes parties from contesting jurisdiction at a later stage unless injustice results. It observed that the respondents were aware of the insolvency proceedings initiated by PNB in Kolkata and had participated in the proceedings without objection. Their failure to notify PNB about the address change to Cuttack further weakened their case.

The bench criticized the High Court for failing to appreciate these facts and for exceeding its limited jurisdiction under Article 227 of the Constitution. The Court reiterated that Article 227 powers are supervisory and should not be used to reexamine factual findings or substitute the judgment of lower courts and tribunals. It cited the decision in Harshad Chiman Lal Modi v. DLF Universal Ltd. to underline that jurisdiction objections cannot be raised belatedly unless they result in manifest injustice.

The Supreme Court also noted that the High Court overlooked the principle that the NCLT’s jurisdiction was rightly invoked as per the registered address in Kolkata, as recorded during the initiation of proceedings. It stated that the High Court’s order failed to consider the legal consequences of the respondent’s delayed objection and unjustly disrupted the insolvency resolution process.

As a result, the Supreme Court quashed the High Court’s order and restored the NCLT’s decision, holding that the objections raised by the respondents were not tenable under Section 21 CPC and did not warrant interference under Article 227. The bench also emphasized the importance of upholding procedural discipline in insolvency matters to prevent the misuse of jurisdictional objections as delay tactics.