2019 (10) TMI 1278 - AT - Insolvency and Bankruptcy

Principles of Natural Justice - Service of Demand Notice - initiation of CIRP - Pre-existing dispute or not - HELD THAT - Let notice be issued on Respondent by speed post. Requisite along with process fee, if not filed, be filed by 24th October, 2019. If the Appellant provides the e-mail address of Respondent, let notice be also issued through e-mail. Place the Appeal for orders on 18th November, 2019. The Appeal may be disposed of on the next date.

Summary

Issues: Violation of Principles of Natural Justice in Insolvency Proceedings

Violation of Principles of Natural Justice:
The judgment addresses the issue of violation of the principles of natural justice in insolvency proceedings. The Appellant argues that the Operational Creditor was not served with a Demand Notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016, nor was any notice issued to the Corporate Debtor before the impugned order was passed. This lack of notice is claimed to be a violation of the rules of natural justice. The Appellant contends that if proper notice had been given, they could have raised a pre-existing dispute or settled the matter with the Operational Creditor. The Tribunal directs that notice be issued to the Respondent by speed post and through email if the Appellant provides the email address. The matter is scheduled for further orders, allowing time for necessary filings.

Interim Measures for Corporate Debtor:
The judgment also addresses interim measures for the Corporate Debtor pending the resolution of the appeal. The Interim Resolution Professional is directed to ensure that the company remains a going concern. The Committee of Creditors is to be constituted if not yet done. The Interim Resolution Professional is authorized to work with the suspended Board of Directors and other officers/employees to manage the company's affairs. The judgment specifies that the person authorized to sign bank cheques must obtain approval from the Interim Resolution Professional. The Corporate Debtor's bank account is allowed to be operated for essential functions such as paying suppliers, salaries, wages, and bills to maintain day-to-day operations.

This judgment provides a comprehensive analysis of the violation of natural justice in insolvency proceedings and outlines interim measures to ensure the continued operation of the Corporate Debtor. The Tribunal's directives aim to address the procedural irregularities while safeguarding the interests of all parties involved in the insolvency proceedings.