2022 (3) TMI 1382 - AT - Insolvency and Bankruptcy

Right to file reply - prayer for modification of an order - Rule 11 of the NCLT, Rules - HELD THAT - It is clear that Reply could not be been filed by the Corporate Debtor and the right to file Reply was closed on 10.12.2020 which was again reiterated on 14.01.2021. Subsequently along with the I.A. as above said, Copy of the Reply was annexed and request was made to take the Reply on record by modifying the Order dated 10.12.2020. Present is not the case where the Adjudicating Authority has exercised its power of review on merits of any issue decided by the Adjudicating Authority. Present is the case where with regard to the pleading i.e. accepting the Reply, inherent power has been exercised by the Adjudicating Authority under Rule 11 of the NCLT, Rules. The substantial justice has been done by the Adjudicating Authority in taking the Reply on record. The present is not the case where this Tribunal should exercise its appellate power. The Appeal is dismissed.

Summary

Issues:
Appeal against Order allowing modification of a previous Order to accept a late Reply from Corporate Debtor in an insolvency matter.

Analysis:
The appeal was filed against an Order allowing the modification of a previous Order to accept a late Reply from the Corporate Debtor in an insolvency matter. The Corporate Debtor had failed to file a Reply within the specified time frame, leading to the closure of the right to file a Reply as per the initial Order dated 10th December, 2020. Subsequent Orders reiterated the closure of the right to file a Reply. However, the Corporate Debtor filed an Application to modify the Order and have the Reply taken on record. The Appellant, representing the Home Buyer Association/Financial Creditor, argued that the Adjudicating Authority had no power to review its earlier Order and accept the late Reply. They contended that once the right to reply was closed, it could not be reinstated by the Impugned Order.

Upon considering the submissions, the Tribunal noted that the Corporate Debtor had indeed failed to file a Reply within the stipulated time frame, and the right to reply had been closed as per the initial Orders. However, the Corporate Debtor annexed the Reply with the Application for modification, requesting its acceptance. The Tribunal observed that the Adjudicating Authority had not reviewed any substantive issue but had exercised its inherent power under Rule 11 of the NCLT Rules to accept the Reply. The Tribunal found that substantial justice had been served by allowing the Reply on record, especially considering the nature of the parties involved. The presence of the Corporate Debtor's Reply on record would assist the Adjudicating Authority in addressing the issues raised by the Appellant, a Financial Creditor representing the Home Buyer Association. Consequently, the Tribunal concluded that the case did not warrant the exercise of its appellate power, and the Appeal was dismissed.