2022 (10) TMI 1155 - Tri - Insolvency and Bankruptcy

Initiation of CIRP - petition filed under Section 7 of the Insolvency Bankruptcy Code 2016 - It is stated by the petitioner that notice in terms of Rule 4 of Adjudicating Authority, IBC Rules, 2016 has already been issued on the Corporate Debtor - HELD THAT - Notice to the Respondent/Corporate Debtor, be issued, returnable by seven days. This Notice to be sent by the Petitioner/Financial Creditor under NCLT Rules, Form-5. 1. By way of an email to the registered email of the Corporate Debtor available with the petitioner. 2. By way of an email to the CD email address registered with the MCA. 3. Service by way of Dasti within three days for today. 4. Proof of Service in any one of the above form filed by way of an affidavit before the next date of hearing. List the matter for further consideration on 02.11.2022.

Summary

Issues:
- Interpretation of notice requirements under Section 7 of the Insolvency & Bankruptcy Code 2016.
- Application of judgments in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors., M/s. Surendra Trading Company Vs. M/s. Juggilala Kamlapat Jute mills Company and Ors., and Innovative Industries Vs. ICICI Bank.
- Duty of the adjudicating authority to provide notice to the corporate debtor before admission of a petition under Section 7 or Section 9.

Analysis:
1. The petition in question was filed under Section 7 of the Insolvency & Bankruptcy Code 2016, with the petitioner asserting that notice has been issued to the Corporate Debtor as per Rule 4 of the Adjudicating Authority, IBC Rules, 2016.

2. Referring to the judgment in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors., it was highlighted that the corporate debtor must be served with a copy of the application filed with the Adjudicating Authority, given the opportunity to file a reply, and be heard before an order is made admitting the application under Section 7(5) of the Code.

3. The judgment in M/s. Surendra Trading Company Vs. M/s. Juggilala Kamlapat Jute mills Company and Ors. was cited to emphasize that the period within which the adjudicating authority must pass an order is directory, not mandatory. It was noted that the applicant's interests lie in promptly addressing any defects to ensure the application is entertained.

4. Further, the judgment in Innovative Industries Vs. ICICI Bank highlighted the duty of the adjudicating authority to provide notice to the corporate debtor before admitting a petition under Section 7 or Section 9. It stressed the importance of natural justice principles and the impact on various stakeholders upon the initiation of insolvency proceedings.

5. Consequently, the tribunal directed the issuance of notice to the Respondent/Corporate Debtor, returnable within seven days. The notice was to be sent by the Petitioner/Financial Creditor in accordance with NCLT Rules, Form-5, through various specified methods, with proof of service required to be filed before the next hearing date set for further consideration on 02.11.2022.