2017 (10) TMI 295 - AT - Insolvency and Bankruptcy

Corporate insolvency procedure - grievance of the appellant is that the impugned order has been passed in violation of the rules of natural justice without notice to the appellant - Held that - As decided in Innoventive Industries Ltd. Vs. ICICI Bank & Anr 2017 (6) TMI 959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI Adjudicating Authority is bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of existence of default based on material submitted by the corporate debtor and to find out whether the application is complete and or there is any other defect required to be removed. In the circumstances, as above the impugned order has been passed in violation of rules of natural justice, we set aside the impugned order. The case is remitted to the learned Adjudicating Authority, Principal Bench, New Delhi to decide the professional fee of Interim Resolution Professional, if appointed, and if any amount is payable, will direct the appellant to pay the same and will close the case in view of the settlement.

Summary

Issues: Violation of natural justice in passing the impugned order without notice to the appellant, applicability of principles of natural justice in admitting a case for ascertainment of default, remittance of the case for deciding the professional fee of Interim Resolution Professional and closure of the case due to settlement.

In this case, the appellant appealed against a judgment passed by the Learned Adjudicating Authority in a matter related to a transfer petition of winding-up under specific sections of the Companies Act, 1956. The Adjudicating Authority treated the respondent's application as one under Section 9 of the Insolvency and Bankruptcy Code, 2016, without notice to the appellant. The appellant contended that the impugned order violated the rules of natural justice and highlighted a settlement with the respondent, including a partial payment made. The respondent acknowledged the lack of notice to the appellant, and it was noted that no appearance was made on behalf of the Corporate Debtor during the proceedings.

Referring to the case of "Innoventive Industries Ltd. Vs. ICICI Bank & Anr.," the Appellate Tribunal emphasized the importance of issuing a limited notice to the corporate debtor before admitting a case to ascertain the existence of default and ensure completeness of the application. The Tribunal clarified that adherence to natural justice principles did not always necessitate providing a hearing opportunity to the Corporate Debtor before passing an order. Consequently, the Tribunal set aside the impugned order due to the violation of natural justice principles.

The Tribunal remitted the case back to the Adjudicating Authority in New Delhi to determine the professional fee of the Interim Resolution Professional, if appointed, and instructed the appellant to pay any outstanding amount. The case was directed to be closed considering the settlement between the parties. The appeal was allowed with the specified observations, and no costs were awarded in the circumstances of the case.