2021 (2) TMI 887 - Tri - Insolvency and Bankruptcy

Validity of CIRP order - ex-parte order - Section 60(5) of the Insolvency Bankruptcy Code, 2016 r.w. Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT - The Applicant could not produce any material on record to justify its claim for setting aside the Exparte order. Further, it is evident from the conduct of the Applicant that since beginning they remained absent and did not participating at all whish shows that the Applicant was never vigilent. Further, the applicant filed this application on 04.12.2020 after one month of passing of order by the Hon'ble NCLAT on 02.11.2020. The Corporate Insolvency Resolution Process (CIRP) has already been set in motion. During the course of hearing the Learned Counsel for the Applicant argued that the matter should be disposed of after giving an adequate opportunity. We are not in dispute with this proposition of law but the law also says that one should be aware of its responsibilities and must take necessary precaution so that such situation does not arise. Even assuming for a moment that notice of hearing was served on the Applicant, however, no useful purpose would be serve and it will prolonged the litigation, if such Ex-parte order is set aside as there is no case of the Applicant on merits - We are constraint to said this kind of frvioulous litigation as resulted into situation where the main object of the Insolvency Bankruptcy Code, 2016 being timely disposal of matters preferably under the statutory timelines prescribed under the 'Code' is not achieved. The Applicant has failed to make out any case for setting aside the order of Corporate Insolvency Resolution Process (CIRP) - Application dismissed.

Summary

Issues: Setting aside an Ex-parte order under Section 60(5) of the Insolvency & Bankruptcy Code, 2016

Detailed Analysis:

1. Background and Filing of Application: The application was filed under Section 60(5) of the Insolvency & Bankruptcy Code, 2016, seeking to set aside an Ex-parte order dated 09.09.2020 passed by the Adjudicating Authority in a specific case. The Corporate Debtor had not appeared before the Authority since the beginning of the proceedings, leading to the Ex-parte order.

2. Chronology of Hearings: The record detailed multiple hearings where the Corporate Debtor failed to appear before the Authority despite notices and opportunities. The series of hearings culminated in the Ex-parte order due to the continued absence of the Corporate Debtor, indicating a lack of diligence on their part.

3. Admission into CIRP and Appeal: The order admitting the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP) was passed on merits, with notices served to the Corporate Debtor. An appeal was made against the Ex-parte order, which was withdrawn with permission to raise the issue of non-service of notice before the Adjudicating Authority.

4. Evaluation of Applicant's Claims: The Applicant failed to provide substantial evidence to justify setting aside the Ex-parte order. The lack of participation and delayed filing of the application post the NCLAT order raised questions about the Applicant's diligence and seriousness in the proceedings.

5. Decision and Reasoning: The Tribunal emphasized the importance of timely and responsible participation in legal proceedings. Despite arguments for further opportunities, the Tribunal noted that setting aside the Ex-parte order would not serve any purpose, especially when there was no strong case on merits. The Tribunal expressed concern over frivolous litigations hindering the timely disposal of matters under the Insolvency & Bankruptcy Code, 2016.

6. Final Ruling: The Tribunal concluded that the Applicant failed to establish grounds for setting aside the CIRP order. Consequently, the application was dismissed with no costs imposed. Another related application was also dismissed accordingly, and the issuance of an urgent certified copy of the order was directed upon request by concerned parties.

This detailed analysis encapsulates the key aspects and reasoning behind the Tribunal's judgment on setting aside an Ex-parte order under the Insolvency & Bankruptcy Code, 2016, providing a comprehensive overview of the case proceedings and the final decision reached by the Tribunal.