2021 (8) TMI 544 - AT - Insolvency and Bankruptcy

Ex-parte order - Principles of Natural Justice - Appellant (Corporate Debtor) could not avail the opportunity to defend as was suffering from COVID - HELD THAT - What appears is that the Application under Section 7 (Annexure A-2 page 33 at page 38) shows that Respondent No. 1 Bank had correctly mentioned in Part IV of the Format that the date of NPA was 28.10.2016. It appears an error in recording occurred in impugned order Para 1 where date of default has been recorded to be 04.03.2020. Part IV of the Format shows that the Respondent Bank had mentioned that Total amount of default as on 04.03.2020 was ₹ 8,44,15,488 . It was specifically mentioned that date of NPA was 28.10.2016. When date of NPA is 28.10.2016 and there is Balance Confirmation as mentioned above of 15.07.2019, the same is within three years. Calculating limitation period from 15.07.2019, Application under Section 7 filed on 28.07.2020 cannot be said to be time barred. When Corporate Debtor is a Company where there are more Directors rather than only one as can be seen from the Balance Confirmation issued by the Company, it does not lie in the mouth of the Corporate Debtor to claim that one Director was suffering from COVID so the Corporate Debtor could not cause appearance before the Adjudicating Authority - there is no reasons why before 16.02.2021 when hearing took place before Adjudicating Authority, Corporate Debtor did not approach Adjudicating Authority to seek to defend. There is no reasons why before 16.02.2021 when hearing took place before Adjudicating Authority, Corporate Debtor did not approach Adjudicating Authority to seek to defend - Appeal dismissed.

Issues Involved:
1. Appeal filed by the Appellant Promoter and Director of the Corporate Debtor against the admission of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Appellant's absence before the Adjudicating Authority due to COVID, leading to claims of suppressed facts by the Financial Creditor.
3. Discrepancy in recording the date of default and NPA in the impugned order.
4. Arguments regarding time-barred debt and acknowledgment through Balance Confirmations.
5. Allegations of Principles of Natural Justice not being followed in the ex-parte proceedings.
6. Corporate Debtor's claim of inability to appear before the Adjudicating Authority due to COVID-related reasons.

Detailed Analysis:
1. The Appeal was filed by the Appellant against the admission of the Application under Section 7 of IBC by the Adjudicating Authority, citing suppressed facts and discrepancies in recording the date of default and NPA.
2. The Appellant's absence before the Adjudicating Authority due to COVID was raised, with claims that relevant facts were not disclosed in the Application.
3. The discrepancy in recording the date of default was highlighted by the Appellant, pointing out that the actual NPA date was different from what was noted in the impugned order.
4. Arguments regarding the time-barred debt were presented, with the Appellant contesting that Balance Confirmations did not extend the limitation period for initiating legal proceedings.
5. Allegations of Principles of Natural Justice not being followed were raised, emphasizing the importance of issuing notice to the Corporate Debtor and the ex-parte proceedings.
6. The Corporate Debtor's claim of inability to appear before the Adjudicating Authority due to COVID-related reasons was considered, but the Tribunal found no substantial grounds to admit the Appeal, ultimately declining to do so.

This comprehensive analysis covers the various issues raised in the legal judgment, addressing the arguments presented by the parties and the Tribunal's decision regarding the Appeal.

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