2023 (9) TMI 306 - AT - Insolvency and Bankruptcy

Maintainability of Section 7 application - opportunity of filing reply not given - order passed ex-parte - principles of natural justice - HELD THAT - In view of the fact that notice by registry was received and served on 04.11.2022 which fact is not disputed, Adjudicating Authority ought to have given one more opportunity to file a reply. Proceeding ex-parte and reserving order is not giving sufficient opportunity to the appellant as contemplated by Rule 37 Sub Rule 2 of the NCLT Rule, 2016. Ends of justice be served in giving one opportunity to the appellant to file a reply before the Adjudicating Authority. Let the appellant filed reply within two weeks from today and appear on the next date fixed by Adjudicating Authority - The order dated 06.12.2022 is set aside - appeal disposed off.

Summary

Issues:
The judgment involves the ex-parte admission of a Section 7 application by the Adjudicating Authority, challenges to the order by the appellant, and the subsequent proceedings before the National Company Law Appellate Tribunal.

Admission of Section 7 Application:
The Adjudicating Authority proceeded ex-parte against the Corporate Debtor and admitted the Section 7 application on 06.12.2022 after the appellant failed to appear on 15.11.2022 as directed.

Appellant's Challenge:
The appellant contended that the notice received did not specify the two-week deadline for filing a reply, and although the registry's communication on 04.11.2022 mentioned the deadline, the Adjudicating Authority should have allowed an opportunity to file a reply before proceeding ex-parte.

Respondent's Response:
The respondent argued that the appellant was duly informed of the appearance date and failed to appear, justifying the Adjudicating Authority's decision to proceed ex-parte and admit the Section 7 application.

Tribunal's Order:
The Tribunal, after hearing both parties, stayed further steps in pursuance of the order dated 06.12.2022 and directed the appellant to file a reply within two weeks. The Tribunal set a new date, 25.09.2023, for the parties to appear before the Adjudicating Authority, emphasizing the importance of providing the appellant with a fair opportunity to respond.

Conclusion:
The Tribunal set aside the order dated 06.12.2022 and disposed of the appeal by granting the appellant the opportunity to file a reply within the specified timeframe and appear before the Adjudicating Authority on the new date fixed. The Adjudicating Authority was instructed to proceed with the matter promptly.