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2023 (9) TMI 1387 - AT - Insolvency and BankruptcyViolation of Principles of Natural Justice - Adjudicating Authority did not give opportunity to the Appellant to make its submissions - admitting Section 9 application - HELD THAT - From the sequence of the events it is clear that the Adjudicating Authority has fixed several dates in Section 9 application after issuance of notice to the Corporate Debtor. On non-appearance of the Corporate Debtor on 22.02.2022, the Adjudicating Authority directed for ex-parte proceedings. The order dated 22.02.2022 was sought to be recalled by the Corporate Debtor by filing an application dated 09.07.2022 which application admittedly was not listed on the date when the Adjudicating Authority heard the Operational Creditor and reserved the matter. The application under Section 9 was filed in the year 2021, where repeatedly notices were issued to the Corporate Debtor. In the facts of the case and sequence of the events, there are no bonafide reason which can explain the non-appearance of the Corporate Debtor before the Adjudicating Authority. It is true that on 11.07.2022, the counsel appearing on behalf of the Corporate Debtor informed the Court that an application for recall has been filed and the Adjudicating Authority on that date has ordered the application to the listed with the Company Petition but the application stood in defect and could not be listed and the matter was heard by the Adjudicating Authority. Even the vakalatnama of counsel for the Corporate Debtor was in defect and was not before the Court. It has clearly been held that opportunity was given to the Corporate Debtor to appear and file reply and when after giving reasonable opportunity Corporate Debtor did not appear, order was passed to proceed ex-parte. I.A. filed by the Corporate Debtor having not listed, no fault can be found with the order passed by the Adjudicating Authority. The Adjudicating Authority has given reasons for admitting Section 9 application. There are no error in the order of the Adjudicating Authority warranting interference in exercise of our appellate jurisdiction - Appeal is dismissed.
Issues Involved:
1. Whether the Adjudicating Authority violated the Principles of Natural Justice by not allowing the Corporate Debtor to make submissions. 2. Whether the Adjudicating Authority erred in proceeding ex-parte against the Corporate Debtor. 3. Whether the recall application filed by the Corporate Debtor was valid and should have been considered before admitting the Section 9 application. Summary: Issue 1: Violation of Principles of Natural Justice The Appellant argued that the Adjudicating Authority violated the Principles of Natural Justice by not giving the Corporate Debtor an opportunity to make submissions. The Corporate Debtor's counsel was present on 23.11.2022 but was not heard because neither the IA nor vakalatnama was on record. The Appellant claimed that the summons were misplaced, causing a delay in appointing counsel. Issue 2: Ex-Parte Proceedings The Adjudicating Authority proceeded ex-parte against the Corporate Debtor after multiple notices and substituted service through newspaper publications. Despite these efforts, the Corporate Debtor failed to appear on several occasions, leading to the ex-parte order on 22.02.2022. The Corporate Debtor filed an IA to recall this order on 09.07.2022, which was kept in defect and not listed. Issue 3: Recall Application The recall application cited the misplacement of summons as the reason for non-appearance. The Adjudicating Authority noted that the Corporate Debtor had received the summons before 15.11.2021, when substituted service was ordered. The application for recall was filed only on 09.07.2022 and was never listed due to defects. The Adjudicating Authority observed that the Corporate Debtor had multiple opportunities to appear but failed to do so. Conclusion: The Adjudicating Authority did not violate the Principles of Natural Justice as reasonable opportunities were given to the Corporate Debtor. The ex-parte proceedings were justified due to the Corporate Debtor's repeated non-appearance. The recall application lacked bonafide reasons and was not listed due to defects. The appeal was dismissed, affirming the Adjudicating Authority's order to admit the Section 9 application.
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