2021 (2) TMI 1396 - AT - IBC

Corporate Debtor s right to file reply has been closed - no opportunity of hearing was provided to him - violation of principles of natural justice - HELD THAT - The mandate of Section 7(5) of the I B Code is loud and clear. The Adjudicating Authority is required to pass an order of admission or rejection qua an application under Section 7 of the I B Code within 14 days of the receipt of application. This mandate cannot be overlooked to set aside the impugned order and make room for further adjournment. Moreso, around 40 days have been availed by the Corporate Debtor for filing reply but despite the same, no reply had been forthcoming. The task assigned to the Adjudicating Authority at the stage of admission of application is summary in nature as it is supposed to only satisfy itself in regard to financial debt and default on the part of the Corporate Debtor besides looking to the aspect of completion of application. Conclusion - Granting the Appellant's request for further delay would contravene the legal mandate and the objectives of the I B Code, particularly the timely completion of the Corporate Insolvency Resolution Process (CIRP). Appeal dismissed.

Summary

The National Company Law Appellate Tribunal, Principal Bench, New Delhi, presided over by Justice Bansi Lal Bhat and Members Dr. Ashok Kumar Mishra and Dr. Alok Srivastava, addressed an appeal concerning the closure of the Corporate Debtor's right to file a reply in an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was pending at the pre-admission stage before the National Company Law Tribunal, New Delhi, Court-IV.

The Corporate Debtor was initially given time until November 9, 2020, to file a reply. However, by December 17, 2020, no reply had been submitted. The Appellant's counsel argued that internal conflicts among the Directors delayed the appointment of counsel and the filing of the reply.

The Tribunal was not persuaded by this argument, emphasizing the "mandate of Section 7(5) of the 'I&B Code'," which requires the Adjudicating Authority to admit or reject an application within 14 days of receipt. The Tribunal noted that the process at this stage is "summary in nature," focusing on the existence of financial debt and default, as well as the application's completeness.

The Tribunal concluded that granting the Appellant's request for further delay would contravene the legal mandate and the objectives of the I&B Code, particularly the timely completion of the Corporate Insolvency Resolution Process (CIRP). Consequently, the appeal was dismissed.