2024 (3) TMI 1290 - AT - Insolvency and Bankruptcy

Rejection of Section 7 application - rejection on the ground that there is non-compliance of order dated 11.08.2022 and 05.12.2022 - direction for publication of notice in two leading newspapers not complied with - issuance of fresh notice to the Respondents and directing the Appellant to serve notice along with copy of petition to the Respondent by all modes and file proof of service. HELD THAT - From the order dated 11.08.2022, it is noted that notices were issued and direction was to issue notice by paper publication in two leading newspapers. On 16.09.2022, the Respondent have appeared before the Adjudicating Authority through counsel and time was allowed to them to file vakalatnama and counter affidavit and thereafter again on 05.12.2022 fresh notices were directed to be issued. Affidavit of service was already filed by the Appellant on 08.08.2022, however, thereafter order for publication was issued. The Appearance of counsel on behalf of the Corporate Debtor on 16.09.2022 clearly indicates that the Corporate Debtor was well aware of the proceedings. In the present appeal, inspite of issuance of notice and publication in newspapers, no one appeared for the Corporate Debtor - the Adjudicating Authority committed error in rejecting the Section 7 application due to non-compliance of order dated 11.08.2022 and 05.12.2022. The Corporate Debtor having appeared before the Adjudicating Authority through counsel who took time for filing vakalatnama and counter affidavit, the Adjudicating Authority ought to have dismissed the application for non-compliance. The order dated 02.02.2023 set aside - Section 7 application is revived before the Adjudicating Authority to be heard and decided in accordance with law - appeal disposed off.

Summary

Issues involved: Non-compliance of orders dated 11.08.2022 and 05.12.2022 leading to dismissal of Section 7 application by the Adjudicating Authority.

The judgment addresses the appeal filed against the order dated 02.02.2023, where the Adjudicating Authority dismissed the application due to non-compliance of previous orders dated 11.08.2022 and 05.12.2022. The application was filed under Section 7 against the Corporate Debtor claiming a default amount. Notices were issued, and directions were given for publication in newspapers. The Respondent appeared through counsel but failed to file required documents, resulting in the dismissal of the application.

The Adjudicating Authority's decision to reject the Section 7 application was based on the non-compliance of orders dated 11.08.2022 and 05.12.2022. The first order directed the petitioner to serve afresh through paper publication in leading newspapers and file proof of service. Despite the appearance of the Respondent's counsel, no further actions were taken, leading to the dismissal of the application.

The Appellate Tribunal reviewed the case and found that the Corporate Debtor was aware of the proceedings as evidenced by their counsel's appearance. Despite multiple notices and opportunities given, the Corporate Debtor failed to comply with the requirements, leading to the erroneous dismissal of the application by the Adjudicating Authority. The Tribunal set aside the order and revived the Section 7 application for further proceedings in accordance with the law.