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2021 (4) TMI 688 - AT - Insolvency and BankruptcyPrinciples of natural Justice - ex-parte order - service of notice or not - HELD THAT - Having regard to the fact that 18.03.2020 falls during the Covid-19 period and the restrictions imposed by the Government read together with the Notice issued by the Learned Adjudicating Authority on 15.03.2020 that matters posted during the period 16.03.2020 to 27.03.2020 would be adjourned, except for urgent matters, keeping in view Principles of Natural Justice, it can be said that an opportunity may be given to the Appellant herein to file his Reply and take part in the proceedings. Further, it is an admitted fact that the Appellant before the Adjudicating Authority is a guarantor of Agnipa Energo Private Limited whose Petition is already pending before the Adjudicating Authority. Therefore, the Order setting the Appellant herein ex-parte is set aside. Though the Adjudicating Authority had the power to set aside an ex-parte Order provided, it is satisfied that there was sufficient cause with respect to service of Notice, as provided in Rule 49(2) of the NCLT Rules, 2016, it is noted that the Appellant herein is silent about the service of Notice which was affected upon them by e-mail. Hence, it a fit case to impose costs of ₹ 25,000/- on the Appellant to be paid to the Respondent before the next date of Hearing. Appeal allowed.
Issues:
1. Appeal against dismissal of IA seeking to set aside an ex-parte Order dated 18.03.2020 passed by the Adjudicating Authority. 2. Power of Adjudicating Authority to review or set aside its own Company Petition Admission Order under Section 7 of the IBC. 3. Validity of service of notice on the Corporate Debtor. 4. Interpretation of Rule 49(2) of the NCLT Rules, 2016. 5. Consideration of Principles of Natural Justice in setting aside an ex-parte Order. Analysis: Issue 1: The Appellant challenged the dismissal of IA seeking to set aside the ex-parte Order dated 18.03.2020 by the Adjudicating Authority. The Adjudicating Authority had dismissed the IA stating that it lacked the power to review or set aside its own Company Petition Admission Order. Issue 2: The key contention revolved around the power of the Adjudicating Authority to set aside an ex-parte Order under Section 7 of the IBC. The Appellant argued that the Authority had the jurisdiction to set aside the ex-parte Order, contrary to the Authority's position that it lacked such power as per established legal principles. Issue 3: The dispute over the validity of the service of notice on the Corporate Debtor was crucial. The Respondent claimed that service was duly made through email, while the Appellant argued that they were not properly served, leading to the ex-parte Order. The Tribunal examined the evidence of service and the address discrepancies to determine the validity of the service. Issue 4: The interpretation of Rule 49(2) of the NCLT Rules, 2016 was pivotal in this case. The Rule provides for setting aside an ex-parte hearing if the respondent satisfies the Tribunal that notice was not duly served or there was a sufficient cause for non-appearance. The Tribunal analyzed the Rule in relation to the facts of the case. Issue 5: The consideration of Principles of Natural Justice played a significant role in the Tribunal's decision to set aside the ex-parte Order. The Tribunal noted the circumstances during the Covid-19 period, the Adjudicating Authority's notice of adjournment, and the need to provide the Appellant with an opportunity to participate in the proceedings. The Tribunal imposed costs on the Appellant and directed both parties to appear before the Adjudicating Authority for further proceedings. This detailed analysis highlights the legal complexities and considerations involved in the judgment, addressing the various issues raised by the parties and the Tribunal's reasoning in reaching its decision.
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