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2022 (3) TMI 599 - Tri - Insolvency and BankruptcyViolation of principles of natural justice - no proper notice issued to the Personal Guarantor by the Hon'ble Tribunal in terms of Rule 37 of the NCLT Rules, 2016 - HELD THAT - In the present case, the applicant filed its application under section 95 of IBC, 2016 in Form C and served a copy of the application to the Respondent vide email dated 28.07.2021. This therefore acts as a notice to the Personal Guarantor for securing his presence in reference to the Interim Moratorium which has commenced. The applicant in the present application has submitted that the Tribunal heard the matter in the absence of appropriate representation on behalf of Personal Guarantor and reserved the same for orders. The present application, therefore has been filed by the personal guarantor to defeat the objects of IBC by raising disputes even after the service of Limited Notice before the receipt of report from Resolution Professional under section 99 of IBC. Once the Resolution Professional is appointed and the report is filed by the Resolution Professional under section 99 of IBC, 2016 the Personal Guarantor will be given an opportunity of hearing by the Tribunal and the above-mentioned preliminary objections can be raised before a final decision is made by the Tribunal. Raising any objections at this stage of adjudication of application is premature and will give rise to double hearings. Application disposed off.
Issues Involved:
1. Whether the order dated 10.08.2021 should be recalled/set aside due to lack of proper notice to the Personal Guarantor. 2. Whether the Tribunal should have issued a notice to the Personal Guarantor in terms of Rule 37 of the NCLT Rules, 2016. 3. The applicability and interpretation of Rule 49(2) of NCLT Rules concerning setting aside ex-parte orders. 4. The relevance of the judgment in Mr. Ravi Ajit Kulkarni v. State Bank of India regarding the necessity of notice before appointing a Resolution Professional. 5. The procedural stages under Section 95 of the Insolvency and Bankruptcy Code (IBC) and the role of the Resolution Professional. Issue-wise Detailed Analysis: 1. Recall/Setting Aside of the Order Dated 10.08.2021: The Applicant, a Personal Guarantor, sought to recall/set aside the order dated 10.08.2021, arguing that the Tribunal heard the submissions made by the Financial Creditor ex-parte without proper notice. The Tribunal clarified that the application under Section 95 of the IBC was listed for the first time on 10.08.2021, and the matter was reserved for orders on the next stages, including interim moratorium and appointment of a Resolution Professional. It was emphasized that this stage did not involve passing a final judgment, hence there was no question of setting aside any order at this juncture. 2. Notice to the Personal Guarantor Under Rule 37 of NCLT Rules, 2016: The Applicant contended that no proper notice was issued by the Tribunal in terms of Rule 37 of the NCLT Rules, 2016. The Tribunal noted that an advance copy of the application was served on the Personal Guarantor on 02.06.2021, which acts as a notice for securing the presence of the Personal Guarantor. The Tribunal referred to the judgment in Mr. Ravi Ajit Kulkarni v. State Bank of India, which held that limited notice should be given to the Personal Guarantor referring to the Interim Moratorium but no detailed hearing is required before appointing a Resolution Professional. 3. Applicability of Rule 49(2) of NCLT Rules: The Applicant cited Rule 49(2) of NCLT Rules, which allows setting aside ex-parte orders if the notice was not duly served or if the respondent was prevented by sufficient cause from appearing. The Tribunal, however, found that the advance copy of the application served on 02.06.2021 fulfilled the requirement of limited notice as per the judgment in Mr. Ravi Ajit Kulkarni v. State Bank of India. Thus, the application for recall/set aside was dismissed as premature. 4. Relevance of Mr. Ravi Ajit Kulkarni v. State Bank of India Judgment: The Tribunal extensively relied on the judgment in Mr. Ravi Ajit Kulkarni v. State Bank of India, which clarified that the limited notice serves to secure the presence of the Personal Guarantor referring to the Interim Moratorium. The judgment emphasized that before the appointment of a Resolution Professional, no hearing is contemplated, and the debtor cannot raise disputes. The stage for raising disputes would be under Section 100 of the IBC, after the Resolution Professional submits the report. 5. Procedural Stages Under Section 95 of IBC: The Tribunal outlined the stages under Section 95 of the IBC, including the filing of the application, commencement of interim moratorium, appointment of a Resolution Professional, and submission of the report by the Resolution Professional. It was highlighted that the process before the appointment of the Resolution Professional is inquisitorial and not adjudicatory. The Tribunal reiterated that the Personal Guarantor would be given an opportunity of hearing after the Resolution Professional submits the report under Section 99 of the IBC, and any objections at this stage would be premature. Conclusion: The Tribunal dismissed the application for recall/setting aside the order dated 10.08.2021, stating that the limited notice served on the Personal Guarantor was sufficient and in line with the judgment in Mr. Ravi Ajit Kulkarni v. State Bank of India. The Tribunal emphasized that objections could be raised after the Resolution Professional submits the report under Section 99 of the IBC, and raising objections at this stage would lead to double hearings, defeating the purpose of the IBC. The application I.A./4062/2021 was disposed of accordingly.
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