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2022 (6) TMI 388 - SC - Insolvency and BankruptcyValidity of Ex-parte order of NCLAT - appellant having been deprived of a reasonable opportunity of hearing - Service of notice - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - As per observations of the Appellate Tribunal in opening paragraph of the impugned order, the registry was directed to serve notice on the parties and in response thereof, respondent of the appeal appeared but nobody appeared on behalf of the appellant. Fresh notice was issued on which, the Appellate Tribunal received postal endorsement to the effect that the appellant had left the given address. Thus, notice could not be delivered to the appellant. It appears just and proper that while setting aside the impugned order dated 09.07.2018, the matter be again restored to the file of the Appellate Tribunal for decision afresh and on merits.
Issues:
1. Deprivation of reasonable opportunity of hearing for the appellant. 2. Validity of the order passed by the National Company Law Appellate Tribunal. 3. Admissibility of the application under Section 9 of the Insolvency and Bankruptcy Code. 4. Consideration of the case in light of the decision in Macquarie Bank Limited v. Shilpi Cable Technologies Limited. 5. Presence of the appellant before the Appellate Tribunal. 6. Merits of the case and the question of pre-existing dispute. 7. Stay of proceedings before the Tribunal and its impact on other creditors. Analysis: 1. The Supreme Court found that the impugned order dated 09.07.2018 passed by the National Company Law Appellate Tribunal could not be sustained as the appellant was deprived of a reasonable opportunity of hearing. The Court emphasized the importance of providing a fair chance to be heard before passing any order. 2. The case revolved around an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by the respondent, an operational creditor, alleging a default in payment. The National Company Law Tribunal initially admitted the application, but the Appellate Tribunal set aside this order on the grounds related to the demand notice served by an advocate not directly associated with the operational creditor. 3. The Supreme Court considered the decision in the case of Macquarie Bank Limited v. Shilpi Cable Technologies Limited and the validity of the notice served by a lawyer on behalf of the operational creditor. The Court highlighted the need for proper consideration of such legal aspects in insolvency proceedings. 4. It was noted that the appellant was not present before the Appellate Tribunal during the proceedings, raising concerns about imputing knowledge to the appellant regarding the orders passed by the Court without proper notice. The Court stressed the importance of ensuring the presence of all relevant parties during legal proceedings. 5. While refraining from commenting on the merits of the case, the Supreme Court directed the Appellate Tribunal to reconsider the matter afresh and on its merits. The Court emphasized the significance of thoroughly evaluating the facts and factors, including any pre-existing disputes, before initiating the insolvency resolution process. 6. Regarding the stay of proceedings before the Tribunal, the Court clarified that the stay order would not hinder other creditors from proceeding in accordance with the law, subject to objections. The Court ensured that the pendency of the appeal and any observations made in the proceedings would not affect other creditors pursuing their claims based on their own merits. 7. Ultimately, the Supreme Court allowed the appeal, setting aside the impugned order and restoring the case for reconsideration by the Appellate Tribunal. The parties were directed to appear before the Appellate Tribunal, emphasizing the need for expeditious proceedings in the matter.
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