2023 (9) TMI 1384 - AT - Insolvency and Bankruptcy

Recall of order admitting Section 7 application - non-service of notice - Appellant challenging the Order contends that it is true that registered office of the Corporate Debtor is at Mumbai however the said office is in the possession of official assignee since the year 2013 hence any notice issued to the said office in the name of Corporate Debtor has never been served. HELD THAT - From the facts which has been brought on record it does appear that notice which was sent by the Financial Creditor to the Corporate Debtor pre filing of Section 7 Application and post filing of section 7 application returned with the remark left . Affidavit which was filed on behalf of Financial Creditor also clearly mentioned this fact which has been brought on record at page 85 of the Appeal Paper Book - It appears that due to non-service effected on the corporate debtor, the Adjudicating Authority has passed an order for paper publication on 2nd July, 2019. There is no dispute that paper publication was made at Mumbai. In support of submission of the Appellant that registered office of the Corporate Debtor is in the possession of the official assignee since 2013, the Appellant has brought on record the letter issued from Official Assignee s Office High Court, Bombay 30th July, 2021 (Page 77) which indicates that in pursuance of the Order Notice of Motion No. 1 of 2013, order dated 3rd June 2013 official assignee has asked for handing over the documents. From the facts stated, it is clear that registered office at Mumbai was not in the possession and control of the Corporate Debtor and after 2013 correspondence was made by the Corporate Debtor from Jaipur Address which was also responded by the Financial Creditor on 08th May, 2014 - In the record, there is no proof that any step was taken for serving the email nor any affidavit was filed by the Financial Creditor before the Adjudicating Authority that both the modes were adopted for service as directed vide Order dated 2nd July, 2019. The present is a case where corporate debtor was unaware of the proceedings and publication at Mumbai was not effective since registered office was not under the control and possession of the Corporate Debtor. The objection of the Respondent that Appeal is not maintainable has no legs to stand - appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the dismissal of an application to recall an order, the service of notice on the Corporate Debtor, the procedural irregularity in passing the order, the challenge to the order, the maintainability of the appeal, and the statutory remedy provided under Rule 49 of NCLT Rules, 2016.

Dismissal of Application to Recall Order:
The appeal was filed against the dismissal of an application to recall an order dated 21st June, 2023, which was filed by the Appellant after the Adjudicating Authority admitted a Section 7 Application against the Corporate Debtor-Krystal Stone Exports Ltd. The Appellant contended that the notice was not effectively served on them, as the registered office in Mumbai was in the possession of the official assignee since 2013, and the Financial Creditor failed to serve the Appellant at their Jaipur office address, which was known to them.

Service of Notice on Corporate Debtor:
The Adjudicating Authority passed an order on 2nd July, 2019, directing the service of notice by Email and Publication in newspapers, as the notice sent to the Corporate Debtor was returned with the remark "left." The Financial Creditor was aware of both the Mumbai and Jaipur addresses of the Corporate Debtor, but no service was effected by email. The Adjudicating Authority proceeded with the matter based on the publication in newspapers, even though the Appellant was not served.

Procedural Irregularity in Passing Order:
The Adjudicating Authority observed that the Corporate Debtor did not appear or file an objection against the admission of the application, and the remedy for the Corporate Debtor was to file an appeal against the admission order. However, the Appellant argued that the Adjudicating Authority committed an error in rejecting the application and that the remedy of the Corporate Debtor was not limited to filing an appeal.

Challenge to Order and Maintainability of Appeal:
The Respondent opposed the appeal on the grounds that the Appellant did not challenge the original order dated 24.09.2019, making the appeal not maintainable. The Respondent relied on a judgment regarding the maintainability of Special Leave Petitions against an order of dismissal of review when the original order is not challenged.

Statutory Remedy Provided under Rule 49 of NCLT Rules, 2016:
The Appellant filed a recall application under Rule 49 of NCLT Rules, 2016, seeking to recall the order dated 24.09.2019. The Appellate Tribunal found that the Appellant had made out a sufficient cause for the recall of the order and allowed the appeal, setting aside the order dated 21st June, 2023, and reviving the matter before the Adjudicating Authority for further proceedings.

This summary provides a detailed overview of the issues involved in the judgment, including the dismissal of the application, the service of notice, procedural irregularities, challenges to the order, the maintainability of the appeal, and the statutory remedy under Rule 49 of NCLT Rules, 2016.