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2022 (7) TMI 1371 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.Principles of natural justice - refusal of grant of time for filing reply on the first date of hearing - whether a Corporate Debtor can pray for time for filing the reply on the first date of hearing? - HELD THAT:- Even though Rules are silent on whether a Corporate Debtor can pray for time for filing the reply on the first date of hearing, the Court has to adopt a procedure with the consonance of principles of natural justice. The order passed by Adjudicating Authority on the first date of hearing, rejecting the request of the Appellant to grant some time to file reply, is in violation of the principles of natural justice and deserves to be set-aside. Order of Adjudicating Authority admitting the Application has serious consequences, hence, the Tribunal ought to have given opportunity to the Corporate Debtor to file a reply. The procedure, which is to be adopted by the Tribunal has to be in consonance with the rules of natural justice and equity as required by the rules itself. Unless, it is held that due to non-filing of the reply before the date of hearing by the Corporate Debtor, the Adjudicating Authority is obliged to decide the application under Section 7, the Adjudicating Authority has ample jurisdiction to consider any request for reasonable time by a Corporate Debtor for filing a reply. The Tribunal is fully entitle to grant time for filing a reply asked for by the Corporate Debtor on the first date of hearing. Rejecting the request of the Corporate Debtor on the very first day for grant of time to file a reply, cannot be said to be in consonance with the principles of natural justice. There can be no dispute that in appropriate case, if the Adjudicating Authority is satisfied that the Corporate Debtor is deliberately delaying the matter, the request for grant of any further time to file a reply can be refused - But present is not a case where it can be said that Corporate Debtor was delaying the disposal of the case, since 29.03.2022 was the first date of hearing as indicated in the notice served on the Corporate Debtor on 07.03.2022. Whether fourteen days’ time prescribed for the Adjudicating Authority to pass the order is ‘directory’ or ‘mandatory’? - HELD THAT:- The Appellate Tribunal has held the said provision as ‘directory’. However, Appellate Tribunal held proviso to sub-section (5) of Section 7 or proviso to sub-section (5) of Section 9 and Section 10 (4) to remove the defect within seven days as mandatory, and on failure, application is fit to be rejected - Adjudicating Authority did not grant reasonable opportunity to the Corporate Debtor to file its reply as is envisaged by Rule 37 of the NCLT Rules and rejecting the request of the Corporate Debtor for time to file reply on the very first day of hearing is denial of principles of natural justice. We, thus, are of the view that order impugned cannot be sustained. Appellant – Corporate Debtor should be allowed time to file a reply, so as to obviate any further delay in proceedings before the Adjudicating Authority. We, thus, allow two weeks’ time to the Appellant to file a reply before the Adjudicating Authority. The Financial Creditor shall also be entitled to file its rejoinder within two weeks thereafter, if so advised. Appeal allowed.
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