2021 (1) TMI 186 - AT - Insolvency and Bankruptcy

Service of notice - Direction to the Respondent (who was not yet served) to settle the issue - HELD THAT - If the Respondent is not served it has to be ensured that the Respondent is served with the Notice. If the Respondent has been served and does not appear the Adjudicating Authority would be required to consider if the Application under Section 9 of IBC is complete and if there is debt due and default as required by the law. If application is complete it has to be admitted. The present order however directs the Respondent to settle the issue who had not appeared before the Adjudicating Authority which is most inappropriate. Petition is restored to the file of Adjudicating Authority (NCLT Bengaluru Bench) - appeal allowed by way of remand.

Summary

Issues:
Adjudication under Section 9 of Insolvency and Bankruptcy Code, 2016; Disposal of application by Adjudicating Authority without proper consideration; Direction to settle the issue instead of admitting the application; Failure to ensure proper service of notice on the Respondent.

Analysis:
The Appellate Tribunal dealt with an appeal filed by an Operational Creditor against an Impugned Order passed by the Adjudicating Authority in a matter related to Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority had disposed of the application under Section 9 of IBC, directing the Respondent to settle the issue or allowing the Appellant to file a fresh Company Petition. The Appellant claimed that service was complete, but the Respondent did not appear, leading to the Adjudicating Authority's decision based on the small amount of operational debt and the existence of a pre-existing dispute. The Respondent argued that the claim was barred by limitation and that they were not properly served.

Upon reviewing the Impugned Order, the Appellate Tribunal found the approach of the Adjudicating Authority to be inappropriate. The Tribunal emphasized the importance of ensuring proper service of notice on the Respondent and the need to consider the completeness of the application under Section 9 of IBC before making a decision. Consequently, the Tribunal set aside the Impugned Order and remanded the matter back to the Adjudicating Authority for proper consideration in accordance with the provisions of IBC. Both parties were directed to appear before the Adjudicating Authority for further proceedings.

In conclusion, the Appellate Tribunal allowed the appeal, directing the Registry to send a copy of the judgment to the Adjudicating Authority promptly. The decision highlighted the significance of following due process and legal requirements in insolvency proceedings, ensuring fair consideration for all parties involved.