TMI Blog2022 (5) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... the 10 days' time starts from the date of delivery of notice to the Corporate Debtor, which in this case expired by 07.01.2022, which is the date of filing the application since admittedly, the notice is delivered on 27.12.2021. In the impugned order, it can be seen that this Tribunal considered the reply notice dated 04.10.2021 wherein it was stated that the Operational Creditor failed to perform his duties as prescribed under the agreements and that the term of 4 years elapsed as per contract dated 31.12.2011 and was not renewed and that the project did not materialize during the term in question, and observed that no evidence was produced in that regard, since the Corporate Debtor did not choose to appear and contest the case and prove the contentions made in the reply notice. Powers of the Tribunal in going in to the merits of the case in an application filed, seeking to set aside the order setting the Corporate Debtor ex-parte - HELD THAT:- In an application seeking to set aside the order of ex-parte, the Applicant needs to either prove that the service of notice is not effected on him or that he was prevented by sufficient cause not to appear before this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainly approached this Tribunal to represent itself. The Applicant did not attempt to avoid any legal proceedings and it is incorrectly noted that the Applicant has refused service of notice in any manner whatsoever. Perhaps, the notice was not received, as the office of the Applicant was closed due to Covid-19 pandemic. In fact, the Corporate Debtor responded to the notice under Section 8 of the Code, vide reply dated 06.01.2022. d) The dispute between the parties is a contractual dispute and the Corporate Debtor has consistently denied that any amount is payable. Grave prejudice and irreparable loss will be caused to the Applicant if the orders dated 17.03.2022 and 21.03.2022 are not set aside. e) The other facts mentioned are on the merits of the case. With regard to the demand notice and reply notice, it is stated that the Operational Creditor sent a demand notice dated 21.12.2021 which was received on 27.12.2021 by the Corporate Debtor. The Operational Creditor has never issued any invoice with respect to the purported default in question. The Corporate Debtor issued reply dated 21.12.2021 on 06.01.2022 reiterating that no amounts are payable, while detailing the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded Management has also committed perjury by making false statements while on oath. They have made wrong submissions that they had no advance notice of the Company Petition prior to filing and that they are completely unaware of the proceedings. All the actions of the Suspended Management, including the blatant lies in the above IA, would only prove that it is not even apologizing to the Tribunal about their adamant attitude. It is an admitted fact that on 23.03.2022, when the IRP arrived at the office of the Corporate Debtor, it was open. Hence, there can be no excuse whatsoever that on two dates and in two different months, the Corporate Debtor's office which is a construction Company and construction was not stopped, was allegedly closed in 2022 due to Covid-19 pandemic. A plain reading of Rule 49 of the NCLT Rules, especially sub-section 2 of Rule 49, would show that the Tribunal may set aside the ex-parte order only in circumstances where the party is able to show that the notice was not duly served or that they were prevented by sufficient cause from appearing for the hearing. The present Application is devoid of any of the above mentioned reasons. The averments made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hearing were inadvertently missed and not viewed prior to the date. With respect to the aforesaid, the Supreme Court is cognizant and has taken judicial notice of how the Covid-19 pandemic, especially the period during and around the three waves, has barely affected the normal functioning of all the offices and courts of the Country and suo-moto took cognizance of the difficulties faced by the litigants and extended limitation period by excluding the pandemic period. In the light of the above, it cannot be the case of the Operational Creditor that service of the notice can be presumed. The Operational Creditor has suppressed the reply dated 06.01.2022 issued on behalf of the Corporate Debtor, The said reply was dispatched via courier on 06.01.2022. As per the tracking report, it was successfully delivered on 08.01.2022. It was also sent to the Counsel of the Operational Creditor via email dated 06.01.2022. No bounce back report was received with respect to the delivery of the said email. The Operational Creditor falsely stated that no notice of dispute was received to the demand notice, though the same was served on the email. From the order of the Tribunal it is clear that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions having been taken place on 18.02.2022, the affidavit states that the office was not completely closed down but few people were given access. The affidavit shows that only very limited functioning of the office, with skeleton staff, mainly comprising of cleaning staff, was allowed. It amounts to admitting that though most of the staff present on 18.02.2022 would have been cleaning staff, some other staff who were competent to execute and present the documents were also present in the office. Even assuming that only cleaning staff were present, the notice cannot be assumed as having refused by those staff. They would at best inform the postal authorities that they are not authorized to take delivery of the notice and that they would inform the same to the concerned staff, which in all probability is expected to be done by the cleaning staff. The correspondence coming to an office running such huge business, would not be taken lightly by even the cleaning staff of the office. Moreover when the affidavit is filed in explanation of the transactions that are evidenced by the document filed by the Respondent, it amounts to admitting, that those persons who carried out those transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Section 9 (1) of IBC is as follows: Section 9 (1): After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainability of the application. It was further observed that the Adjudicating Authority is obligated under law to issue a limited notice to the Corporate Debtor at the pre-admission stage of the Application filed under Section 9 of the IBC and it shall pass an order of admission on being satisfied about completion of application and there being an unpaid operational debt and default in its payment. It was further held that the object of limited notice is to enable the Adjudicating Authority to satisfy itself that there is no pre-existing dispute qua the operational debt and no suit or arbitration proceeding in relation to such dispute was pending before the receipt of demand notice by Corporate Debtor as contemplated under Section 8(1) of the IBC. It was further observed that if the Corporate Debtor did not choose to appear in response to the notice issued upon it and did not take stand as regards a pre-existing dispute qua the operational debt, it cannot be heard to say that no opportunity of being heard has been provided to it and viewed in this perspective, consideration of issue of maintainability by the Adjudicating Authority would be of no consequence if the same were neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, was relied upon in support of the contention that as per Section 27 of the General Clauses Act, 1897, a presumption has to be drawn that service of notice has been effected when it is sent to the correct address by registered post and if a notice is returned with a postal endorsement as refused, it has to be deemed as proper service. 16. In answer to the contention raised with regard to the powers of the Tribunal in going in to the merits of the case in an application filed, seeking to set aside the order setting the Corporate Debtor ex-parte, the Counsel for the Applicant, relied on three judgments. A reading of the judgments shows that none of the judgments did lay any ratio on the said aspect. The first judgement is rendered by the NCLAT, New Delhi between Ms. Bhaskar vs. Sai Precious Traexim Pvt. Ltd., in CA(AT) (Insolvency) No. 531 of 2020. This is a judgment rendered by the NCLAT in an appeal brought to it by the Applicant/Corporate Debtor, assailing the order passed by the NCLT therein, in the circumstances of none appearing for both the parties. In those circumstances, the NCLAT discussed about the merits of the case and remanded the matter. But it can be noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question, whether the merits of the case, while hearing the application seeking to set aside the order, setting the Applicant ex-parte, can be gone into. 19. The Counsel for the Respondent relied on a judgement of NCLAT in CA (AT) (Insolvency) No. 54 of 2021 between Ravinder Kumar Kalra vs. Ricela Health Foods Limited Ors., in support of his contention that the merits of the case cannot be gone into while deciding an application seeking to set aside the ex-parte order. It was held that the object of limited notice is to enable the Adjudicating Authority to satisfy itself that there is no preexisting dispute qua the operational debt and no suit or arbitration proceeding in relation to such dispute was pending before the receipt of demand notice by Corporate Debtor as contemplated under Section 8 of the IBC. It was held that if the Corporate Debtor did not choose to appear in response to the notice issued upon it and did not take stand as regards a preexisting dispute qua the operational debt, it cannot be heard to say that no opportunity of being heard has been provided to it. It also observed that consideration of issue of maintainability by the Adjudicating Authority woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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