Adjudicating Authority can Proceed for Exparte as per Rule 49 of NCLT Rules when CD not Appear: NCLAT [Read Order]
The Tribunal held the corporate debtor at fault for failing to appoint an advocate in time, as required under Rule 49(1) of the NCLT Rules, 2016
NCLAT – Rule 49 of NCLT – NCLT Rules – NCLT News – NCLT Updates – taxscan
NCLAT – Rule 49 of NCLT – NCLT Rules – NCLT News – NCLT Updates – taxscan
The National Company Law Appellate Tribunal ('NCLAT') in a recent case,held that Rule 49 of National Company Law Tribunal ( NCLT ) Rules, 2016 gives ample jurisdiction to the Adjudicating Authority to proceed for ex parte as the corporate debtor does not appear.It was found that the appearance by the corporate debtor or an authorized representative is required under Rule 49(1) of NCLT Rules, 2016.
DBS Bank India Ltd. (Financial Creditor) approached the Debt Recovery Tribunal ('DRT') on default towards the financial facilities by Vyam Technologies Ltd. (Corporate Debtor). DRT via its Order dated 15.07.2019, DRT awarded an amount of Rs.23.29 crores along with interest. A recovery certificate was also issued in favor of the financial creditor.
DBS Bank initiated the Corporate Insolvency Resolution Process ('CIRP') against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code ('IBC') claiming a default of amount of Rs.48.31 crores till 22.09.2021 and also placed reliance upon the recovery certificate.
The Corporate Debtor received notices issued by NCLT New Delhi but did not file a response.When the CIRP application was listed on 25.03.2022, no reply had been submitted and no authorized counsel appeared. Consequently, NCLT New Delhi proceeded to hear the application on its merits and admitted the Section 7 application by order dated 25.03.2022.
An application was subsequently filed with a request to recall the order dated 25.03.2022.This application was heard by the Adjudicating Authority, which rejected the request by an order dated 15.01.2024. Aggrieved by this impugned order dated 15.01.2024, the present appeal has been filed.
A three-member bench comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) dismissed the appeal and held that Rule 49 of NCLT Rules, 2016 gives ample jurisdiction to the Adjudicating Authority to proceed for ex parte as the corporate debtor does not appear.“Appearance” as contemplated under Rule 49(1) is an appearance by the corporate debtor or by an authorized representative.
It was ruled that, according to Rule 49(2) of the NCLT Rules, 2016, where a petition or an application has been heard ex-parte against the respondent(s), such respondent may apply to set aside such ex-parte order if they can prove that the notice was not properly served or that they were prevented by a sufficient cause from appearing when the petition or application was heard.
The Tribunal noted that the Corporate Debtor's Counsel's argument that he was recently engaged and had not filed a vakalatnama cannot be considered to be a sufficient cause.
Further held that the corporate debtor was at fault for not appointing an advocate in time to make the necessary pleadings before the court. The appearance by the corporate debtor or an authorized representative is required under Rule 49(1) of NCLT Rules, 2016.
To Read the full text of the Order CLICK HERE
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