Subham Capital Private Limited vs Mr. Raj Kishore Modi & Anr
- CitationCompany Appeal (AT) (Ins.) No. 471 of 2024
Ratio decidendi
The rule this decision rests on
Where the Adjudicating Authority has, in the exercise of its discretion, closed a party's right to file a reply and proceeded ex parte, but has subsequently noticed before pronouncing its order that the conditions for that closure (non-filing of reply and non-payment of costs) were in fact satisfied by the party, it may recall its order and afford that party an opportunity to file its reply; such recall is an exercise of the Adjudicating Authority's own procedural discretion and does not, without more, amount to a procedural infirmity warranting appellate interference. An Adjudicating Authority is empowered under the procedural rules to proceed and pass an order where a party fails to appear on a date of hearing, and such a course is not in itself procedurally defective; however, that power does not oblige the authority to disregard subsequently discovered facts showing that the basis for proceeding ex parte was not made out.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Subham Capital Pvt. Ltd. ...Appellant
Versus
Raj Kishore Modi & Anr. ...Respondents
Present: For Appellant: Mr. Shwetaank Nigam, Mr. Deep Roy, Advocates. For Respondents: Mr. Abhijeet Sinha, Sr. Advocate with Ms. Srmila Chakraborty, Ms. Archana Sonthalia, Mr. Raghav Joshi, Mr. Rameezuddin Raja, Ms. Purnima Singh, Advocates for R-1.
ORDER
(Hybrid Mode)
12.03.2024: Heard learned counsel for the parties. This Appeal has
been filed against order dated 09.02.2024 by which the Adjudicating
Authority has recalled its earlier order passed on 25.01.2024 by which
Section 7 application filed by the Appellant was admitted. In the present case,
the Adjudicating Authority granted time to the Corporate Debtor for filing
reply and time was extended. On 01.12.2023, the Adjudicating Authority
noticing the prayer of the Corporate Debtor for further time, granted one week
time subject to payment of cost of Rs.25,000/-.
2. Learned counsel for the Appellant challenging the order contends that
there was no procedural defect and the Adjudicating Authority ought not to
have recalled order dated 25.01.2024. Learned counsel for the Appellant has
relied on Rule 49 and Rule 110 of the NCLT Rules, 2016.
Cont'd.../ -2-
3. Learned counsel for the Respondent submits that on 08.01.2024
counsel for the Respondent was held up in some other Court, therefore, he
could not appear before the Adjudicating Authority. It is submitted that in
pursuance of order of the Adjudicating Authority reply has already been filed
by the Corporate Debtor, which was taken on record and 05.04.2024 is the
next date fixed for hearing of the matter. It is submitted that the cost has
also been deposited by the Corporate Debtor in the PM Relief Fund.
4. We have considered the submissions of learned counsel for the parties
and perused the record.
5. Order dated 08.01.2024 is as follows:
"ORDER
1. Ld. Counsel for the Financial Creditor Present.
None for the Corporate Debtor.
2. In terms of order dated 01.12.2023, the Respondent has neither filed Reply Affidavit nor paid the cost and therefore, the right to file Reply Affidavit shall stand closed. The Corporate Debtor is set ex parte in view of the order passed on 01.12.2023.
3. Heard the Ld. Counsel for the Financial Creditor at length. Reserved for Orders.
4. Written Notes of Arguments be filed within three days."
Company Appeal (AT) (Insolvency) No.471 of 2024 -3-
6. The Adjudicating Authority noticed in the order that the Respondent
has neither filed Reply Affidavit nor paid the cost, hence, their right to reply
is closed. The Adjudicating Authority proceeded ex-parte and reserved order
on 08.01.2024, which was pronounced on 25.01.2024. The Adjudicating
Authority in the impugned order has not noticed that cost was paid by the
Corporate Debtor on 05.01.2024. It is true that the Corporate Debtor did not
appear on the date matter was taken on 08.01.2024 and it was only the
Financial Creditor who was present. The Adjudicating Authority noticing the
aforesaid fact that cost was already paid has recalled the order.
7. In this appeal, the Financial Creditor has prayed for setting aside the
order by which, order has been recalled and Adjudicating Authority has
decided to proceed further giving opportunity to the Corporate Debtor to file
Reply finding sufficient cause for recall of order dated 25.01.2024.
8. Learned counsel for the Appellant is right in his submission that under
Rule 49, it was open for the Adjudicating Authority to proceed and pass an
order when the Corporate Debtor did not appear on 08.01.2024; to this extend
there can be no procedural infirmity in the order. However, present is a case
where on 08.01.2023, when application was reserved for orders it was noticed
by the Adjudicating Authority that the Corporate Debtor could not appear
neither file reply nor paid cost in terms of order dated 01.12.2023. The
Adjudicating Authority decided to recall order dated 08.01.2023 to give
opportunity to the Corporate Debtor to file reply and decide the matter,
therefore, we see no occasion to exercise our Appellate Jurisdiction to
Company Appeal (AT) (Insolvency) No.471 of 2024 -4-
interfere in the order passed by the Adjudicating Authority giving opportunity
to the Respondent to file a reply as costs to file reply was already paid by the
Corporate Debtor. Now, the matter has been fixed for hearing on 05.04.2024,
as submitted by learned counsel for the Corporate Debtor.
9. We, thus are of the view that order impugned is not to be interfered and
the Adjudicating Authority may proceed to decide the matter in accordance
with law. We make it clear that we have not expressed any opinion on the
merits of the application and it is for the Adjudicating Authority to consider
and decide the matter in accordance with law. Appeal is disposed of
accordingly.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical)
[Arun Baroka] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No.471 of 2024
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