Email and Physical Service Constitute Proper Notice – NCLAT on Section 7 IBC
- REEDLAW
- Oct 4
- 3 min read
REEDLAW Legal News Network reports: In a pivotal ruling, the Appellate Tribunal clarified that proper service of notice under Rule 38 of the NCLT Rules is deemed satisfied when sent to the registered email address along with an attempted physical delivery. It held that once debt and default stood established, the admission of a Section 7 IBC application could not be faulted.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating a Company Appeal and connected Interlocutory Application, held that the proper service of notice under Rule 38 NCLT Rules is satisfied through email to the registered address and attempted physical delivery, and once debt and default stood proved, admission of a Section 7 IBC application could not be faulted.
The Appellant, a suspended director of the Corporate Debtor, had filed an appeal challenging the order of the Adjudicating Authority admitting a Section 7 application filed by the Financial Creditor. The Appellant argued that the order had been passed without proper service of notice and contended that service by email could not be considered valid in terms of Rule 38 of the NCLT Rules, 2016, since no petition or reply had been filed by the Corporate Debtor. It was further submitted that the Financial Creditor had earlier consented to another bank proceeding under SARFAESI, and hence the present proceedings were unsustainable.
The Respondent, representing the Financial Creditor, refuted these arguments and demonstrated that service had been affected both by email to the registered email address of the Corporate Debtor available in MCA records and by a physical attempt at the registered office. Affidavits of service, along with reports and photographs, were filed, indicating that service was attempted but entry was refused at the premises. The Respondent also highlighted that the Corporate Debtor was aware of the proceedings and had even approached the Financial Creditor for settlement, showing clear knowledge of the process.
The Appellate Tribunal, after examining the record, held that service of notice had been duly effected in compliance with Rule 38 and as per the directions of the Adjudicating Authority. It noted that emails were sent on 24.10.2024 and 14.11.2024, enclosing copies of the petition, orders, and notices, and that physical service was also attempted. The Tribunal observed that the Appellant did not dispute the existence of debt and default, which had been established through financial records, CIBIL reports, and the NeSL report filed by the Financial Creditor.
The Tribunal concluded that there was no infirmity in the admission of the Section 7 application since debt and default stood proved and the Corporate Debtor was duly served but failed to appear. It held that the appeal lacked merit and dismissed it, affirming the Adjudicating Authority’s decision to admit the Corporate Debtor into the Corporate Insolvency Resolution Process.
Mr. Mohit Chaudhary and Mr. Raghav Dikshit, Advocates, represented the Appellant.
Mr. Sougat Sinha, Ms. R. Gayathri Manasa and Mr. Navneet Kumar, Advocates, appeared for the Respondent No. 1.
Mr. Abhindra Maheshwari, Advocate, appeared for the IRP/Respondent No. 2.
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