The NCLAT rejected the recall Application of the Corporate Debtor as they had been given ample opportunities to participate in the proceedings.
The National Company Law Appellate Tribunal, New Delhi Bench comprising of Justice Ashok Bhushan and Barun Mitra was hearing an appeal on Friday. The Bench upheld the Adjudicating Authority's decision to admit the Section 9 application, as the Corporate Debtor had been given ample opportunities to participate in the proceedings, and their recall application lacked valid grounds.
In the present case, an appeal was filed against an order passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-IV, on 09.02.2023. The order in question had admitted a Section 9 application filed by an Operational Creditor. The Section 9 application had been initiated on 13.07.2021, where the Operational Creditor sought to commence Corporate Insolvency Resolution Proceedings against the Corporate Debtor due to their failure to make the required payments as per a Demand Notice.
The Adjudicating Authority had diligently conducted the proceedings, issuing notices to the Corporate Debtor through various means, including email and registered post. Additionally, the Authority ordered the publication of notices in local newspapers. However, despite these attempts, the Corporate Debtor did not participate in the proceedings, leading to an ex-parte order on 22.02.2022.
Subsequently, on 09.07.2022, the Corporate Debtor filed an application to recall the ex-parte order, but this application could not be listed due to certain defects. The Adjudicating Authority then proceeded with the case. The appellant contended that the Adjudicating Authority violated the Principles of Natural Justice by not allowing the recall application to be heard before deciding on the Section 9 application.
However, the NCLAT dismissed the appeal, noting that the Corporate Debtor had been given multiple opportunities to participate in the proceedings, and their recall application lacked sufficient grounds. Therefore, the Adjudicating Authority's decision to admit the Section 9 application was upheld.