Page 816 - IBC Orders us 7-CA Mukesh Mohan

Order Passed under Sec 7
By Hon’ble NCLT New Delhi-II Bench
adjudicating authority before passing order, adhering to principles of natural justice. An insolvency

resolution process can and may have adverse consequences on the welfare of the company. This make it
imperative for the 'adjudicating authority' to adopt a cautious approach in admitting insolvency
application and also ensuring adherence to the principles of natural justice.

5. In "innovative Industries Limited Vs ICICI Bank" Company Appeal (AT) (Insolvency) No.1 & 2 of
2017 Hon'ble Appellate Tribunal by judgment dated 15th May 017 while holding that a notice is required
to be given to the Corporate Debtor before admitting any application for initiation of corporate resolution

process under section 7 & 9 of the I & B Code held as under:

"53. In view of the discussion above, we are of the view and hold that adjudicating
authority is bound to issue a limited notice to the corporate debtor before admitting the
case lb,- ascertainment of existence of default based on material submitted by the

corporate debtor and to find out whether the application is complete and or there is any
other defect required to be removed."

6. It is pertinent to mention here that in the case of P. K. Gras (P) Ltd. Vs. Tractors India (P) Ltd.

Company Appeal (AT) Insolvency No. 56 of 2017 (judgment dated 1.06.2017), as the Adjudicating
authority had not given any notice to the Corporate Debtor, prior to admitting the application under the I

&B Code, the admission order was set aside having been passed in violation of rules of natural justice. It
was further held therein that although the Code has no specific provision to provide hearing to corporate
debtor in a petition under Section 7 & 9, but reasonable opportunity has to be provided by adjudicating
authority before passing an order in adherence to principle of natural justice.

7. In view of the aforesaid findings of the Hon'ble Appellate Tribunal it is clear that before admitting an
application filed under Section 7 and 9 of the Code exparte, it is mandatory on the 'adjudicating authority'
to issue notice to the Respondent Corporate Debtor, in addition to the statutory notices provided under the

Code and Rules.

8. In the present case neither the Respondent Corporate debtor has appeared nor has a limited notice as
stated above been issued by this Tribunal to the respondent corporate debtor in the line of precedent laid

down by the Hon'ble NCLAT.

9. As a sequel to the above discussion, let a notice be served at the registered office of the Respondent
Corporate debtor by way of speed post and also on registered e-mail id of the corporate debtor returnable
on 6th October, 2017. Process Dasti as well. The applicant shall file affidavit of proof of service of notice

by the ensuing date of hearing.

List the matter on 06th October, 2017.

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