2020 (1) TMI 1444 - Tri - Companies Law

Tribunal sets aside ex parte order due to notice failure, imposes cost on Corporate Debtor

The National Company Law Tribunal, Kolkata Bench, considered setting aside an ex parte order due to notice service failure upon the Corporate Debtor. ... Setting aside ex parte order - service of notice by e-mail and post - opportunity to defend on merits - conditional restoration - costs as pre-condition to relief - reply and rejoinder timetableSetting aside ex parte order - service of notice by e-mail and post - opportunity to defend on merits - Application to set aside the ex parte order dated 20/12/2019 - HELD THAT: - The Tribunal examined the grounds advanced by the Corporate Debtor that the e-mail ID was not in use and that postal notice was overlooked due to a director's personal engagement. The reasons were found unsatisfactory as a basis for automatically setting aside the ex parte order. Nonetheless, in order to afford the Corporate Debtor an opportunity to be heard and to decide the dispute on merits, the Tribunal exercised its discretion to allow the application conditionally and to restore the matter for adjudication provided stipulated conditions are complied with. The order thus permits conditional restoration rather than an unqualified setting aside of the ex parte order.Application allowed conditionally to enable defence on merits; ex parte order set aside subject to compliance with conditions.Conditional restoration - costs as pre-condition to relief - reply and rejoinder timetable - Conditions and procedural directions for restoration (payment of costs, filing of reply, and timeline for rejoinder) - HELD THAT: - The Tribunal directed that the Corporate Debtor must pay costs of Rs. 1 Lakh to the Operational Creditor and file the reply affidavit along with proof of payment at the Registry within 10 days, with service of the reply on the Operational Creditor; failure to pay the cost along with filing of the reply would result in dismissal of the application. Upon compliance, the Operational Creditor is permitted to file a rejoinder within 7 days of receipt of the reply, and no further opportunity to file rejoinder will be granted. The matter was listed for hearing on the specified date.Restoration is subject to payment of costs and filing of reply within 10 days; rejoinder permitted within 7 days; non-compliance results in dismissal.Final Conclusion: The Tribunal conditionally set aside the ex parte order to enable adjudication on merits, subject to payment of prescribed costs and compliance with the directed timetable for filing reply and rejoinder; non-compliance will result in dismissal of the restoration application. Issues: Setting aside an ex parte order due to failure of notice service.In the judgment delivered by the National Company Law Tribunal, Kolkata Bench, the issue at hand was the setting aside of an ex parte order dated 20/12/2019 due to the failure of notice service upon the Corporate Debtor. The record indicated that notice was served via e-mail and post, with the e-mail notice being missed by the Corporate Debtor as the e-mail ID was not in use. The Director of the Corporate Debtor had overlooked the postal service due to personal engagements related to his daughter's marriage. The Tribunal found the reasons provided by the Corporate Debtor unsatisfactory for setting aside the ex parte order. However, to ensure a fair opportunity for defense and decision on merit, the Tribunal allowed the application on the condition that a cost of Rs. 1 Lakh be paid to the Operational Creditor within 10 days, along with filing a reply affidavit at the Registry within the same timeframe. Failure to pay the cost along with the reply affidavit would result in the dismissal of the application.Moreover, if the cost was paid and the reply affidavit filed as directed, the Operational Creditor was required to file a rejoinder within 7 days of receiving the reply affidavit. The Tribunal emphasized that no further opportunity to file a rejoinder would be granted. The matter was listed for hearing on 03/02/2020, indicating a clear timeline for the subsequent legal proceedings in the case. The judgment highlighted the importance of proper notice service and the consequences of failing to adhere to procedural requirements in legal matters, underscoring the significance of timely and diligent communication in legal proceedings.