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Tribunal overturns order due to lack of notice, emphasizing natural justice violation. Appellant wins appeal under Insolvency Code. The Tribunal set aside the impugned order in an appeal involving an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. It found that ...
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Tribunal overturns order due to lack of notice, emphasizing natural justice violation. Appellant wins appeal under Insolvency Code.
The Tribunal set aside the impugned order in an appeal involving an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. It found that no notice was properly served on the appellant, emphasizing a violation of natural justice. Consequently, all orders appointing an Interim Resolution Professional and freezing accounts were declared illegal. The application was dismissed, allowing the appellant company to resume operations independently. The Adjudicating Authority was directed to determine the Interim Resolution Professional's fee, if appointed, to be paid by the Respondents. The appeal was allowed with no costs ordered.
Issues: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016; Existence of dispute; Service of notice; Violation of rules of natural justice; Appointment of Interim Resolution Professional; Setting aside of impugned order.
Analysis: The case involved an appeal against the admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor. The appellant contended that no notice was served by the Adjudicating Authority and emphasized the existence of a dispute. The appellant presented a letter dated 1st June 2016 as evidence of the dispute, highlighting false claims made by the Operational Creditor. On the other hand, the respondent argued that the notice was served, referring to an order and affidavit as proof. However, the order revealed that no notice was actually served on the appellant, raising concerns about the violation of natural justice.
The Tribunal noted that the Adjudicating Authority wrongly treated the notice as served despite evidence to the contrary. It emphasized that the refusal of notice by a party does not equate to service, especially if the notice was sent to an incorrect address. The appellant's letter further reinforced the existence of a dispute, refuting the claims made by the Operational Creditor. Consequently, the impugned order was deemed to be passed in violation of the rules of natural justice and was set aside.
In its final decision, the Tribunal declared all orders related to the appointment of an Interim Resolution Professional and freezing of accounts as illegal and set them aside. The application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed, allowing the appellant company to resume independent functioning through its Board of Directors. The Adjudicating Authority was directed to determine the fee of the Interim Resolution Professional, if appointed, to be paid by the Respondents. The appeal was allowed with no order as to costs.
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