NCLT dismisses application to set aside ex-parte order under Rule 11

The National Company Law Tribunal, Indore Bench, dismissed an application seeking to set aside an ex-parte order under Rule 11 read with Rule 49 of NCLT Rules, 2016. The Tribunal found that despite the Corporate Debtor's claim of non-receipt of notice, the notice had been duly served through publication in newspapers as the Debtor had refused to accept it. The Tribunal clarified that Rule 49(2) applies to matters disposed of summarily, not after due consideration, and relief against such orders should be sought through an appeal to the NCLAT. The application was dismissed, emphasizing the Tribunal's limited power to rectify typographical errors and review orders on merits.

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Issues: Setting aside an ex-parte order under Rule 11 read with Rule 49 of NCLT Rules, 2016

The judgment by the National Company Law Tribunal, Indore Bench, involved an application filed for setting aside an ex-parte order dated 11.01.2021 passed by the Adjudicating Authority under Rule 11 read with Rule 49 of NCLT Rules, 2016. The Corporate Insolvency Resolution Process was initiated by an Operational Creditor under section 9 of the Insolvency and Bankruptcy Code, 2016, and admitted by the Adjudicating Authority on 11.01.2021. Despite multiple attempts to serve notice to the Corporate Debtor, who refused to accept it, the Adjudicating Authority suggested publication in two newspapers, which was duly complied with by the applicant. The Insolvency Resolution Professional (IRP) had been appointed, and the Corporate Insolvency Resolution Process (CIRP) was running smoothly. The respondent Corporate Debtor sought to quash the order based on Rule 49(2) of NCLT Rules, 2016, which allows setting aside an ex-parte order if the notice was not duly served or there was a sufficient cause for non-appearance. However, the Tribunal found that the respondent's claim of non-receipt of notice was not valid as the Corporate Debtor had refused to accept the notice, and publication had been done. Therefore, the application was dismissed. The Tribunal clarified that Rule 49(2) applies when a matter is disposed of summarily, not after due consideration, and any relief against such an order should be sought through an appeal to the NCLAT. The Tribunal emphasized that it has limited power to rectify typographical errors and cannot review orders passed on merits. Consequently, the application was dismissed, and an urgent certified copy of the order was to be issued to all concerned parties upon request and compliance with formalities.

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