Tribunal validates Demand Notice service in insolvency case, dismisses application.

The Tribunal upheld the ex parte order dated 22.03.2021, validated the service of the Demand Notice, and concluded that the principles of natural justice were not violated by not issuing notice at the stage of appointing the Resolution Professional. The application IA-1774/ND/2021 was dismissed, emphasizing that notice is only required when the Resolution Professional recommends initiating the Insolvency Resolution Process against the Personal Guarantor.

---

---

Issues Involved:
1. Validity of ex parte order dated 22.03.2021.
2. Service of Demand Notice.
3. Principles of Natural Justice.
4. Requirement of issuing notice to the Personal Guarantor at the time of appointing Resolution Professional (RP).

Detailed Analysis:

1. Validity of Ex Parte Order Dated 22.03.2021:
The Personal Guarantor contended that the order dated 22.03.2021 was passed ex parte without issuing notice to him. The Tribunal noted that the Personal Guarantor admitted to receiving the Demand Notice and the petition via email. Consequently, the Tribunal found no mistake apparent on the face of the record regarding the service of the Demand Notice and thus upheld the order dated 22.03.2021.

2. Service of Demand Notice:
The Applicant argued that the Demand Notice was not served at his correct address, which is mandatory under Section 95(4) of IBC 2016 and Rule 7(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtor) Rules, 2019. The Tribunal, however, noted that the Demand Notice was served via email, and the Applicant's counsel confirmed receipt of the same. Therefore, the Tribunal dismissed the contention of improper service.

3. Principles of Natural Justice:
The Applicant emphasized the need for adherence to the principles of natural justice, citing Section 424(1) of the Companies Act, 2013, and relevant rules under the NCLT Rules, 2016. The Tribunal acknowledged that while the principles of natural justice are crucial, they are not rigid and must adapt to the demands of the law and situation. The Tribunal referenced the Supreme Court judgment in Ajit Kumar Nag Vs. G.M. (P.J.) India Oil Corporation Ltd., which highlighted the flexibility of natural justice principles.

4. Requirement of Issuing Notice to the Personal Guarantor at the Time of Appointing RP:
The Tribunal examined the statutory provisions under Chapter III of IBC 2016 and relevant rules, concluding that there is no requirement to issue notice to the Personal Guarantor at the initial stage of appointing an RP. The Tribunal noted that the interim moratorium under Section 96 of IBC 2016 does not prejudice the Personal Guarantor and that the RP is responsible for examining the application and making recommendations. The Tribunal cited the judgment in Volkswagen Finance Private Ltd. Vs. Smt. Pavan Kapoor, which supported the view that notice is not required at the stage of appointing an RP.

Conclusion:
The Tribunal dismissed the application IA-1774/ND/2021, upholding the ex parte order dated 22.03.2021, validating the service of the Demand Notice, and concluding that the principles of natural justice were not violated by not issuing notice at the stage of appointing the RP. The Tribunal emphasized that the issuance of notice is required only when the RP recommends initiating the Insolvency Resolution Process against the Personal Guarantor.

---