Appeals allowed, orders set aside. Adjudicating Authority to hear parties afresh. Appearance before NCLT.

The appeals were allowed, and the impugned orders were set aside. The Adjudicating Authority was directed to hear both parties on merits and decide the matter afresh, uninfluenced by any observations made by the Tribunal. Both parties were directed to appear before the National Company Law Tribunal, Amravati Bench, Hyderabad, on 15.03.2023.

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Issues Involved:
1. Admission of the Section 9 Application.
2. Existence of a Pre-Existing Dispute.
3. Service of Notice and Ex-Parte Order.
4. Limitation period for filing the appeal.
5. Rule 49 of the NCLT Rules, 2016.
6. Costs and Conditions for setting aside Ex-Parte Order.

Issue-wise Detailed Analysis:

1. Admission of the Section 9 Application:
The Adjudicating Authority admitted the application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Authority observed that the Corporate Debtor had defaulted on payments due to the Operational Creditor as per the Revenue Sharing Agreement. Despite issuing a legal notice, the Corporate Debtor failed to pay the amount due, leading to the admission of the insolvency petition.

2. Existence of a Pre-Existing Dispute:
The Appellant argued that there was a pre-existing dispute regarding the claimed amount, citing various communications and legal notices exchanged between the parties. The Adjudicating Authority, however, found no evidence of a pre-existing dispute, as the Corporate Debtor did not appear to contest the case and prove the contentions made in the reply notices. The Tribunal noted that the reply notices did not spell out any pre-existing dispute except for raising certain contentions regarding contractual obligations.

3. Service of Notice and Ex-Parte Order:
The Appellant contended that the notice was refused due to limited functioning of the Corporate Debtor's office during the Covid-19 pandemic. The Adjudicating Authority dismissed this argument, stating that the notice was deemed to be properly served once refused. The Tribunal emphasized that the Appellant did not satisfy the conditions under Rule 49 of the NCLT Rules, 2016, to set aside the ex-parte order, as they did not prove that the notice was not duly served or that they were prevented by sufficient cause from appearing.

4. Limitation Period for Filing the Appeal:
The Tribunal assessed whether the appeal was barred by limitation. It concluded that the appeal was filed within the limitation period, as the operation of the impugned order was stayed until 05.05.2022, and the appeal was filed on 09.05.2022. The Tribunal held that the period spent before the Adjudicating Authority, pending adjudication, would not be included in computing the limitation.

5. Rule 49 of the NCLT Rules, 2016:
The Tribunal examined Rule 49, which allows a respondent to apply for setting aside an ex-parte order if the notice was not duly served or if they were prevented by sufficient cause from appearing. The Tribunal found that the Appellant's argument of limited functioning due to Covid-19 did not constitute sufficient cause. However, considering the peculiar facts of the case, the Tribunal decided to provide the Appellant an opportunity to be heard on merits.

6. Costs and Conditions for Setting Aside Ex-Parte Order:
The Tribunal set aside the ex-parte order, placing the Appellant on terms of paying costs of Rs. 15,000 to the Prime Minister's Relief Fund. The Appellant was required to produce the receipt before the Registry of the Adjudicating Authority three days prior to the first appearance.

Conclusion:
The appeals were allowed, and the impugned orders were set aside. The Adjudicating Authority was directed to hear both parties on merits and decide the matter afresh, uninfluenced by any observations made by the Tribunal. Both parties were directed to appear before the National Company Law Tribunal, Amravati Bench, Hyderabad, on 15.03.2023.

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