Ex parte admission in insolvency set aside where corporate debtor was given one further chance to file a reply

The Appellate Tribunal considered whether a Section 7 application could be admitted ex parte after the Corporate Debtor had earlier appeared and been given time to file a reply. It distinguished the precedent relied on by the appellant because, unlike that case, an opportunity had already been granted. However, as the order was passed ex parte and the Corporate Debtor's grievances and later facts on the loan transaction were not placed before the Adjudicating Authority, the Tribunal found it appropriate, in the interests of justice, to allow one further opportunity to file a reply on costs and have the matter heard afresh. The ex parte admission order was set aside.

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Issues: Whether the Adjudicating Authority was justified in proceeding ex parte and admitting the Section 7 application without granting a further opportunity to the Corporate Debtor to file its reply.

Analysis: The Corporate Debtor had initially appeared and obtained time to file a reply, but did not appear on the next date and did not file any reply. The Appellate Tribunal distinguished the cited precedent where no opportunity had been granted at the first hearing, and held that in the present case the Adjudicating Authority had already afforded time. Even so, the Appellate Tribunal noted that the order had been passed ex parte and that relevant grievances and subsequent facts concerning the loan transaction had not been placed before the Adjudicating Authority. In the circumstances, and to serve the ends of justice, the Tribunal considered it appropriate to permit one further opportunity to file a reply on costs, with the matter to be heard afresh.

Conclusion: The ex parte admission order was set aside and the Corporate Debtor was granted a further opportunity to file its reply before the Adjudicating Authority.

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