Rule 37 notice is mandatory before ex parte proceeding against a corporate debtor in Section 9 insolvency matters.

Rule 37 of the NCLT Rules, 2016 requires the Tribunal to issue prescribed notice to the respondent and afford a reasonable opportunity before proceeding ex parte. Mere advance service by the operational creditor does not replace the Tribunal's duty to issue notice when the corporate debtor has not appeared. Because no Rule 37 notice was issued and the Section 9 application was taken up ex parte only on the operational creditor's statement, the admission order was held unsustainable and set aside, with remand for fresh consideration after reply and rejoinder.

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Issues: Whether the admission of the Section 9 application could be sustained when the Adjudicating Authority proceeded ex parte without issuing notice to the corporate debtor as required by Rule 37 of the NCLT Rules, 2016.

Analysis: Rule 37 requires the Tribunal to issue notice to the respondent to show cause against the application and, if the respondent does not appear on the date specified in such notice, to proceed ex parte only after according reasonable opportunity. Mere advance service by the operational creditor does not dispense with the Tribunal's obligation to issue notice in the prescribed manner when the corporate debtor has not appeared. As no notice under Rule 37 was issued and the matter was taken ex parte only on the basis of the operational creditor's statement, the admission order was vitiated.

Conclusion: The admission order was unsustainable and was set aside. The matter was remitted for fresh consideration of the Section 9 application after filing of reply and rejoinder.

Ratio Decidendi: Where the respondent has not appeared, ex parte proceedings under Rule 37 of the NCLT Rules, 2016 can be taken only after the Tribunal issues the prescribed notice and affords a reasonable opportunity of hearing.

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