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Judgment
O R D E R
12.03.2024: This Appeal has been filed against order dated 02.02.2023 by which order the Adjudicating Authority has dismissed the application filed by the Appellant due to non-compliance of order dated 11.08.2022 and 05.12.2022. The application was filed by the Appellant under Section 7 against the Corporate Debtor claiming default of Rs.10,92,05,184/-. On 01.07.2022 notices were issued by the Adjudicating Authority. The Adjudicating Authority on 11.08.2022 directed for publication of notice in two leading newspapers. Learned counsel for the Appellant submits that Affidavit of service was also filed. Subsequently, on 16.09.2022, Respondent appeared through counsel and were granted 10 days’ time to file vakalatnama and counter affidavit. On 05.12.2022, the Adjudicating Authority again issued fresh notice to the Respondents and directed the Appellant to serve notice along with copy of petition to the Respondent by all modes and file proof of service. Subsequently, when the matter was taken up, the Adjudicating Authority dismissed the application for non-compliance of order dated 11.08.2022 and 05.12.2022.
In this Appeal, we have issued notices to the Respondent on 18.05.2023. Affidavit of service was filed by the Appellant. Then, further order was passed for publication in two newspapers on 10.11.2023. Thereafter, paper publication was made and Affidavit of Service dated 07.12.2023 has been filed by the Appellant. However, when today the case was called none appeared for the Respondent.
The order passed by the Adjudicating Authority rejecting Section 7 application is on the ground that there is non-compliance of order dated 11.08.2022 and 05.12.2022. Order dated 11.08.2022 passed by the Adjudicating Authority is as follows:
“ORDER
Ms. Ananya, Proxy Counsel appears on behalf of the Applicant. She is not able to assist the Tribunal properly and inform as to whether service has been duly effected upon the Corporate Debtor.
From the records, it appears that notice has been sent through Speed Post but the same has been returned back with the remarks that the addressee has left the premises.
Further, there is no proof to show that service has been made properly through e- Mail. We, therefore, direct the petitioner to take necessary steps to serve afresh through paper publication in two leading newspapers, one in English and one in Hindi language, widely circulated in the areas where the respondents are residing and their Registered offices are situated and file the proof of service and affidavit of service within three weeks. List the matter on 16.9.2022.”
On subsequent date, the counsel appeared on behalf of the Corporate Debtor and was granted 10 days’ time to file vakalatnama and counter affidavit, which order dated 16.09.2022 is as follows:
“ORDER
Heard Mr. Harshal Kumar, Ld. Counsel appearing on behalf of the Financial Creditor.
Mr. R. Akshay Dhawan, Ld. Counsel appearing on behalf of the Corporate Debtor seeks and granted 10 days' time to file Vakalatnama and counter affidavit.
Rejoinder can be filed within 10 days thereafter.
List the matter for final arguments on 12.10.2022.”
When on 05.12.2022, again the case was taken, the Adjudicating Authority issued fresh notice along with copy of petition.
Learned counsel for the Appellant submits that since Respondent has already appeared, hence, no steps were required to be taken and the Adjudicating Authority without noticing that Respondent has appeared, has dismissed the application.
We have considered the submissions of the Appellant and perused the record.
From the order dated 11.08.2022, it is noted that notices were issued and direction was to issue notice by paper publication in two leading newspapers. On 16.09.2022, the Respondent have appeared before the Adjudicating Authority through counsel and time was allowed to them to file vakalatnama and counter affidavit and thereafter again on 05.12.2022 fresh notices were directed to be issued. Affidavit of service was already filed by the Appellant on 08.08.2022, however, thereafter order for publication was issued. The Appearance of counsel on behalf of the Corporate Debtor on 16.09.2022 clearly indicates that the Corporate Debtor was well aware of the proceedings. When the Corporate Debtor’s counsel appeared and at no point of time any vakalatnama or counter affidavit was filed, it cannot be said that Corporate Debtor was not aware of the proceedings and it appears that he deliberately not appeared.
In the present appeal, inspite of issuance of notice and publication in newspapers, no one appeared for the Corporate Debtor. We, thus, are of the view that the Adjudicating Authority committed error in rejecting the Section 7 application due to non-compliance of order dated 11.08.2022 and 05.12.2022. The Corporate Debtor having appeared before the Adjudicating Authority through counsel who took time for filing vakalatnama and counter affidavit, the Adjudicating Authority ought to have dismissed the application for non-compliance. In result, we set aside order dated 02.02.2023 and revive Section 7 application before the Adjudicating Authority to be heard and decided in accordance with law. Appeal is disposed of accordingly.