Deepraj Investments Ltd vs Sai Precious Traexim Pvt. Ltd

Abni Ranjan Kumar Sinha, J

IA-2371/2020:-

The present application is filed on behalf of Corporate Debtor under Rule 49(2) of the NCLT Rules, 2016 for setting aside of the ex-parte hearing against the respondent/Corporate Debtor, including the order dated 08.06.2020.

IA-2355/2020:-

The present application is filed under Rule 11 of the NCLT Rules, 2016 for interim directions.

Aforesaid two IA have been filed on behalf of the Petitioner/Corporate Debtor. Out of that One IA is registered as IA-2371/2020 in which the prayer of the petitioner/Corporate Debtor is to set aside the ex-parte order of admission dated 08.06.2020 and in the Second IA which is registered as IA-2355/2020 the prayer of the petitioner/Corporate Debtor is to direct the IRP not to proceed further and to make sure that Corporate Debtor remains a going concern.

Since the prayer of petitioner/Corporate Debtor in both the IAs are related with each other, therefore, We would like to dispose off both the IAs with this common order.

We have heard the Ld. Counsel for petitioner/Corporate Debtor as well as Financial Creditor and perused the averments made in both the applications.

The facts mentioned in IA-2355/2020 is that in company petition No. 2845/2019, the counsel engaged by the Corporate Debtor appeared and filed the Vakaltnama as well as Reply but subsequently stopped appearing after 10.01.2020 without any intimation or instructions. Further, counsel engaged did not appear before this Adjudicating Authority on 30.01.2020 & 03.02.2020 and nor any written argument has been filed on behalf of Corporate Debtor and petitioner/Corporate Debtor has filed an application for setting aside the ex-parte order of admission dated 08.06.2020, therefore, in the meantime IRP may be directed not to proceed further.

The facts mentioned in IA-2371/2020 is that Corporate Debtor has engaged Mr. Sudhir Sinha in main application, who has filed the reply on behalf of Corporate Debtor, which is duly signed by one of the directors of the Corporate Debtor and Mr. Sudhir Sinha has received the fee through bank transfer in order to defend the Corporate Debtor. Further, after the admission of the petition, the Corporate Debtor was contacted by the IRP. Further, after receiving the information about the initiation of CIRP from the IRP, the Corporate Debtor/applicant was shocked and thereafter, Corporate Debtor checked the status online and found that the counsel engaged did not appear before this Tribunal on 30.01.2020 & 03.02.2020 and hence no written argument was filed or oral argument was advanced before this Tribunal but on query the Corporate Debtor came to know that the condition of the mother of counsel was not good, therefore, he had relocated to Patna, Bihar and handed over the responsibility to look into the matter to his colleague in Delhi. Further the case of the counsel was not argued due to fault as committed by the counsel engaged. Further, as per the guidelines of the Bar Council of India, it is the duty of advocate fearlessly to uphold the interests of his client. Since this duty has been vitiated by the counsel and the counsel choose to stop appearing before this Tribunal without intimating the Corporate Debtor, therefore, the Corporate Debtor was prevented by sufficient cause from appearing before this Tribunal and further arguing the matter on merits. Further, in the similar situation in the case on Sanjay Stores Vs. Cookme (Spice) Private Limited, CP (IB) No. 202/KB/2018, NCLT Kolkata Bench vide order dated 07.12.2018 set aside the ex-parte order, therefore, order passed by this Adjudicating Authority on 08.06.2020 may be set aside.

Ld. Counsel for petitioner/Corporate Debtor raised all the facts mentioned in both the applications and submitted that due to fault of the conducting lawyer of the Corporate. Debtor, order was passed ex-parte, therefore, the same may be set aside. He further submitted that there is no fault of the Corporate Debtor rather Corporate Debtor had duly engaged the counsel to contest the case and also paid fee to the concerned lawyer, who fails to appear and permit the adjudicating authority to proceed ex-parte. He further submitted that since Corporate Debtor prevented by sufficient cause from appearing before this Tribunal, therefore, the order dated 08.06.2020 may be set aside and the petitioner/Corporate Debtor may be permitted to argue the matter on merits. He further submitted in the meantime the IRP may be directed not to proceed further.

On the other hand, Ld. Counsel for Financial Creditor submitted that record reveals that sufficient opportunities were given to the Corporate Debtor to argue the matter and the hearing was adjourned to different date for the appearance of the Corporate Debtor but after filing the reply the Corporate Debtor knowingly fails to appear in the proceeding. He further submitted that the decision upon which the Ld. Counsel for petitioner/Corporate Debtor placed reliance, the facts of that case is different from the facts of the case in hand. In that case, no reply was filed by the Corporate Debtor and proceeding was fixed for ex-parte hearing, whereas in the present case, the Corporate Debtor appeared and filed the Vakalatnama as well as Reply and the matter was posted for final hearing but on two dates i.e. 30.01.2020 & 03.02.2020 when the Corporate Debtor did not appear then after hearing the Financial Creditor, the order was reserved. He further submitted the order dated 08.06.2020 shows that Adjudicating Authority has considered the reply and specifically mentioned in the order that since after giving sufficient opportunities the Corporate Debtor fails to appear, therefore, in course of writing of order, reply filed by the Corporate Debtor shall be taken into consideration and the Adjudicating Authority before passing the order has considered the reply and pass the order and so the prayer of the petitioner/Corporate Debtor may be rejected.

In the light of the submissions made on behalf of parties, we have gone through both the applications filed by the petitioner/Corporate Debtor and We find that ground taken in both the application by the petitioner/Corporate Debtor is that Ld. Counsel for Corporate Debtor did not appear on two dates i.e. 30.01.2020 & 03.02.2020, therefore, the matter was heard ex-parte and order was reserved.

At this juncture, we would like to refer Rule 49 of the NCLT Rules and the same is quoted below:-

Ex-parte Hearing and disposal.-

(1) Where on the date fixed for hearing the petition or application or on any other date to which such hearing may be adjourned, the applicant appears and the respondent does not appear when the petition or the application is called for hearing, the Tribunal may adjourn the hearing or hear and decide the petition or the application ex-parte.

(2) Where a petition or an application has been heard ex-parte against a respondent or respondents, such respondent or respondents may apply to the Tribunal for an order to set it aside and if such respondent or respondents satisfies the Tribunal that the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him or them upon such terms as it thinks fit.

Provided that where the ex-parte hearing of the petition or application is of such nature that it cannot be set aside as against one respondent only, it may be set aside as against all or any of the other respondents also.

Mere plain reading of the provisions shows that Rule 49 Sub Rule 2 lays down the ground for setting aside the ex-parte order, one of the ground is that the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing. The first part of sub Rule shows that if notice of hearing was not duly served upon the respondents and the case is fixed for ex-parte hearing in the absence of the respondent and matter was heard ex-parte but here in the case in hand notice was duly served and Corporate Debtor appeared and filed Vakaltnama as well as reply and when the matter was posted for final hearing then his counsel did not appear on two occasions, therefore, the case was heard in the absence of the Corporate Debtor and order was reserved, therefore, in our considered view, under first part of Rule 49(2) of the NCLT Rules the petitioner is not entitled to get any relief, so far second part of Rule 49(2) NCLT Rules is concerned, it says if the Respondent was prevented by sufficient cause for appearing when the petition was called, in the light of this provision when We shall consider the prayer of the petitioner/Corporate Debtor then We find, it is not the case of the Petitioner that he had not filed the Reply rather it is the specific case of the Petitioner that Corporate Debtor engaged the Counsel, who appeared and filed the reply and it was the counsel who after receiving the fee did not appear and we further find the reason for none appearance of the counsel was that the condition of the mother of the counsel was not good, so, he had left for Patna, Bihar after giving instructions to another Counsel to contest the case, and when the matter was called for final arguments then his counsel did not appear so, in our considered view it is duty of the Corporate Debtor to watch and get the day to day information regarding the progress of the case, specially when the Corporate Debtor appeared and duly signed the reply which was filed. It is the specific case of the petitioner that matter of final hearing was adjourned twice due to the absence of the Corporate Debtor but the Corporate Debtor did not make any enquiry about the progress of the case, therefore, we are of the considered view that it is not the case in which the Corporate Debtor was prevented by sufficient cause for appearing, rather it appear that knowingly Corporate Debtor remains absent during the proceedings therefore, in our considered view, on second ground also the order passed by us is not require to be set aside.

However, after perusal of order dt. 08/06/2020, we find, at the time of writing of order, We have considered the reply filed by the Corporate Debtor and after considering the reply, we passed the order, therefore, in our considered view no prejudice has been caused to the Corporate debtor because ground taken in the reply has been considered at the time of passing the order.

So far decision upon which the Petitioner placed reliance is concerned the facts and circumstances of that case is different from the facts and circumstances of the case in hand, therefore, that would not help the Petitioner.

For the reasons discussed above, We are of the considered view that there is no merit in the contention of the Petitioner/Corporate Debtor, therefore, We are not inclined to exercise our power under Rule 49 of the NCLT Rules, hence we hereby reject the prayer of Corporate debtor to set aside ex-parte order dt. 08/06/2020, accordingly IA No. 2371/20 is hereby DISMISSED.

So far IA-2355/20 is concerned, since we have rejected the prayer of the petitioner/Corporate Debtor in IA-2371/20 for setting aside the order dated 08.06.2020, therefore, we are not inclined to direct the IRP not to proceed further. Hence, prayer made by the petitioner/Corporate Debtor in this IA-2355 is also hereby rejected and accordingly the IA-2355/20 is hereby DISMISSED.