AA Ought To Issue Notice To Respondent(s) Before Passing Any Final Direction Against Them: NCLAT Delhi

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Dr. Alok Srivastava (Technical Member) while adjudicating an appeal filed in Rajasthan State Mines & Minerals Ltd. v Parag Sheth & Ors., has set aside an order whereby the Adjudicating Authority had issued final directions against the respondent, without issuing any notice or granting an opportunity to be heard to the latter. The Bench held that notice ought to have been issued to the Respondent before passing of the Order. Background Facts Nagaur Water Supply Company Pvt. Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the Adjudicating Authority. Certain unidentified assets of the Corporate Debtor were lying in the premises of Rajasthan State Mines & Minerals Ltd. (“RSMML/Appellant”). The Resolution Professional of the Corporate Debtor filed an interim application (I.A./1115(AHM)2022) before the Adjudicating Authority, seeking direction to the Suspended Management and related party to hand over all documents and possession of the assets lying in the premises of RSMML. An advance copy of the application was served to the Suspended Management and Related Parties (“Respondents”) but no one appeared. Further, though RSMML was arrayed as Respondent No. 3 in the application but was not served any notice. On 19.12.2022 the Adjudicating Authority directed the Suspended Management, Related Parties and RSMML to hand over all documents and assets lying in RSMML’s premises within a week. Failing which, the Resolution Professional was given liberty to approach local police and the latter would give assistance. RSMML, which was one of the respondents, challenged the Order dated 19.12.2022 before NCLAT. RSMML argued that it was arrayed as Respondent No. 3 in the application filed by the Resolution Professional. However, the Adjudicating Authority allowed the application and passed the order without issuing notice to RSMML. Further, the directions to handover the assets within a week could not have been issued to RSMML without granting an opportunity to be heard. NCLAT Verdict The Bench observed that the direction issued by the Adjudicating Authority were final direction, allowing an application filed by the Resolution Professional without issuing notice to RSMML. The Bench held that the Adjudicating Authority ought to have issued notice to RSMML before passing any order on the interim application. “We thus at this ground alone set aside the Order dated 19.12.2022 and revive the application I.A./1115(AHM)2022 before the Adjudicating Authority to be heard afresh and decide in accordance with law.” The Bench set aside the Order dated 19.12.2022 and revived the interim application. The Appellant/RSMML has been directed to file Reply-Affidavit to the Application within three weeks and the NCLT would hear the matter afresh. Case Title: Rajasthan State Mines & Minerals Ltd. v Parag Sheth & Ors. Case No.: Company Appeal (AT) (Insolvency) No. 170 of 2023. Counsel for Respondent: Mr. Suresh Dutt Dobhal and Disha Ganjoo, Advocates for RP. Click Here To Read/Download Order

AA Ought To Issue Notice To Respondent(s) Before Passing Any Final Direction Against Them: NCLAT Delhi

Pallavi Mishra

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