If the Application under Sec. 9 of the IBC is complete, it has to be admitted: NCLAT

If the Application under Sec. 9 of the IBC is complete, it has to be admitted: NCLAT

The Hon'ble NCLAT has firmly observed that it has to be ensured that the Respondent is served with the Notice. If the Respondent has been served and does not appear, the Adjudicating Authority would be required to consider if the Application under Section 9 of IBC is complete and if there is debt due and default as required by the law. Further, it also held that if Application is complete, it has to be admitted.

In the Appeal filed by the Appellant-Operational Creditor i.e. Aster Technologies Pvt. Ltd., the National Company Law Appellate Tribunal (NCLAT) has set aside the impugned Order passed by the Adjudicating Authority (NCLT, Bengaluru Bench).

By the Impugned Order, the Adjudicating Authority disposed of the Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Appellant as Operational Creditor with a direction to the Respondent (who was not yet served) to settle the issue or the Appellant would be at liberty to file fresh Company Petition.

The Appellant in this case submitted that the Appellant filed the Application under Section 9 of IBC and the Adjudicating Authority issued Notice. On the date of return of Notice, the Appellant claimed that service was complete but none had appeared for Respondent.

The Adjudicating Authority observed that the amount of the Operational Debt was small amount of Rs. 4.35 lakhs and thus instead of admitting the Application under Section 9 of IBC directed the Respondent to settle the issue and left the Appellant high and dry.

On the contrary, the Respondent submitted that on merits the Respondent had a good case as there was pre-existing dispute. It was also submitted that the claim was barred by Limitation. It was stated that the Respondent was not served.

If application is complete, it has to be admitted. The present order however directed the Respondent to settle the issue who had not appeared before the Adjudicating Authority, which is most inappropriate.

Hence, due to these reasons the Impugned Order was set aside and the matter was remanded back to the Adjudicating Authority. The Adjudicating Authority has also been requested to consider the Application as per provisions of IBC and decide the same as per law, after hearing the parties. The Appellant and Respondent have been directed to appear before the Adjudicating Authority on 27th January, 2021.