Legal Analysis in Reconsideration of Application under Section 9

In a recent legal case, the court focused on the meticulous legal analysis of the application under Section 9, setting a standard for thorough examination of documentation in insolvency proceedings. The court’s decision to reevaluate the admission of new documents showcases the importance of due process and fairness in legal proceedings. Stay tuned for further insights on this significant legal development.

Facts

NCLT rejected the application made by the respondent due to limitations in the documents provided.
The corporate debtor disputed the dues on 17.08.2019, referencing a pending dispute with the Directorate of Health Services.
The appellate tribunal allowed the applicant to submit additional documents related to settlement propositions for dues.
Documents dated 15.12.2017 and 02.02.2017 were considered for acknowledgment of debt, but limitations were seen from their respective dates.
The Adjudicating Authority erred in holding the applicant’s claim to be barred by time.
The application under Section 9 of the Code was filed by the applicant-respondent as an operational creditor on 30.06.2020.
The applicant-respondent claimed that there was a distribution agreement for selling pharmaceutical products.
Multiple invoices and credit notes were issued by the applicant-respondent.
A demand notice for USD 9,01,000 was sent on 25.07.2019 but returned undelivered.
Another demand notice was sent on 07.08.2019 to the new registered office address of the corporate debtor.
The Appellate Tribunal considered emails as acknowledgements by the corporate debtor.

Also Read: Legal Analysis on Alleged Multiple Agreements in Property Sale Case

Analysis

The NCLAT allowed the application under Section 9 of the Code despite objections raised.
The Adjudicating Authority is expected to prioritize the matter filed in June 2020 and proceed expeditiously.
Additional documents, namely the e-mails, were deemed necessary for adjudication despite not being on record before NCLT.
The NCLT’s order dated 06.10.2020 is set aside to reconsider the application under Section 9 with the new documents and providing a fair hearing to the corporate debtor.
Maintainability of the appeal by the corporate debtor was questioned by their counsel.
Impugned order allowing the appeal and admitting the application under Section 9 cannot be sustained due to lack of response opportunity to the corporate debtor regarding the additional documents.
The appropriate course of action is to set aside the NCLAT’s order that allowed the application under Section 9 but retain the part admitting the new documents.
The application under Section 9 of the Code in CP(IB) 841(ND) of 2020 has been restored for re-consideration by the Adjudicating Authority.
The court has not made any pronouncement on the merits of the case or the evidentiary value of the documents in question.
The impugned order was passed on 15.12.2021, and no further steps, including the appointment of a resolution professional, have been taken in the matter.
Objections raised by the learned senior counsel for the respondent have been overruled in this matter.