11 March 2019: The Supreme Court has observed that stipulation of service of notice on the other side, pursuant to issuance of notice by the National Company Law Appellate Tribunal in an appeal, has to be complied with, regardless of supply of advance copy of appeal paper book prior to the issuance of notice by NCLAT.
The State Bank of India had approached the National Company Law Appellate Tribunal against an order passed by the National Company Law Tribunal, Calcutta. It set aside the NCLT order and directed to admit the application filed by the bank against Jai Balaji Industries Limited under Section 7, Insolvency and Bankruptcy Code. The company preferred appeal before the Apex court.
Senior Advocate Kapil Sibal, on behalf of the company, approached the Apex Court contending that principles of natural justice, was violated as the company was neither been served with notice of appeal before the NCLAT nor been given a hearing before it. On the other hand, Mukul Rohatgi, who appeared for the bank, submitted that the advance copy of the appeal paperbook filed by the Bank and was duly delivered by post at the registered office of the Company, wherein it showed intent to challenge the order of the NCLT.
The bench comprising Justice NV Ramana and Justice Mohan M. Shantanagoudar observed:
“Rule 48 of the NCLAT Rules clearly stipulates service of notice on the other side, pursuant to issuance of notice by the NCLAT in the appeal, regardless of supply of advance copy of appeal paperbook prior to the issuance of notice by NCLAT. Further, Rule 52 of the NCLAT Rules categorically states that the judicial section of the registry of the NCLAT shall record, in the “Notes of the Registry” column in the order sheet, the details regarding completion of service of notice on the respondents.”
Therefore, the court observed that, since no notice was served upon the company before the NCLAT as stipulated under the rules, and its right to be heard, audi alteram partem, has been violated.
The bench then set aside the NCLAT order and remanded the matter back to NCLAT with a direction to dispose of the matter as expeditiously as possible after affording an opportunity of hearing to the parties.