Case Law Details
Aster Technologies Pvt. Ltd. Vs Solas Fire Safety Equipment Pvt. Ltd (NCLAT)
Brief Facts: An application was filed under Section 9 of IBC and the Adjudicating Authority issued Notice but none appeared for Respondent. The Adjudicating Authority disposed of by directing the Respondent to settle the issue in question within a stipulated period while observing that:
“the Respondent did not appear before the Adjudicating Authority, the amount involved in the case is mere Rs. 4.35 lakhs and initiation of CIRP is not a solution for the Petitioner, which is a small entrepreneur and operational Creditor. And chances of getting dues of Operational Creditors are very less in comparisons to secured Creditors.”
Decision: Appeal Allowed
Reason: The NCLAT held that ‘we find this approach of the Adjudicating Authority not to be in accordance with the law. If the Respondent is not served, 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. If the application is complete, it has to be admitted. The present order however directs the Respondent to settle the issue who had not appeared before the Adjudicating Authority, which is most inappropriate.’
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