Advocates and Solicitors send notice on instructions of client which cannot be ignored for want of Resolution of company: NCLAT

National Company Law Appellate Tribunal (NCLAT): A Bench comprising of Justice A.I.S. Cheema, Member (Judicial) and Balvinder Singh, Member (Technical) dismissed an appeal filed against the order of National Company Law Tribunal (Mumbai) whereby it had admitted application filed by Operational Creditor under Section 8 read with Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against Corporate Debtor.

Appellant was the Managing Director of Corporate Debtor. His submissions as to existence of dispute as contemplated under the code were not accepted. The main point considered by the Appellate Tribunal was regarding the non-observance of the provision of serving of notice by the Adjudicating Authority (NCLT) before admitting the application. It was argued by the appellant that absence of service of notice by the Adjudicating Authority itself violates principles of natural justice. Reliance was placed upon Starlog Enterprises Ltd. v. ICICI Bank Ltd., 2017 SCC OnLine NCLAT 13 and Mass Metals (P) Ltd v. Sunflag Iron and Steel Co. Ltd., 2017 SCC OnLine NCLAT 504. It was also an admitted fact that the appellant received the notice sent under Section 8 of I&B Code but Veritas Legal, Advocates & Solicitors of operational Creditor but it was contended that Veritas Legal was not the filing authority of the application in NCLT and nor was it authorised by any Board Resolution to act on behalf of Operational Creditor.

The Appellate Tribunal was of the view that Corporate Debtor and appellant had knowledge of the legal proceedings and also of the notice. It observed, “When advocate sends the notice, it is on instructions from the client and the same cannot be ignored by saying that the advocate should also forward authority and Resolution of the Company.” In regard to the requirement of notice to be sent by Adjudicating Authority, the Appellate Tribunal observed that the appellant had sufficient notice and still chose not to appear before NCLT. In such a case, the non-observance of the requirement was not fatal to the appellant’s case. Resultantly, it was held that the appeal was sans merit and was thus dismissed. [J.B. Tiwari v. Biostadt India Ltd., 2018 SCC OnLine NCLAT 563, decided on 30-11-2018]

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