9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1119 - Tri - IBCMaintainability of application - initiation of CIRP - service of notice u/s 8 of IBC - corporate debtor has failed and neglected to make the payment to the Operational Creditor till date - present case has been filed on behalf of Operational Creditor against the Corporate Debtor U/s 9 of the I B Code and before filing the present petition, the Operational Creditor had sent the demand notice as required U/s 8 of the IBC - whether the notice sent U/s 8 of the IBC is deemed to be served or not? - HELD THAT - It is a settled principle of law that there is a difference between the procedure for initiation of CIRP by the Financial Creditors U/s 7 of the IBC and the Operational Creditors U/s 9 of the IBC. So far as the Financial Creditor is concerned, as per Section 7 of the IBC, there is no need to deliver the notice before the initiation of CIRP and that has been decided by the Hon'ble Apex Court in Innoventive Industries Ltd. v. ICICI Bank 2017 (9) TMI 58 - SUPREME COURT . A mere plain reading of the provision shows that, in this provision like Section 8 of IBC, the word 'deliver the notice' is not mentioned, rather it is mentioned that 'the payee or the holder makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque', where in Section 8 of IBC, the word, 'deliver the notice upon unpaid operational creditor' is mentioned. There is a difference between these two Sections, Section 8 of TBC and Section 138(b) of the N.I. Act regarding the service of notice upon the person concern - The purpose to deliver the notice is to give an opportunity to the Corporate Debtor to raise a dispute or negotiate with the operational creditor and that was the intention of the legislatures, that is the reason the word 'delivery' has been given in place of 'sending or giving the notice upon the person concern'. The applicant had sent the demand notice only through the registered post, which was returned unserved and he has neither delivered it personally nor send the demand notice through electronic mail service to a whole time director or designated partner or key managerial personnel of the corporate debtor - the applicant has not complied the provision contained under Rule 5 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016, therefore, this Tribunal is of the considered view that the applicant has not delivered the demand notice as required U/s 8 of the IBC, which is the mandatory provision of law and so on this ground in the absence of delivery of demand notice as required U/s 8 of IBC, the present petition filed by the applicant/operational creditor is not complete and not maintainable and liable to be dismissed. Petition dismissed.
Issues Involved:
1. Whether the demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC), 2016, was duly served upon the Corporate Debtor. 2. Compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 3. Validity of the application under Section 9 of the IBC in the absence of proper service of demand notice. Issue-wise Detailed Analysis: 1. Whether the demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC), 2016, was duly served upon the Corporate Debtor: The Applicant/Operational Creditor sent a demand notice to the Corporate Debtor on 29.06.2019 and again on 19.07.2019. Both notices were returned with endorsements "Office Closed" and "Not Known". The Applicant argued that the notice should be deemed served based on precedents such as *State of MP v. Hiralal*, *C.C. Alavi Haji v. Palapetty Muhammad*, and *Alloysmin Industries v. Raman Casting (P.) Ltd.*. However, the Tribunal differentiated the current case from these precedents, noting that the notices were not served at any address of the Corporate Debtor, unlike the cases cited. Therefore, the Tribunal concluded that the demand notice was not duly served. 2. Compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016: Rule 5 outlines that a demand notice must be delivered to the registered office by hand, registered post, or speed post with acknowledgment due, or by electronic mail to key personnel of the Corporate Debtor. The Tribunal found that the Applicant only attempted delivery via registered post, which was returned unserved. The Applicant did not attempt delivery by hand or electronic mail. Consequently, the Tribunal held that the Applicant did not comply with Rule 5, which mandates proper delivery of the demand notice. 3. Validity of the application under Section 9 of the IBC in the absence of proper service of demand notice: The Tribunal emphasized the importance of delivering a demand notice under Section 8 of the IBC before initiating the Corporate Insolvency Resolution Process (CIRP) under Section 9. The purpose of this provision is to allow the Corporate Debtor an opportunity to settle the debt or raise a dispute. Since the Applicant failed to deliver the notice as required, the application under Section 9 was deemed incomplete and not maintainable. The Tribunal referenced the decision in *Eastern Travels (P.) Ltd. v. Swash Convergence Technologies Ltd.*, which supports the necessity of proper service of notice. Conclusion: The Tribunal dismissed the application (CP No. (IB)328/ALD/2019) due to non-compliance with Section 8 of the IBC and Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Applicant/Operational Creditor was granted liberty to file a fresh case after ensuring proper delivery of the demand notice as per the prescribed rules.
|
