2017 (12) TMI 1772 - AT - Insolvency and Bankruptcy

Service of notice - appellant submitted that before treating the petition for winding up as am application under Section 9 of the I B Code the respondent has not complied with the provisions of the I B Code as no notice under sub-section (1) of Section 8 of the I B Code was issued in Form 3 or 4 and the application has been admitted though there is existence of a dispute. HELD THAT - In the present case as notice under sub-section (1) of Section 8 of I B code has not been issued by the Respondent (operational creditor), we hold that the application preferred by the Respondent was incomplete. In this circumstances, we have no other option but to set aside the impugned order dated 28th July, 2017 passed by the National Company Law Tribunal, Chennai Bench, Chennai and declare that the application preferred by the Respondent under Section 433 of the Companies Act, 1956 stands abated. The order (s) passed by Ld. Adjudicating Authority appointing any Interim Resolution Professional declaring moratorium, freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the Resolution Professional , including the advertisement, if any, published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent is dismissed - Adjudicating Authority will fix the fee of Interim Resolution Professional , and the appellant will pay the fees of the Resolution Professional , for the period he has functioned. Appeal allowed.

Summary

Issues:
Challenge to impugned order under the Insolvency and Bankruptcy Code, 2016; Compliance with provisions of the I&B Code regarding notice issuance and dispute existence; Interpretation of Rules regarding transfer of winding up proceedings; Requirement of demand notice under Section 8 of the I&B Code; Completeness of application under Section 9; Legality of orders passed by Adjudicating Authority.

Analysis:
The judgment involves a challenge to an order passed by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. The appellant contested that the respondent did not comply with the I&B Code provisions as no notice under Section 8 was issued, and the application was admitted despite a dispute. The respondent argued that there was no dispute, and partial payment was made during the proceedings. However, both parties acknowledged the absence of a notice under Section 8. The Tribunal referred to a similar case and highlighted Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, which mandates the submission of information for admission of the petition within a specified period after transfer from the High Court.

The judgment emphasized the importance of a demand notice under Section 8 of the I&B Code, which triggers the obligation for the Corporate Debtor to either pay or dispute the claim. The prescribed format for filing an application under Section 9 includes specific details and required attachments such as invoice copies, bank statements, and affidavits. Due to the absence of the Section 8 notice in the present case, the Tribunal deemed the application incomplete and set aside the impugned order, declaring the application abated.

Consequently, all orders related to the appointment of an Interim Resolution Professional, moratorium declaration, and other actions were deemed illegal and set aside. The appellant was released from legal constraints and allowed to resume independent operations through its Board of Directors. The Tribunal directed the Adjudicating Authority to determine the Interim Resolution Professional's fee, to be paid by the appellant for the period of service. The appeal was allowed without costs, enabling the operational creditor to issue a fresh notice under Section 8 and file a new application if necessary.