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2020 (3) TMI 1251 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - demand notice under Section 8(1) of the IB, Code - HELD THAT - The demand notice was sent through its proprietor Ms. Shipra Somani and not in the name of M/s. Jai Laxmi Traders. Therefore, the contention of the applicant that since it was sent in the name of proprietorship firm, therefore, it is not the proper demand notice is not correct rather we are of the view that since it was sent through the Shipra Somani, hence it is maintainable and same is a demand notice under Section 8(1) of the IB, Code. Before initiating a proceeding under Section 9, the operational-creditor is required to fulfil the conditions mentioned under Section 8(1), if he has not sent the demand notice as required under Section 8(1) of the IB, Code, then he cannot invoke the provision under Section 9, rather he can invoke the provision of Section 9 only, when CD fails to raise the existing of disputes or place the document to show that unpaid operational-creditor has been paid within ten days of the receipt of the demand notice. Therefore on the basis of aforesaid provision, we are of the view that Section 8 and 9 cast a duty upon the operational-creditor as well as CD to act as per Section 8 and if they fail to fulfil the conditions of Section 8 and 9 then in that case neither the application filed by the operational-creditor is maintainable nor the plea of existing of disputes or the payment of debt subsequently taken by the CDs can be taken into consideration. In the present case, since it is specifically mentioned in Section 8(2) that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application filed on behalf of the operational-creditor. Thus, there is no force in the contention raised on behalf of the learned counsel for the corporate-debtor, since there is an existence of disputes, hence the present application is not maintainable - application admitted - moratorium declared.
Issues Involved:
1. Maintainability of the application filed by the operational creditor. 2. Existence of a pre-existing dispute between the parties. 3. Validity of the demand notice sent by the operational creditor. 4. Settlement of the outstanding debt through WhatsApp communications. 5. Admission of the application and initiation of the Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Maintainability of the Application: The operational creditor, a sole proprietorship, filed an application to initiate CIRP against the corporate debtor for a defaulted amount of INR 21,27,034.75. The corporate debtor contended that the application was not maintainable, arguing that the operational creditor acted as a facilitator between the actual manufacturer/supplier and the corporate debtor. The Tribunal found that the operational creditor was engaged in wholesale trading and not merely a facilitator. Therefore, the application was maintainable. 2. Existence of a Pre-existing Dispute: The corporate debtor claimed that disputes arose due to the operational creditor dumping goods without demand and that a settlement was reached via WhatsApp messages. However, the operational creditor denied any such settlement or disputes. The Tribunal noted that the corporate debtor failed to raise any dispute within ten days of receiving the demand notice, as required under Section 8(2) of the Insolvency and Bankruptcy Code (IBC). Consequently, the Tribunal held that no pre-existing dispute existed. 3. Validity of the Demand Notice: The corporate debtor argued that the demand notice was invalid as it was sent by the sole proprietorship firm. However, the Tribunal found that the demand notice was sent through the proprietor, Ms. Shipra Somani, and not in the name of the firm. Therefore, the demand notice was valid and maintainable under Section 8(1) of the IBC. 4. Settlement of the Outstanding Debt through WhatsApp Communications: The corporate debtor relied on WhatsApp messages to claim that a settlement was reached. The Tribunal examined the WhatsApp messages and found no written settlement agreement between the parties. The Tribunal held that the corporate debtor's claim of settlement was baseless and that the outstanding amount was due. 5. Admission of the Application and Initiation of CIRP: The Tribunal found that the operational creditor's application was complete, and there was no payment of the unpaid operational debt. No notice of dispute was received by the operational creditor, and there was no record of dispute in the information utility. Consequently, the Tribunal admitted the application and initiated the CIRP against the corporate debtor. A moratorium was imposed under Section 14 of the IBC, and Mr. Anand Sonbhadra was appointed as the Interim Resolution Professional (IRP). Conclusion: The Tribunal admitted the application filed by the operational creditor, initiated the CIRP against the corporate debtor, and imposed a moratorium. Mr. Anand Sonbhadra was appointed as the IRP, and the operational creditor was directed to deposit the fee for the IRP's immediate expenses. The Registry was directed to communicate the order to the IRP and both parties.
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