2011 (1) TMI 1563 - AT - Insolvency and Bankruptcy

Summary

Issues involved: Application filed by the Appellant- Operational Creditor u/s 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed due to invalid demand notice issuance.

Summary:
The National Company Law Appellate Tribunal, New Delhi, heard the appeal where the Respondent failed to appear. The Appellant, an Operational Creditor, had filed an application u/s 9 of the Insolvency and Bankruptcy Code, 2016, which was dismissed by the Adjudicating Authority for issuing a demand notice without authority.

Upon review, it was established that a valid demand notice is essential for initiating Corporate Insolvency Resolution Process (CIRP) u/s 9 of the I&B Code. The demand notice must be in the prescribed Form-3 and issued by the Operational Creditor or an authorized person. In this case, the notice was issued by an Advocate on behalf of the Operational Creditor, which was deemed valid as per legal precedents.

The Appellant cited a previous case where it was held that an Advocate can issue a demand notice on behalf of the operational creditor. The Tribunal agreed that the notice issued through an Advocate was valid, and the Adjudicating Authority's decision was inconsistent with legal principles.

Consequently, the Tribunal set aside the impugned order, remitted the matter back to the Adjudicating Authority for further consideration, and directed the Corporate Debtor to settle the claim. The appeal was allowed, and the Appellant was instructed to appear before the Adjudicating Authority on a specified date.