2020 (6) TMI 731 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - allegation is that demand notice has not been received by the Corporate debtor - HELD THAT - On perusal of tracking report, it is found that however a notice was sent on 13/11/2019, which was booked from the Jungpura SO but the same was not delivered to the registered office/Pin Code of the Corporate Debtor and the notice was returned to Jungpura SO from where the article was booked. It is further found that the tracking report clearly shows that the address given by the Applicant was insufficient and it could not be delivered on the registered address of the Corporate Debtor, rather, it was returned to the Applicant. Therefore, the claim of the Applicant that he had delivered the demand notice as required under Section 8(1) of the IBC is not supported with the document. Thereafter, we have gone through the page No. 58 of the application i.e. annexure P7, which is the e-mail sent on 01/04/2019 and in this e-mail it is specifically mentioned that the notice which the Applicant sent was returned with a remark Left and thereafter, the Applicant sent the demand notice through e-mail [email protected] . At this juncture, we would like to refer page 40 of the application i.e. master data enclosed by the Applicant as annexure P2/which also shows the name of the directors of the Corporate Debtor company but in the master data, the e-mail ID of the director is not given rather one e-mail ID of which the applicant claimed to sent the demand notice is given but from the perusal of the same, it can not be said that this e-mail ID is one of the persons as required under Rule 5(2) of the Adjudicating Authority Rule. Mere plain reading of the rules shows that the e-mail ID on which the Applicant had delivered the demand notice was neither of a whole time director or designated partner or key managerial personal of corporate debtor, therefore, we have no option but to hold that the demand notice as required under Section 8(1) of the IBC has not been delivered, therefore, the claim of the Applicant that no reply as required under Section 8(2) of the IBC is given by the Corporate Debtor is not liable to be accepted. It is found that the Financial Creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to whereas an Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Since the present application has been filed under Section 9 of the IBC, therefore, we can say that the applicant claimed that on the basis of consent decree an Operational Debt became due but when we shall read the definition of Operational Debt then we find that the decree is not included as an Operational Debt, of course definition of Creditor include decree holder but definition of Operational Creditor does not include decree holder. A decree-holder does not come within the definition of Operational Creditor, therefore, the present application is not maintainable - Under such circumstances, generally in a case when the demand notice was not duly delivered then we direct the Operational Creditor to file a fresh application after delivery of demand notice, but here in this case, since we hold that applicant is not Operational Creditor and decree is not a Operational debt, therefore, we are not inclined to give such directions rather we held that the present application is not maintainable as Applicant is not an Operational Creditor, therefore, we have no other option but to dismiss the present application. Application dismissed.

Summary

Issues Involved:
1. Definition and qualification of "Operational Creditor" under Section 3(23) of the Insolvency and Bankruptcy Code, 2016.
2. Validity of the demand notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016.
3. Whether a decree holder qualifies as an "Operational Creditor" under Section 5(20) of the Insolvency and Bankruptcy Code, 2016.

Issue-wise Analysis:

1. Definition and Qualification of "Operational Creditor" under Section 3(23) of the Insolvency and Bankruptcy Code, 2016:

The Corporate Debtor contended that the Petitioner does not fall under the definition of "Operational Creditor" as per Section 3(23) of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor referenced the case of R.G. Steels Vs. Berry Auto Ancillaries Pvt. Ltd., where it was held that a Sole Proprietary Concern is not included under the term "person" as defined in Section 3(23) of IBC. The Tribunal considered this argument and observed that the definition indeed does not explicitly include a Sole Proprietary Concern, thus questioning the eligibility of the Petitioner as an Operational Creditor.

2. Validity of the Demand Notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016:

The Tribunal examined whether the demand notice was properly delivered to the Corporate Debtor as required under Section 8(1) of the IBC. The Petitioner claimed that the notice was sent and delivered, but the tracking report showed that the notice was returned due to an insufficient address. Although the Petitioner later sent the notice via email, the Tribunal found that the email was not sent to a whole-time director, designated partner, or key managerial personnel as required under Rule 5(2) of the Adjudicating Authority Rules. Consequently, the Tribunal held that the demand notice was not validly delivered, and thus the claim that no reply was received under Section 8(2) could not be accepted.

3. Whether a Decree Holder Qualifies as an "Operational Creditor" under Section 5(20) of the Insolvency and Bankruptcy Code, 2016:

The Tribunal considered whether the consent decree obtained by the Petitioner qualifies as an "Operational Debt" under Section 5(21) of the IBC. The Tribunal noted that while the definition of "Creditor" under Section 3(10) includes a decree holder, the definitions of "Financial Creditor" and "Operational Creditor" under Sections 5(7) and 5(20) do not. The Tribunal referred to the NCLAT decision in Digamber Bhondwe Vs. JM Financial Asset Reconstruction Company Limited, which clarified that a decree holder does not have the standing to initiate CIRP under Sections 7 or 9 of the IBC. Thus, the Tribunal concluded that a decree holder does not qualify as an Operational Creditor, and the present application is not maintainable.

Conclusion:

The Tribunal dismissed the application on the grounds that the Petitioner does not qualify as an Operational Creditor and the decree does not constitute an Operational Debt. Additionally, the demand notice was not validly delivered as per the statutory requirements. Therefore, the application was dismissed, and the Registry was instructed to inform both parties.