2018 (10) TMI 1892 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - whether issuing Section-8 notice without enclosing copies of invoices and then as to non-filing of invoices along with Section-9 Petition will amount to not furnishing of material papers as envisaged under section 9 (2) of the Code or not? - HELD THAT - In this case, the document to prove goods supplied is invoices, which the petitioner has not produced before this Bench. That apart, the corporate debtor has not admitted the claim made by the petitioner. In this background, only one conclusion that could be drawn is the petitioner failed to prove the existence of debt. The first essential proof required to admit the case is existence of debt, which the petitioner failed to do, therefore the petition shall be dismissed.

Summary

Issues:
1. Petition filed against Corporate Debtor under section 9 of the Insolvency & Bankruptcy Code due to default in payment.
2. Dispute regarding the validity of the petition based on the failure to attach copies of invoices along with the notice.
3. Examination of the difference between Form-3 and Form-4 templates in relation to the requirement of attaching invoices.
4. Determination of whether the petition is maintainable without furnishing copies of invoices as proof of debt.

Analysis:
1. The petitioner initiated a Company Petition against the Corporate Debtor under section 9 of the Insolvency & Bankruptcy Code due to non-payment of dues amounting to ?26,47,048 for goods supplied. The petitioner's claim was based on the invoices raised against the Corporate Debtor for the products supplied.

2. The Corporate Debtor's defense centered around the contention that the petitioner failed to attach copies of the invoices along with the notice as required under Form-4 of the Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. The discrepancy in dates mentioned in the notice and the petition was also highlighted by the Corporate Debtor's Counsel to challenge the validity of the petition under section 9 (5) (ii) of the Code.

3. The Tribunal examined the difference between Form-3 and Form-4 templates to understand the requirement of attaching invoices. While Form-3 allows for either a demand notice or an invoice demanding payment without specifying the attachment of invoices, Form-4 explicitly mentions a "Notice attached to invoice demanding payment." The Tribunal concluded that the notice issued in Form-4 without attaching invoices was defective and not curable post-petition filing.

4. The key issue for determination was whether the petition could be considered maintainable without furnishing copies of invoices, which serve as crucial evidence of the goods supplied to the Corporate Debtor. The Tribunal referred to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which mandate the filing of specific documents, including invoices, to prove the existence of debt.

5. The Tribunal emphasized the importance of providing material papers, such as invoices, along with the petition to substantiate the claim of debt. Since the petitioner failed to produce the invoices as evidence of goods supplied and the Corporate Debtor did not acknowledge the claim, the Tribunal concluded that the petitioner had not proven the existence of debt. Consequently, the petition was dismissed for lack of essential proof required for admission, with the petitioner granted liberty to explore other legal avenues available.