2019 (9) TMI 1661 - 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 - HELD THAT - As per provision of Section 8(1) of Insolvency and Bankruptcy Code, 2016, an operational creditor on occurrence of a default is required to deliver a demand notice to which the corporate debtor is required to respond within a period of 10 days from the date of receipt of such notice. As per provision of Sec.9 (5)(ii) clause (c) Insolvency and Bankruptcy Code, 2016 the Tribunal will reject the application if the creditor has not delivered invoice or notice for payment to the corporate debtor - the claim of receipt of money in May 20 16 is not evidenced by the documentary evidence of Banker s Certificate or details of cheques or any DD Note details. Hence, this also goes against the claim of the operational creditor. In view of this, it is not considered necessary to go into other aspects. This petition is dismissed.

Summary

Issues:
1. Initiation of corporate insolvency resolution process under Sec.9 of the Insolvency & Bankruptcy Code, 2016.
2. Maintainability of the petition on the grounds of debt being barred by limitation.
3. Delivery of notice under Sec.8 Insolvency & Bankruptcy Code, 2016.
4. Rejection of application based on non-delivery of invoice or notice for payment to the corporate debtor.

Analysis:

1. The judgment revolves around a petition filed by an operational creditor under Sec.9 of the Insolvency & Bankruptcy Code, 2016 against a corporate debtor for the initiation of the corporate insolvency resolution process. The operational creditor claimed a default amount of Rs.43,00,510, comprising principal and interest. The operational creditor provided Rig on hire to the corporate debtor as per agreements, leading to an outstanding balance.

2. The issue of the petition's maintainability due to the debt being barred by limitation was raised. The operational creditor argued that the last payment was received in March 2016, making the petition within the limitation period. Additionally, a winding-up petition under the Companies Act, 2013 was filed within the limitation period as well.

3. The delivery of notice under Sec.8 of the Insolvency & Bankruptcy Code, 2016 was contested. The operational creditor claimed to have served the notice on the corporate debtor, while the corporate debtor denied receiving it. The lack of proof of delivery of the notice was highlighted as a crucial defect.

4. The Tribunal rejected the application based on the non-delivery of the invoice or notice for payment to the corporate debtor, as mandated by Sec.9(5)(ii) of the Insolvency and Bankruptcy Code, 2016. The absence of proof of delivery of the notice was considered an incurable defect, leading to the dismissal of the petition. The Tribunal also noted the lack of documentary evidence supporting the operational creditor's claim of receipt of money in May 2016, further weakening the creditor's case.

In conclusion, the judgment emphasizes the importance of complying with procedural requirements, such as delivering notices and maintaining evidence to support claims, in insolvency proceedings. The dismissal of the petition highlights the significance of meeting statutory obligations and providing concrete proof to substantiate claims in such legal processes.