2017 (11) TMI 782 - AT - Insolvency and Bankruptcy

Corporate insolvency procedure - Advocate/Lawyer or Chartered Accountant or Company Secretary eligibility to issue notice under Section 8 of the I&B Code - Held that - In view of provisions of I&B Code, read with Rules, as referred to above, we hold that an Advocate/Lawyer or Chartered Accountant or Company Secretary in absence of any authority of the Board of Directors, and holding no position with or in relation to the Operational Creditor cannot issue any notice under Section 8 of the I&B Code, which otherwise is a lawyer s notice as distinct from notice to be given by operational creditor in terms of section 8 of the I&B Code. In the present case as an advocate/lawyer has given notice and there is nothing on record to suggest that the lawyer has been authorised by Board of Directors of the Respondent DF Deutsche Forfait AG and there is nothing on record to suggest that the lawyer hold any position with or in relation with the Respondents, we hold that the notice issued by the lawyer on behalf of the Respondents cannot be treated as a notice under section 8 of the I&B Code and for that the petition under section 9 at the instance of the Respondents against the Appellant was not maintainable. See Uttam Galva Steels Limited v. DF Deutsche Forfait AG & Anr. Company Appeal (AT) (Insolvency) 2017 (8) TMI 1198 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI In effect, order(s), if any, passed by Ld. Adjudicating Authority appointing any Interim Resolution Professional or declaring moratorium, freezing of account, if any, and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the Interim Resolution Professional , including the advertisement, if any, published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 9 of the I&B Code, 2016 is dismissed

Summary

Issues Involved:
Condonation of delay in filing the appeal, validity of the notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, authority to issue notice under Section 8 of the I&B Code, setting aside the impugned order, legality of orders passed by the Adjudicating Authority, dismissal of the application under Section 9 of the I&B Code, release of the appellant company from legal obligations, payment of fees to the Interim Resolution Professional.

Condonation of Delay:
The appeal was filed beyond the prescribed period of 30 days, necessitating an application for condonation of delay. The appellant argued that the delay was due to the closure of the Appellate Tribunal during summer vacations. After considering the submissions, the delay of 11 days was condoned by the Appellate Tribunal.

Validity of Notice under Section 8 of the I&B Code:
The appellant contended that the impugned order was passed without proper consideration as the notice under Section 8 of the I&B Code was not issued by the respondent 'Operational Creditor' but by a legal firm. It was revealed that the notice was indeed not issued by the Operational Creditor, a fact acknowledged by the respondent's counsel.

Authority to Issue Notice under Section 8 of the I&B Code:
The Appellate Tribunal referred to a previous judgment where it was established that only a person authorized to act on behalf of the Operational Creditor, holding a position with or in relation to the Operational Creditor, can issue a notice under Section 8 of the I&B Code. In this case, as an advocate/lawyer issued the notice without proper authorization or position with the Operational Creditor, the notice could not be considered valid under the I&B Code.

Setting Aside the Impugned Order:
Citing the precedent set in a related case, the Appellate Tribunal concluded that the notice issued by the lawyer on behalf of the respondent did not meet the requirements of Section 8 of the I&B Code. Consequently, the impugned order was set aside, rendering any actions taken based on that order as illegal.

Legality of Orders Passed by the Adjudicating Authority:
All orders passed by the Adjudicating Authority, including the appointment of an Interim Resolution Professional and any related actions, were declared illegal and set aside. The application under Section 9 of the I&B Code was dismissed, and the appellant company was released from legal obligations to function independently through its Board of Directors.

Payment of Fees to the Interim Resolution Professional:
The Adjudicating Authority was tasked with fixing the fee of the Interim Resolution Professional, if appointed, with the respondents responsible for paying the fees for the period of the professional's service. The appeal was allowed with the mentioned observations and directions, with no costs awarded in the circumstances of the case.