2017 (11) TMI 926 - Tri - Insolvency and Bankruptcy

Corporate insolvency resolution process - notices not issued by the Operational Creditor but by the Advocates Associates, namely, SPS 85 Associates - Held that - In the present case, admittedly the notice has been given by Associate of Advocates and there is nothing on the record to suggest that the Associate of Advocates was authorised by the respondent- Operational Creditor or was holding any position with or in relation to the respondent company, the so-called notice cannot be treated as notice under Section 8 of the I & B Code. The aforesaid fact is also accepted by the learned counsel appearing on behalf of the respondent- Operational Creditor , who submits that the due amount has already been paid by the appellants- Corporate Debtor .In view of the aforesaid admitted position that the notice under Section 8 was not issued in terms of the provisions of the Adjudicating Authority Rules and I & B Code, we have no option but to set aside the impugned order dated 6th July, 2017.

Issues:
Delay in re-filing appeal condonation, validity of demand notice under I & B Code, authorization of notice issuer, setting aside impugned order, legality of actions by Interim Resolution Professional, dismissal of application under Section 9, release of appellant company, fee payment to Interim Resolution Professional.

Delay in re-filing appeal condonation:
The Tribunal condoned the delay in re-filing the appeal, disposing of I.A. No. 486 of 2017.

Validity of demand notice under I & B Code:
The appeal was filed by the Corporate Debtor against an order admitting an application by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 (I & B Code). The Corporate Debtor challenged the validity of the demand notice, arguing it was issued by an unauthorized party. Citing a previous judgment, the Tribunal emphasized that only notices in Form-3 or Form-4 could trigger the serious consequences of non-payment of Operational Debt.

Authorization of notice issuer:
The Tribunal noted that the demand notice was issued by an Associate of Advocates, not authorized by the Operational Creditor. The absence of authorization rendered the notice invalid under the I & B Code, leading to the setting aside of the impugned order.

Setting aside impugned order:
Due to the unauthorized issuance of the demand notice, the Tribunal set aside the order passed by the Adjudicating Authority on 6th July 2017. Consequently, all actions taken based on that order, including the appointment of an Interim Resolution Professional and declaration of moratorium, were declared illegal and set aside.

Legality of actions by Interim Resolution Professional:
The Tribunal deemed all orders and actions taken by the Adjudicating Authority, including the appointment of an Interim Resolution Professional and any related advertisements, as illegal and set them aside. The proceeding under Section 9 of the I & B Code was dismissed, allowing the appellant company to function independently through its Board of Directors.

Dismissal of application under Section 9, release of appellant company:
The application under Section 9 of the I & B Code was dismissed, releasing the appellant company from the legal constraints imposed by the impugned order. The company was permitted to operate independently through its Board of Directors immediately.

Fee payment to Interim Resolution Professional:
The Adjudicating Authority was directed to fix the fee of the Interim Resolution Professional, if appointed, with the respondent responsible for paying the fees for the period of the professional's service. The appeal was allowed with the specified observations and directions, with no order as to costs in the circumstances of the case.

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