2019 (10) TMI 281 - Tri - Insolvency and Bankruptcy

Maintainability of application - Corporate Debtor - mandatory notice - notice has been sent by e-mail as well as by post but the notice sent by post has not been served for the reason as the addressee left without instructions. - dishonor of cheque - Section 9 of the Insolvency Bankruptcy Code, 2016 - HELD THAT - In view of the facts that the notice dated 4th December, 2018 though stated to have been sent by the Operational Creditor by post to the Corporate Debtor, but it could not be delivered due to the absence of the Corporate Debtor at its registered address. Section 8(1) specifically mentions that an Operational Creditor may, on the occurrence of a default, deliver a demand notice of unpaid Operational Debt . The law specifically mandates that the Operational Creditor shall see to it that the demand notice is actually delivered by the Operational Creditor or any of its Agents, Postal Authorities or whatever mode is adopted by him to deliver the demand notice but, there should be specific physical delivery of the notice - It is further clarified that the Corporate Debtor shall be bound to bring to the notice of the Operational Creditor about the existence of dispute or payment of unpaid Operational debt within a period of 10 days of receipt of demand notice or copy of the invoice mentioned in sub section (1) of Section 8. It is thus clear that the Operational Creditor has admittedly not complied with the provisions of Section 8 of the Insolvency and Bankruptcy Code and therefore the application thus fails and is deserve an order of rejection under Section 9(5)(ii)(c) of the Code. Petition dismissed.

Summary

Issues:
- Failure to deliver a demand notice of unpaid operational debt as per Section 8 of the Insolvency & Bankruptcy Code, 2016.

Analysis:
The case involved a Company Petition filed by an Operational Creditor against a Corporate Debtor for non-payment of dues. The Operational Creditor had supplied Ready Mix Concrete to the Corporate Debtor, and despite several reminders and notices, the Corporate Debtor failed to pay the outstanding amount. The Operational Creditor claimed a sum of ?5,42,620, including principal dues and interest. The Corporate Debtor acknowledged the dues but failed to make the payment as promised. The Operational Creditor issued a notice under the Insolvency and Bankruptcy Code, which was returned unserved by the postal department and also sent by email, but no response was received.

The Tribunal noted that the mandatory notice under Section 8 of the Code had not been delivered to the Corporate Debtor. Section 8 requires the Operational Creditor to deliver a demand notice of unpaid operational debt to the Corporate Debtor, and the Corporate Debtor must respond within ten days. In this case, the notice sent by the Operational Creditor was not physically delivered to the Corporate Debtor, as required by law. As a result, the Operational Creditor failed to comply with the provisions of Section 8 of the Code. Therefore, the Tribunal rejected the Company Petition under Section 9(5)(ii)(c) of the Code, emphasizing the importance of proper delivery of the demand notice.

In conclusion, the Company Petition was rejected due to the Operational Creditor's failure to deliver the demand notice of unpaid operational debt as required by Section 8 of the Insolvency & Bankruptcy Code, 2016. The Tribunal highlighted the necessity of strict compliance with legal provisions to initiate insolvency proceedings and emphasized the significance of proper service of notices in such cases.