2020 (4) TMI 605 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Appellant has assailed the impugned order mainly on the ground that the impugned order is an ex parte order and was communicated to the Appellant on 09th January 2020 by the Insolvency Resolution Professional - HELD THAT - The Corporate Debtor failed to make the payment despite service of the demand notice issued under Form 3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016). The Corporate Debtor neither made the payment nor sent any notice of dispute and the alleged outstanding amount of more than ₹1,00,000/-. There is sufficient evidence on record to prove the amount due and payable against the Corporate Debtor in the circumstances - the service of the demand notice on the corporate debtor was proper. Despite service of notice under Section 8(1) of the I B Code, 2016 the Corporate Debtor neither made the payment not raised any dispute of the outstanding amount. The Appellant has admitted that the Court notice was received by its employee Ashish Gupta on 17th August 2019, but he left the organisation on 03rd October 2019. Since the said employee was in active employment of the Appellant/Corporate Debtor when he received the notice, thus it is clear that the order to proceed the case ex-parte is fully justified - The Appellant has also admitted that he has defaulted in payment of the outstanding amount due to cash crunch and was willing to pay the same. The Appellant has also not disputed the completion certificate dated 05th January 2018, which clearly shows that the work was completed to its satisfaction. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Admission of petition under Section 9 of the Insolvency and Bankruptcy Code 2016; Default in payment by the Corporate Debtor; Service of demand notice under Section 8(1) of the Insolvency and Bankruptcy Code; Ex parte order due to failure to respond to court notices; Dispute regarding outstanding amount and quality of materials supplied; Justification for interference in the impugned order.

Analysis:
The judgment by the National Company Law Appellate Tribunal pertains to an appeal arising from an order passed by the Adjudicating Authority/National Company Law Tribunal concerning the admission of a petition under Section 9 of the Insolvency and Bankruptcy Code 2016. The case involves a dispute between an operational creditor and a corporate debtor, where the creditor supplied materials as per a purchase order, invoiced the debtor, and subsequently sought payment for the outstanding amount. Despite various requests and a demand notice, the corporate debtor failed to make the payment, leading to the initiation of insolvency proceedings.

The appellant contested the impugned order, primarily arguing that it was an ex parte order due to alleged lack of communication regarding court notices. The appellant claimed that the company was not insolvent but faced temporary cash flow issues, leading to the non-settlement of dues. Additionally, the appellant raised concerns about quality issues with the materials supplied, which led to a dispute over the remaining balance.

The tribunal carefully examined the evidence presented, including email correspondences, completion certificates, and acknowledgment of demand notices. It noted that despite the appellant's acknowledgment of the outstanding amount and promises to settle the debt, no payment was made, and no dispute was raised officially. The tribunal found that the service of demand notices was proper, and the ex parte order was justified due to the appellant's failure to respond despite being aware of the court proceedings.

Ultimately, the tribunal concluded that there was no valid reason to interfere with the impugned order, as the appellant's justifications did not hold sufficient merit. Therefore, the appeal was dismissed, with no costs imposed. The judgment emphasizes the importance of timely responses to legal notices, adherence to contractual obligations, and the significance of formal dispute resolution mechanisms in insolvency proceedings.

This comprehensive analysis highlights the key legal aspects, factual contentions, and procedural considerations addressed in the judgment, providing a detailed understanding of the case and the tribunal's decision.