2020 (8) TMI 792 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - ex-parte order - service of notice - it is contended that application filed by the Financial Creditor is not served on the correct address and the notice has also been served upon him - HELD THAT - The email ID [email protected] is printed on the letterhead of the Corporate Debtor, therefore, there is no force in the argument of appellant that the said Email ID was used by the staff. This is an after thought. Further it is the duty of the Corporate Debtor to access to his emails and can not take excuse that the same was not in use. Financial Creditor has duly served the Corporate Debtor. We also not e that the Notice dated 25th August, 2019 (Page 27 of Reply of Respondent No.1) was also sent to email ID [email protected] in addition to email ID [email protected] of appellant. The email [email protected] is the email of erstwhile Director of Grand Batteries Pvt Ltd . We also note notices were also pasted on the premises of Grand Batteries Pvt Ltd in which the appellant happened to be Director. The Notice under Section 13(2) of SARFEASI Act was served upon the Corporate Debtor and its sister concern, M/s Nihan Batteries Ltd, (Page 86 and 94 of Appeal Paper Book) at the common address. The IRP made a public announcement on 1.11.2019 as per Rule 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016. In this Public Announcement the name of the Corporate Debtor, Insolvency commencement date in respect of corporate debtor, Corporate Identification No. of corporate debtor etc. is given. This public announcement is for public at large. Even if it is presumed that the appellant was not served at the correct address or at the correct email, this public announcement is made known to each and every citizen of country and the appellant cannot deny it. Therefore, the appellant should have filed the appeal within 45 days from the date of public announcement i.e. 1.11.2019. But the appellant has not done this and taking the irrelevant pleas that the email if not being used by them for the last three years or the email was for the staff etc. Thus, it is established that the Corporate Debtor was duly served, as also observed by the NCLT Jaipur, but did not appear before the NCLT Jaipur and also deliberately filed the appeal before this Appellate Tribunal after a delay of 110 days to delay the process of insolvency of corporation debtor. Further the appellant has also not disclosed that they have attended the 3rd, 4th and 5th COC Meeting. Appeal dismissed.

Summary

Issues Involved:
1. Service of application and notice under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Alleged violation of principles of natural justice.
3. Timeliness of the appeal.
4. Existence of debt and default.

Detailed Analysis:

1. Service of Application and Notice:
The appellant contended that the application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 (I&B Code) was not served on the correct addresses of the Corporate Debtor or its erstwhile directors. They argued that the email ID used for service, [email protected], was not in use since early 2018 and was used by former employees. Additionally, they claimed that the postal receipts and tracking reports indicated that the application was not served on the correct addresses. The 1st respondent countered by stating that the appellant was evading service and had been served through multiple channels, including pasting notices and sending emails to various addresses associated with the Corporate Debtor and its directors. The tribunal observed that the email ID in question was printed on the Corporate Debtor's letterhead, suggesting its official use. It was also noted that the appellant had a duty to access their emails and could not excuse non-receipt on the basis of non-use. The tribunal found that proper service had been made through multiple channels, including email and physical notices.

2. Alleged Violation of Principles of Natural Justice:
The appellant argued that the impugned order was passed without notice to them, violating the principles of natural justice as stipulated under Section 424 of the Companies Act. The tribunal found that the appellant was aware of the proceedings and had been served through various means, including email and physical notices. The tribunal also noted that the appellant had attended several meetings of the Committee of Creditors (CoC), indicating their awareness of the ongoing process. Therefore, the tribunal concluded that there was no violation of natural justice.

3. Timeliness of the Appeal:
The 1st respondent argued that the appeal was time-barred and should be dismissed on this ground alone. The tribunal noted that the public announcement of the Corporate Insolvency Resolution Process (CIRP) was made on 1.11.2019, and the appellant should have filed the appeal within 45 days from this date. However, the appeal was filed after a delay of 110 days. The tribunal found that the appellant's arguments regarding non-receipt of notices were not credible and that the delay was deliberate, aimed at stalling the insolvency process.

4. Existence of Debt and Default:
The tribunal observed that the Corporate Debtor had availed credit facilities and failed to maintain financial discipline, leading to the account being classified as a Non-Performing Asset (NPA). The Corporate Debtor had admitted to sending a One Time Settlement (OTS) proposal to the Financial Creditor, which indicated the existence of debt and default. The tribunal found that the appellant had not provided any evidence to refute the existence of debt and default.

Conclusion:
The tribunal dismissed the appeal, finding no merit in the appellant's arguments. The tribunal concluded that proper service of notice had been made, the principles of natural justice were not violated, the appeal was time-barred, and the existence of debt and default was established. The tribunal upheld the impugned order dated 20.09.2019, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. No order as to costs was made.