2020 (9) TMI 718 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is admitted fact that the Corporate Debtor has not sent the reply as required under Section 8(2) of the IBC, 2016, according to which, the Corporate Debtor shall within a period of 10 days of the receipt of demand notice or copy of invoices mentioned in sub section (1) bring to the notice of the Operational Creditor, the existence of dispute or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such disputes. Before initiating a proceeding under Section 9, the operational-creditor is required to fulfil the conditions mentioned under Section 8(1), if he has not sent the demand notice as required under Section 8(1) of the Code, then he cannot invoke the provision under Section 9, rather he can invoke the provision of Section 9 only, when Corporate Debtor fails to raise the existing of disputes or produce the document to show that unpaid operational debt has been paid within ten days of the receipt of the demand notice - Section 8 and 9 cast a duty upon the operational-creditor as well as Corporate Debtor to act as per Section 8 and if they fail to fulfil the conditions of Section 8 and 9 then in that case neither the application filed by the operational-creditor is maintainable nor the plea of existing of disputes or the payment of debt subsequently taken by the Corporate Debtor can be taken into consideration. Since it is specifically mentioned in Section 8(2) of the Code that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application filed on behalf of the operational-creditor and this has also been held by another NCLT, Delhi Bench in the case of JAI LAXMI TRADERS VERSUS MAYASHEEL RETAIL INDIA LTD. 2020 (3) TMI 1251 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI . In view of Section 9(5)(i)(a) since the application is complete, there is no payment of unpaid operational debt, which is more than ₹ 1 Lakh, which is the minimum threshold U/S 4 of the Code for initiating a proceeding U/S 9 of the Code and no notice of dispute as required U/S 8(2) of the Code is raised by Corporate Debtor - Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Existence of a valid operational debt.
2. Compliance with procedural requirements under Section 8 and Section 9 of the Insolvency & Bankruptcy Code (IBC), 2016.
3. Existence of a dispute regarding the debt.
4. Admission of the application for Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

1. Existence of a Valid Operational Debt:
The Operational Creditor, Om Logistics Limited, filed an application against the Corporate Debtor, Servel India Private Limited, under Section 9 of the IBC, 2016, seeking initiation of the CIRP. The Operational Creditor claimed that it had provided transportation services to the Corporate Debtor under a contract dated 01st July 2017, which was renewed/amended from time to time. It raised various bills for freight charges which remained unpaid, amounting to ?7,94,035/-. Despite repeated requests and a demand notice dated 19.08.2019, the Corporate Debtor failed to pay the outstanding amount.

2. Compliance with Procedural Requirements under Section 8 and Section 9 of the IBC, 2016:
The Operational Creditor submitted that it had complied with all procedural requirements by sending a demand notice to the Corporate Debtor, which was duly delivered on 21.09.2019. The Corporate Debtor did not respond within the stipulated ten days, as required under Section 8(2) of the IBC, 2016. The Tribunal noted that the Operational Creditor had provided postal documents as proof of delivery of the demand notice.

3. Existence of a Dispute Regarding the Debt:
The Corporate Debtor denied the claims, asserting that no agreement existed between the parties and that the invoices were not genuine. It contended that there were serious disputed facts that required a trial. However, the Tribunal observed that the Corporate Debtor failed to raise any dispute or provide evidence of payment within ten days of receiving the demand notice, as mandated by Section 8(2) of the IBC, 2016. The Tribunal referenced the case of Nathi Devi v. Radha Devi Gupta, emphasizing that legislative intent must be given effect, and non-compliance with Section 8(2) precluded the Corporate Debtor from raising disputes subsequently.

4. Admission of the Application for CIRP:
The Tribunal found that the application was complete, and the unpaid operational debt exceeded the minimum threshold of ?1 Lakh. Since the Corporate Debtor did not raise any disputes or provide payment evidence within the required timeframe, the Tribunal admitted the application under Section 9(5)(i)(a) of the IBC, 2016. Consequently, a moratorium was declared under Section 14, staying all suits, proceedings, and actions against the Corporate Debtor, and prohibiting the transfer or disposal of its assets.

Additional Orders:
The Tribunal appointed Mr. Reetesh Kumar Agarwal as the Interim Resolution Professional (IRP) and directed the Operational Creditor to deposit ?2 lakhs to cover immediate IRP expenses, which would be reimbursed as CIR costs. Copies of the order were to be sent to both parties and the IRP.

Conclusion:
The Tribunal admitted the application for initiating the CIRP against the Corporate Debtor due to non-compliance with procedural requirements and the absence of a valid dispute, thereby enforcing the provisions of the IBC, 2016.