2020 (9) TMI 1116 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor did not clear the dues - existence of dispute or dues - HELD THAT - The Operational Creditor could not invoke confidence of the Adjudicating Authority for initiating such stringent action as one under Section 9 of Insolvency and Bankruptcy Code, 2016. The Learned Counsel for the Appellant states that the Adjudicating Authority wrongly referred the notice under Section 8 of I B Code (copy of which is at Page 43 Annexure A/13) to be not in Format. Clearly, the Addresses do not match and service of Notice under Section 8 on Corporate Debtor cannot be accepted. The Learned Counsel is relying only on the Postal Cash Receipts which are at Page 44 which relate to booking of the document with the Postal Authorities. The Respondent did not appear or did not contest. That would not be material looking to the fact that it is burden on the Operational Creditor to make out a case for admitting an Application under Section 9 when the address of the Section 8 notice does not match with the registered address mentioned in Application under Section 9, it cannot be said that the burden on the Operational Creditor has been discharged - Even if such stand was not taken, we cannot close our eyes to what is obvious from the record. Insolvency and Bankruptcy Code, 2016 Proceedings are serious mattes and we cannot simply admit Application under Section 9 if we are not satisfied with compliance of requirements of law. We are also not convinced that the Application under Section 9 is required to be admitted - Appeal dismissed.

Issues:
1. Dismissal of the Application under Section 9 of Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority.
2. Non-filing of reply by the Corporate Debtor.
3. Incomplete demand notice issued by the operational creditor.
4. Lack of supporting documents for the claim by the operational creditor.
5. Allegation of malicious intent by the operational creditor.
6. Discrepancy in addresses for service of notice under Section 8 on the Corporate Debtor.

Issue 1: Dismissal of the Application under Section 9:
The Appellant, an Operational Creditor, filed an appeal against the Impugned Judgment and Order passed by the Adjudicating Authority, NCLT, Ahmedabad, dismissing the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant claimed that as a Contractor, they had completed civil construction works for the Corporate Debtor and had outstanding dues of &8377; 1,45,716. However, the Adjudicating Authority found the application not maintainable as it was filed with malicious intent to pressurize the Corporate Debtor, and failed to establish insolvency of the Corporate Debtor.

Issue 2: Non-filing of Reply by the Corporate Debtor:
The Corporate Debtor failed to file a reply to the petition, and despite adjournments for settlement, no response was submitted. The Adjudicating Authority noted the absence of a reply from the Corporate Debtor and highlighted the incomplete demand notice issued by the operational creditor, which did not comply with the format prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Issue 3: Incomplete Demand Notice and Lack of Supporting Documents:
The Adjudicating Authority emphasized that the demand notice issued by the operational creditor was incomplete and not in the prescribed format. Additionally, the operational creditor failed to provide essential documents like appointment letters or contracts to support their claim of engagement by the Corporate Debtor, which raised doubts about the credibility of the claim.

Issue 4: Allegation of Malicious Intent:
The Adjudicating Authority raised concerns about the operational creditor's intention, suggesting malicious intent behind filing the application to pressurize the Corporate Debtor. The Authority highlighted that the Insolvency and Bankruptcy Code is not intended for mere recovery but for the resolution of the company, emphasizing the need for genuine insolvency cases.

Issue 5: Discrepancy in Addresses for Service of Notice:
A critical discrepancy was identified in the addresses provided for service of notice under Section 8 on the Corporate Debtor. The addresses mentioned in the demand notice and the application did not match, leading to the rejection of the notice. The Adjudicating Authority emphasized the importance of compliance with legal requirements in insolvency proceedings and dismissed the appeal based on this discrepancy.

In conclusion, the appeal was dismissed based on various grounds, including the lack of compliance with legal requirements, incomplete documentation, discrepancies in addresses, and doubts regarding the operational creditor's intentions. The judgment underscores the significance of adhering to procedural norms and establishing genuine insolvency cases for the admission of applications under the Insolvency and Bankruptcy Code, 2016.

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