9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 312 - AT - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - allegation that the demand notice was issued without any authority - HELD THAT - It is well settled by now that delivery of a demand notice of unpaid operational debt by the Operational Creditor upon the Corporate Debtor under Section 8(1) of the I B Code is a sine-qua-non for initiation of Corporate Insolvency Resolution Process (CIRP) by Operational Creditor under Section 9 of the I B Code . Format in which the demand notice is to be issued by the Operational Creditor in terms of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is prescribed in Form-3. The delivery of notice is to be effected in the prescribed form which must emanate from the Operational Creditor or any authorized person on its behalf. In the case in hand, it is not in controversy that the demand notice in prescribed form has been issued by the lawyer of Operational Creditor and delivered upon the Corporate Debtor. Perusal of the demand notice forming Annexure A-16 to the appeal paper book at Page 227, Volume-II brings it to fore that the same has been issued by one Mr. Sumit Kumar, Advocate under instructions from and on behalf of Operational Creditor. It is the dictum of the Hon ble Apex Court in MACQUARIE BANK LIMITED VERSUS SHILPI CABLE TECHNOLOGIES LTD. 2017 (12) TMI 850 - SUPREME COURT that a demand notice delivered by an Advocate duly instructed by the Operational Creditor would be a valid demand notice for purposes of initiation of CIRP. In view of the same, notice delivered could not be held to be bad in law unless it was shown that the lawyer was not duly instructed. The finding recorded by the Adjudicating Authority in regard to invalidity of service of mandatory demand notice under Section 8(1) of the I B Code cannot be sustained - the matter is remitted back to the Adjudicating Authority with direction that in the event of the application being complete in all respects, it may, having regard to the key ingredients of debt and default, pass an order of admission or otherwise as warranted under law - Appeal allowed by way of remand.
Issues:
1. Validity of demand notice issued by Operational Creditor. 2. Requirement of authorization for issuance of demand notice by an Advocate. 3. Judicial consistency in interpreting the law. Issue 1: Validity of demand notice issued by Operational Creditor The Appellate Tribunal reviewed the dismissal of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) by the Adjudicating Authority. The dismissal was based on the contention that the demand notice was issued without authority. The Tribunal emphasized that the delivery of a demand notice of unpaid operational debt is essential for initiating the Corporate Insolvency Resolution Process (CIRP) under the I&B Code. The prescribed format for the demand notice is outlined in Form-3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal noted that the demand notice in question was issued by an Advocate on behalf of the Operational Creditor, which was deemed valid as per legal precedents. It was established that the notice was duly instructed by the Operational Creditor, and no Board Resolution was required in such cases. Issue 2: Requirement of authorization for issuance of demand notice by an Advocate The Tribunal referred to a previous judgment where it was held that an Advocate can issue a demand notice on behalf of the client, i.e., the operational creditor. It emphasized that once an Advocate is authorized to issue the demand notice, it fulfills the requirement of being delivered by an authorized person. The Adjudicating Authority's insistence on a Board Resolution for authorization in this case was deemed unsustainable, as the Advocate's instructions were considered sufficient. Issue 3: Judicial consistency in interpreting the law The Tribunal highlighted the importance of judicial consistency in interpreting legal provisions. It noted that the Adjudicating Authority had previously taken a correct view on a similar issue, emphasizing the need to maintain consistency based on legal precedents. The Tribunal set aside the impugned order and remitted the matter back to the Adjudicating Authority for further consideration. The Appellant was directed to appear before the Adjudicating Authority, and the appeal was allowed, providing an opportunity for the Corporate Debtor to settle the claim of the Operational Creditor. In conclusion, the Appellate Tribunal's judgment focused on the validity of the demand notice, the authorization required for an Advocate to issue such notice, and the importance of judicial consistency in interpreting legal provisions related to the Insolvency and Bankruptcy Code.
|
