2022 (4) TMI 885 - AT - Insolvency and Bankruptcy

Initiation of CIRP - Operational Creditor - Filing of application jointly instead of individually - Scope of section 8 read with section 9 - NCLT rejected the application - HELD THAT - In the instant case it is the case of the Appellants that they had rendered consultancy services which is completely denied by the Corporate Debtor. The material on record evidences that the services of the First Appellant was terminated on the ground that he was engaged in business agreements with other competing companies. An Operational Creditor can apply himself or through a person authorised to act on behalf of the Operational Creditor. In the instant case the contention of the Appellant that he is acting on behalf of the Second Appellant who is also arrayed as an Operational Creditor, has not established his position with or in relation to the Corporate Debtor seeking the payment of dues alleged to be payable, keeping in view that there is no documentary evidence with respect to Consultancy Services having been hired by the Corporate Debtor as there was no Agreement/letter which deals with any Consultancy - there are no merit in the submission of the Appellant that a Joint Application is maintainable that the Corporate Debtor hired the services of the 2nd Appellant and that the Appellant is acting on behalf of the 2nd Appellant, specifically in the light of the termination letter issued by the Corporate Debtor, terminating the service of the 1st Appellant, in his capacity as an Employee . It is clear from the provisions of Section 8 and 9 of the Code, that unlike under Section 7, a Notice under Section 8 is to be issued by an Operational Creditor individually and the Petition under Section 9 has to be filed by the Operational Creditor individually and not jointly. Individual Operational Creditor will have to issue their individual claim notice under Section 8 of the Code. Each claim will vary and would be different. The date of notice under Section 8 would also be different and vary on a case to case basis. The notices have to be issued in specific forms filling separately Form 3 and Form 4. Petition under Section 9 in the Form would contain separate individual data - A bare perusal of Form 3 4 read with Sub-Rule (1) of Rule 5 and Section 8 of the Code, it is clear that an Operational Creditor can apply himself or through a person authorised to act on behalf of the Operational Creditor. At the cost of repetition the person who is authorised to act on his behalf, is required to state his relation and his position vis a vis the Operational Creditor. This Tribunal is of the earnest view that there is no illegality or infirmity in the order of the Adjudicating Authority - Appeal dismissed.

Summary

Issues Involved:
1. Whether a joint application under Section 9 of the Insolvency & Bankruptcy Code, 2016, by two or more Operational Creditors is maintainable.
2. Whether the Adjudicating Authority was justified in dismissing the application filed under Section 9 of the Code by the Appellants.

Issue-wise Detailed Analysis:

1. Joint Application under Section 9:
The primary issue addressed was whether a joint application under Section 9 by multiple Operational Creditors is permissible. The Adjudicating Authority dismissed the application, referencing the judgment in Uttam Galva Steels Ltd V DF Deutsche Forfait AG and Anr, which clarified that notices under Section 8 and petitions under Section 9 must be issued and filed by Operational Creditors individually, not jointly. The Tribunal reiterated that "a notice under Section 8 is to be issued by an ‘Operational Creditor’ individually and the petition under Section 9 has to be filed by Operational Creditor individually and not jointly." This principle was upheld, emphasizing that individual claims and notices must be distinct and separately filed.

2. Justification of Dismissal by Adjudicating Authority:
The Appellants argued that the Adjudicating Authority erred in dismissing the application without adjudicating on its merits, taking a hyper-technical view that Section 9 petitions must be filed individually. They contended that the First Appellant, as an authorized representative of the Second Appellant, had rendered consultancy services to the Corporate Debtor, resulting in an operational debt of ?25,70,656/-. However, the Respondent disputed the claim, asserting that the First Appellant, while employed, engaged in unauthorized business agreements causing losses, leading to the termination of his services. The Tribunal noted that the services rendered by the First Appellant were disputed, and there was no documentary evidence of consultancy services being hired by the Corporate Debtor. The Tribunal concluded that the Appellants failed to establish their claims and the joint application was not maintainable.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision, affirming that a joint application under Section 9 by multiple Operational Creditors is not maintainable. The Tribunal emphasized that individual claims must be filed separately, and the Appellants did not provide sufficient evidence to support their claims of consultancy services. Consequently, the appeal was dismissed, and the order of the Adjudicating Authority was found to be without illegality or infirmity. The judgment was directed to be uploaded on the Tribunal's website and communicated to the National Company Law Tribunal, New Delhi.