2022 (8) TMI 326 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Service of demand notice - whether the Adjudicating Authority was justified in rejecting the Section 9 Application on the ground that the Demand Notice under Section 8 was not duly served on the Corporate Debtor and also that receipt of money in May 2016 is not evidenced by any Banker s certificate or details of cheque? Service of demand notice - HELD THAT - The contention of the Learned Sr. Counsel for the Respondent /Corporate Debtor that the Section 8 notice was never delivered upon is untenable, specially keeping in view that the address written is the registered Office address, which is undisputed. There are also force in the submissions of the Learned Counsel for the Appellant that the Section 9 Application was also addressed to the same Registered Office. Therefore, they cannot be any ambiguity with respect to the Registered Office address of the Corporate Debtor. Having regard to the fact that the Demand Notice, as mandated under Section 8 of the Code, was duly served upon the Respondent / Corporate Debtor, the requirement under Section 8 of the code, is complete. Whether the claim of receipt of money in May 2016 was not evidenced by any Banker s certificate or details of cheque? - HELD THAT - A Banker s Certificate is not mandatorily required to trigger CIRP under Section 9 of the Code. It is significant to mention that this Tribunal has not gone into the merits of the matter with respect to debt or default , we only addressed to the issue of the service of Demand Notice on the Corporate Debtor and that a Banker s certificate is not essential to trigger CIRP under Section 9 of the Code. The matter is remanded back to the Adjudicating Authority to decide the Application preferred by the Appellant under Section 9 of the Code, on merits - Appeal allowed.

Summary

Issues Involved:
1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority.
2. Service of Demand Notice under Section 8 on the Corporate Debtor.
3. Requirement of a Banker's Certificate for triggering Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Code.

Analysis:

Issue 1: Rejection of Application under Section 9:
The Appellate Tribunal considered an appeal against the rejection of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. The Adjudicating Authority dismissed the application due to the operational creditor's failure to provide proof of delivery of the demand notice and absence of evidence regarding the receipt of money in May 2016. The Appellant contended that the demand notice was duly served on the Respondent and that proof of receipt of payment in May 2016 was provided. The Tribunal found that the demand notice was served as per requirements and the receipt of money was evidenced by bank statements. The Tribunal allowed the appeal, setting aside the Adjudicating Authority's order and remanding the matter back for further consideration on its merits.

Issue 2: Service of Demand Notice under Section 8:
The Tribunal examined whether the demand notice under Section 8 was duly served on the Corporate Debtor. It was established that the demand notice was sent by the Appellant to the Respondent and was duly served on the Corporate Debtor at the registered office address. The Tribunal noted that the address was undisputed, and the Section 9 application was also addressed to the same registered office. Therefore, the Tribunal concluded that the demand notice was properly served, meeting the requirements under Section 8 of the Code.

Issue 3: Requirement of Banker's Certificate for CIRP under Section 9:
Regarding the need for a Banker's Certificate for triggering the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Code, the Tribunal referred to a Supreme Court case and emphasized that a Banker's Certificate is not mandatory to initiate CIRP. The Tribunal clarified that it did not delve into the debt or default aspects but focused on the service of the demand notice and the necessity of a Banker's Certificate for initiating CIRP under Section 9. The Tribunal allowed the appeal based on these findings and directed the Adjudicating Authority to decide the application on its merits.

In conclusion, the Appellate Tribunal allowed the appeal, setting aside the Adjudicating Authority's order and remanding the matter for further consideration, emphasizing the proper service of the demand notice and clarifying the requirement of a Banker's Certificate for initiating the Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.