2017 (10) TMI 1131 - Tri - Insolvency and Bankruptcy

Corporate Insolvency resolution process - Held that - In the present case time was afforded to the applicant on 24.08.2017 for removal of the aforesaid defect. The applicant has filed certified Bank statements along with copy of report of Chartered Accountant dated 29.07.2017 on 30.08.2017 which cannot be termed as compliance of sub-section (3)(c) of Section 9 of the Code. Despite opportunity afforded admittedly the applicant has failed to complete the required documents till date. The word shall used in sub-section (3) of Section 9 of the Code shows mandatory requirement which includes inter alia clause C of sub-section (3). Therefore on a bare perusal of the above-mentioned provision it is clear that furnishing of certificate from the relevant financial institution by applicant inter alia is a mandatory requirement under Section 9 of the Code and in the absence of such certificate from the financial institution maintaining accounts of the operational creditor the application filed by the applicant is clearly incomplete. As a sequel to the above discussion the present application filed by operational creditor is rejected being incomplete.

Summary

Issues:
1. Application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency resolution process.
2. Claim of operational debt by the applicant against the respondent corporate debtor.
3. Dispute raised by the corporate debtor regarding the invoices and operational debt claimed.
4. Non-compliance with the requirement of filing a certificate from financial institutions maintaining accounts of the operational creditor as per Section 9(3)(c) of the Code.

Analysis:
1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of the Corporate Insolvency resolution process against the respondent corporate debtor. The applicant, an operational creditor, claimed an outstanding amount of ?18,60,921 plus interest for transportation services provided to the corporate debtor from 2011 to 2012. In response, the corporate debtor disputed the debt, alleging that some invoices were forged and inflated.

2. The corporate debtor contended that the operational debt claimed was time-barred and that significant payments had already been made to the applicant. Moreover, the debtor disputed the authenticity of the invoices raised by the applicant, stating that some were for work not undertaken. The debtor also claimed that the invoices were subject to verification and scrutiny, and some contained inflated and forged figures.

3. The respondent raised a crucial issue of non-compliance with Section 9(3)(c) of the Insolvency and Bankruptcy Code, which mandates the filing of a certificate from financial institutions confirming the absence of payment of unpaid operational debt by the corporate debtor. The respondent argued that the applicant failed to provide this certificate, rendering the application incomplete and liable to be rejected.

4. Despite being given an opportunity to rectify the deficiency in the application by submitting the required certificate, the applicant failed to comply within the stipulated time frame. The Tribunal emphasized the mandatory nature of the requirement to furnish the certificate from financial institutions, as stated in Section 9(3)(c) of the Code. Consequently, the Tribunal rejected the application on the grounds of incompleteness due to the lack of the mandatory certificate, thereby upholding the importance of strict compliance with the statutory provisions of the Code.