2017 (11) TMI 1116 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - The statement of accounts as filed by the Operational Creditor is not complete in order to ascertain what are the amounts which were actually remitted by the Corporate Debtor over a period time even though it is admitted that some payments were received shown by the Banker s Certificate as received from the Corporate Debtor and the same does not match as no payment is shown to have been received in the statement of accounts. In this, the Tribunal being the Adjudicating Authority cannot lose track of the avowed objects for which IBC, 2016 has been brought into force and more pertinently in relation to CIRP. Taking the above facts and circumstances of the case and as well as the precedents laid down by the Hon ble NCLAT in relation to the issue of demand notice and furnishing of certificate from the banker, this Tribunal is not inclined to admit this Petition and in the circumstances the Petition is dismissed but without costs.

Summary

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Authorization for the notice of demand and compliance with Section 9(3)(c) of IBC, 2016.
3. Failure of the Corporate Debtor to pay the demanded amount leading to the application for CIRP.

Analysis:
1. The application was filed by the Operational Creditor seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor provided details of the unpaid invoices amounting to ?1,34,41,475, out of which ?38,47,415 was paid by the Corporate Debtor, leaving a balance of ?95,94,060. The Operational Creditor issued a notice demanding payment, including interest, which was received by the Corporate Debtor. Despite the notice, the Corporate Debtor failed to pay the outstanding amount, leading to the application for CIRP.

2. The Tribunal scrutinized the authorization for the notice of demand and compliance with Section 9(3)(c) of IBC, 2016. It was noted that the notice was issued by an advocate on behalf of the Operational Creditor without explicit authorization in the documents submitted. Additionally, while a banker's certificate was produced, it did not fully comply with the requirements of Section 9(3)(c). The Tribunal referenced previous judgments by the NCLAT emphasizing the importance of proper authorization and complete documentation for such proceedings. Due to these discrepancies, the Tribunal found the petition lacking in validity and grounds for admission.

3. Despite the receipt of the notice of demand, the Corporate Debtor did not pay the demanded amount or raise any disputes. The Operational Creditor provided evidence of serving the notice to the Corporate Debtor, who did not appear before the Tribunal. However, the Tribunal, considering the precedents set by the NCLAT, dismissed the petition due to deficiencies in the authorization process and the incomplete banker's certificate. The Tribunal highlighted the summary jurisdiction under IBC, emphasizing the need for adherence to procedural requirements and the objectives of the insolvency process.

In conclusion, the Tribunal dismissed the petition for initiation of CIRP against the Corporate Debtor due to deficiencies in authorization for the notice of demand and non-compliance with Section 9(3)(c) of IBC, 2016. The decision was based on the principles outlined in previous judgments by the NCLAT regarding the importance of proper documentation and adherence to procedural requirements in insolvency proceedings.