2018 (6) TMI 1193 - Tri - Insolvency and Bankruptcy

Corporate insolvency resolution process - Default to the corporate debtor - Non adherence to mandatory nature of service of Notice of Demand - Held that - Since the decision of the Hon ble Supreme Court in Mobilox Innovations (P.) Ltd 2017 (9) TMI 1270 - SUPREME COURT OF INDIA case is directly on the point this Tribunal is guided by the same and in view of the position that the Petitioner has not been able to demonstrate with proof or evidence the delivery of notice of demand as contemplated under Section 8 of IBC 2016 upon the Corporate Debtor at its registered office which is the starting point and triggers the entire process contemplated under IBC 2016 and the same being absent and not furnished despite a week s time being granted this Tribunal is constrained to dismiss the petition in view of Section 9(5)(ii)(c) of IBC 2016

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
2. Service of Demand Notice under Section 8 of IBC, 2016.
3. Applicability of precedents from other statutes to IBC, 2016.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016):
The petitioner, an operational creditor, filed an application under the provisions of IBC, 2016, seeking to initiate the CIRP against the corporate debtor for an unpaid amount of ?1,32,87,228/-. The debt arose from a construction project in Haryana, with an agreement dated 26.05.2008. The operational creditor stopped work and raised the final bill on 14.12.2011, following the corporate debtor's instruction. Despite multiple attempts, the amount remained unpaid, leading to police complaints and an unserved statutory notice for winding up dated 01.02.2017.

2. Service of Demand Notice under Section 8 of IBC, 2016:
The operational creditor sent a Demand Notice dated 14.03.2017 under Section 8 of IBC, 2016, to the corporate debtor's registered office and another office in New Delhi. However, the registered office was always found locked, and the notice was deemed to be served. During the Tribunal hearing on 12.03.2018, the petitioner’s counsel argued that service should be considered complete despite the locked office. The Tribunal noted the absence of proof of service and requested precedents supporting the petitioner's position.

3. Applicability of precedents from other statutes to IBC, 2016:
The petitioner’s counsel cited decisions from the Supreme Court and Delhi High Court related to the Negotiable Instruments Act, 1881, and Companies Act, 1956, respectively, to argue that the notice should be deemed served. However, the Tribunal emphasized the need to consider the specific provisions of IBC, 2016. Section 8 of IBC, 2016, and Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, outline the procedural requirements for delivering a Demand Notice. The Tribunal referred to the Supreme Court's judgment in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, which detailed the scheme under Sections 8 and 9 of IBC, 2016, emphasizing the importance of delivering the Demand Notice to trigger the insolvency process.

The Tribunal further noted that IBC, 2016, is a self-contained code, as highlighted in the Supreme Court’s decision in Innoventive Industries Ltd. v. ICICI Bank and Ors. The Tribunal concluded that it is not necessary to refer to decisions under other statutes when construing the provisions of IBC, 2016. Given the absence of proof of delivery of the Demand Notice as required under Section 8 of IBC, 2016, the Tribunal dismissed the petition under Section 9(5)(ii)(c) of IBC, 2016, without costs.