2018 (11) TMI 892 - AT - Insolvency and Bankruptcy

Corporate insolvency process - outstanding workman s due - Held that - Each workman s due is more than rupees one lakh and the Corporate Debtor having defaulted to pay the amount, the application was fit to be admitted. The Adjudicating Authority having failed to consider the aforesaid fact, we have no other option but to set aside the impugned order dated 3rd January, 2018 and remit the matter to the Adjudicating Authority to admit the application. In the result, the Adjudicating Authority is directed to admit the application filed by the Appellant- Mr. Suresh Narayan Singh and pass appropriate order of Moratorium and appointment of Insolvency Resolution Professional in accordance with law after notice to the Corporate Debtor .

Summary

Issues Involved:
1. Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) can be filed jointly by multiple Operational Creditors.
2. Whether the application by the Authorized Representative of 284 workers is maintainable.
3. Whether the Adjudicating Authority erred in rejecting the application on technical grounds.

Issue-wise Detailed Analysis:

1. Joint Filing by Multiple Operational Creditors:
The Adjudicating Authority rejected the application under Section 9 of the I&B Code on the grounds that it must be filed by an 'Operational Creditor' individually and not jointly. The Authority also noted that it is impractical for more than one 'Operational Creditor' to file a joint petition as they must issue individual claim notices under Section 8 of the I&B Code.

2. Maintainability of Application by Authorized Representative:
The Appellant's counsel argued that the application was filed by the Authorized Representative of 284 workers, each having a claim exceeding one lakh rupees. It was contended that even an individual workman is entitled to file separate applications under Section 9 of the I&B Code. The Adjudicating Authority should have entertained the application on behalf of an individual workman if there was any difficulty.

3. Error in Rejecting the Application on Technical Grounds:
The Respondent's counsel submitted that the 'Corporate Debtor' had no objection to the application by the workmen and had decided to go for 'Corporate Insolvency Resolution Process'. An application under Section 10 of the I&B Code filed by the 'Corporate Debtor' was also dismissed by the Adjudicating Authority, and an appeal against that order was pending.

Legal Provisions and Precedents:
Section 5(20) read with Section 5(21) of the I&B Code clarifies that workmen of a company are 'Operational Creditors'. Sections 8 and 9, read with Form-5, indicate that an authorized person can file an application under Section 9 on behalf of 'Operational Creditors'. The Supreme Court in "Innoventive Industries Ltd. v. ICICI Bank and Anr." explained that an operational creditor must deliver a demand notice of unpaid debt and the corporate debtor can dispute the claim within 10 days. If there is a 'debt' and a 'default', the application should be entertained.

Conclusion:
The Tribunal found that the application was complete and the 'Corporate Debtor' had not disputed the debt or default. The Adjudicating Authority should have entertained the application instead of raising a technical ground about joint filing. Each workman's due was more than one lakh rupees, making the application fit for admission.

Order:
The impugned order dated 3rd January 2018 was set aside. The matter was remitted to the Adjudicating Authority to admit the application, pass an order of 'Moratorium', and appoint an 'Insolvency Resolution Professional' after notice to the 'Corporate Debtor'. If the appeal regarding the application under Section 10 by the 'Corporate Debtor' is allowed, the 'Interim Resolution Professional' suggested by the 'Corporate Debtor' may be appointed. The appeal was allowed with no order as to costs.