2019 (5) TMI 878 - AT - Insolvency and Bankruptcy

Non-compliance with the provisions of Section 9(3)(c) by the Operational Creditor - validity of demand - Demand Notice under Section 8(1) was issued by the Appellant on 24th April, 2017 without attaching the invoices relating to debt which are payable - time limitation - HELD THAT - There is nothing on the record to suggest that the invoices dated 23rd July, 2014 were forwarded or received by the Respondent- Spicejet Limited . Therefore, the Demand Notice issued on 24th April, 2017 as relates to invoice dated 23rd July, 2014, though it cannot be held to be barred by limitation, but in absence of specific evidence relating to invoices actually forwarded by the Appellant and there being a doubt, we hold that the Adjudicating Authority has rightly refused to entertain application under Section 9 which requires strict proof of debt and default. No relief can be granted - appeal dismissed.

Summary

Issues: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor

Issue 1: Compliance with Section 9(3)(c) and inconsistency in payments
The Appellant, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code against the Corporate Debtor. The Adjudicating Authority dismissed the application citing inconsistency in payments and non-compliance with Section 9(3)(c) by the Operational Creditor. The Authority noted the absence of a certificate from the financial institution maintaining the Operational Creditor's accounts. The Corporate Debtor claimed to have made certain payments, leading to the dismissal of the application.

Issue 2: Background of the case and agreements between the parties
The Appellant and the Respondent entered into 'Aviation Software Solutions Agreements' in May 2013, consisting of four agreements. A 'Change Order Demand' was executed in July 2014, amending the previous Software License Agreement. The Appellant claimed a substantial amount payable by the Respondent, with invoices sent in January 2016.

Issue 3: Limitation and disputed invoices
The Respondent argued that the claims were based on invoices from 2013-14, including one dated July 2014, which they deemed as barred by limitation. The Appellant referenced an email from the Respondent's auditors to counter the limitation argument. The Demand Notice issued by the Appellant in April 2017 did not attach the invoices, leading to a dispute regarding the issuance of specific invoices by the Appellant to the Respondent.

Judgment and Conclusion
The Adjudicating Authority refused to entertain the application under Section 9 due to the lack of specific evidence regarding the forwarded invoices and doubts about the debt and default. The Tribunal dismissed the appeal, stating that no relief could be granted. However, the Appellant was allowed to seek appropriate relief from the Court of Competent Jurisdiction. The decision highlighted the importance of strict proof of debt and default for applications under Section 9 of the Insolvency and Bankruptcy Code.