2022 (2) TMI 962 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT - As per Section 8(1) of IBC 2016 the Applicant is required to deliver the Demand Notice before filing an application under Section 9 of IBC 2016. Since the Applicant has failed to deliver the demand notice to the Respondent before filing the Application under Section 9 of IBC 2016 therefore the present application is not maintainable. Application dismissed being not maintainable.

Summary

Issues:
- Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency & Bankruptcy Code, 2016 based on inability to liquidate operational debt.
- Dispute over non-payment of salary and consultation fee by the Corporate Debtor to the Applicant.
- Contention regarding termination of the Applicant's services due to alleged non-performance during the probation period.
- Examination of the delivery of the Demand Notice as a prerequisite for filing an application under Section 9 of the Insolvency & Bankruptcy Code, 2016.

Analysis:
1. The Applicant filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process due to the Corporate Debtor's failure to pay operational debt. The Applicant, an ex-employee, claimed unpaid salary and consultation fee totaling ?3,35,916. The Respondent disputed the claim, citing the Applicant's termination for alleged non-performance during the probation period, leading to company losses.

2. The Applicant provided evidence of salary payment until August 2018, with outstanding dues thereafter. Additionally, the Applicant claimed a commission as per an unpaid invoice from February 2019. The Respondent argued that the Applicant's termination was justified due to unsatisfactory performance, resulting in company losses. The Respondent contended that the termination was in accordance with the terms of the appointment letter.

3. The Tribunal analyzed the delivery of the Demand Notice, a prerequisite under Section 8(1) of the IBC, 2016, before filing an application under Section 9. The Applicant submitted postal receipts and delivery details, but the tracking report indicated non-delivery to the Respondent's registered address. Due to the failure to establish proper delivery of the Demand Notice, the Tribunal deemed the application not maintainable and dismissed it on this ground alone.

4. The judgment highlighted the importance of complying with procedural requirements, such as delivering the Demand Notice, before initiating insolvency proceedings. The dismissal of the application emphasized the significance of adhering to statutory procedures to maintain the integrity and validity of insolvency petitions under the IBC, 2016. The decision underscored the need for strict adherence to procedural norms in insolvency matters to ensure fairness and due process for all parties involved.