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2023 (1) TMI 1147 - AT - Insolvency and BankruptcyInitiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - demand notice was defective or not - service of demand notice - existence of debt and dispute or not. Whether the demand notice was defective? - HELD THAT - The rival contention of the Operational Creditor is that the acronym LI stands for Lex Innova and the Corporate Debtor have themselves used the word Lex Innova in the letter-head of the Appointment Letter dated 02.08.2018 issued by them to the Operational Creditor. Thus, the Corporate Debtor is also clearly associated with the name LexInnova - even in the Settlement slip at page 117 of Appeal Paper Book (APB), the word Lexinnova has been used by the Corporate Debtor Company. Further the forwarding email from the HR Team of the Corporate Debtor to the Respondent No.1 also uses the word Lexinnova as may be seen at page 116 of APB - thus there are no cogent reasons to disagree with well-considered findings of the Adjudicating Authority that there was no deficiency in the Demand Notice with regard to nomenclature of the Corporate Debtor Company. Effective service of the Demand Notice - HELD THAT - This aspect has also been dwelled upon at length by the Adjudicating Authority and that after taking due cognisance of the address mentioned on the Letter-head of the Settlement Slip issued by the Corporate Debtor to the Operational Creditor it has been correctly held in the Impugned Order that the said slip clearly depicts that the aforesaid address 4th Floor, Plot No.30, STPI Building, Electronic City, Udyog Vihar, Sector 18, Gurgaon-122015 belongs to the Corporate Debtor. The postal tracking report has also been perused by the Adjudicating Authority and thereafter it has been rightly held at Paras 28 and 29 of the Impugned Order that the service having been done on the Gurgaon address, the demand notice has been correctly serviced without defects. In the circumstances, the reasoned findings of the Adjudicating Authority are agreed upon that the Demand Notice was not defective and that it had been both despatched and serviced properly. Existence of pre-existing dispute or not - HELD THAT - A plain reading of the FIR reveals that the Operational Creditor does not appear to figure in the list of the accused. Going by the contents of the said FIR, the inference drawn by the Adjudicating Authority after perusing the said FIR that the Operational Creditor was not an accused party in the FIR and that no consequential investigation was going on against him is factually in order and stands to reason. Moreover, the clear admission of operational debt as evidenced in the revised Full and Final Statement of settlement of dues as sent by the Corporate Debtor to the Operational Creditor on 21.11.2019 which notably is post filing of FIR also corroborates that there was no pre-existing dispute at the time of admission of liability of the operational dues. It is pertinent to add here that the issue of the Settlement Slip has not been denied by the Appellant - there are no hesitation in observing that in the present case, all the requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled with operational debt having been acknowledged and a default having been committed thereto; demand notice served but remained un-replied; and there being no real pre-existing dispute discernible from the given facts. The Adjudicating Authority has not committed any error in admitting the Section 9 Application for initiation of CIRP of the Corporate Debtor. We are satisfied that the impugned order does not warrant any interference - Appeal dismissed.
Issues Involved:
1. Whether the Demand Notice was defective and ineffectively served. 2. Whether a pre-existing dispute existed between the parties arising from FIR No. 499/2019. Detailed Analysis: Issue 1: Defective and Ineffective Service of Demand Notice The Corporate Debtor contended that the Demand Notice was defective as it was addressed to "Lex Innova Digital Payments Pvt. Ltd." instead of "LI Digital Payments Pvt. Ltd." The Operational Creditor argued that "LI" stands for Lex Innova, and the Corporate Debtor used "Lex Innova" in their letterhead. The Adjudicating Authority examined the Appointment Letter, Demand Notice, and Company Master Data, concluding that there was no deficiency in the Demand Notice's issuance. The Tribunal agreed with this finding, noting the consistent use of "Lexinnova" by the Corporate Debtor. Regarding the effective service of the Demand Notice, the Corporate Debtor argued that the notice was sent to an old branch office address and not the registered office. The Operational Creditor countered that the address used was operational as per the settlement slip and tracking report. The Adjudicating Authority found that the Demand Notice was correctly served at the address where the Corporate Debtor was operating, and the Tribunal upheld this conclusion, agreeing that the notice was properly dispatched and served. Issue 2: Pre-existing Dispute The Corporate Debtor claimed a pre-existing dispute based on an FIR No. 499/2019 alleging fraudulent conduct by the Operational Creditor. However, the Operational Creditor denied any notification of fraud during his service and argued that his layoff was due to financial issues, not misconduct. The Tribunal noted the layoff notice, which did not mention any misconduct and commended the Operational Creditor's contributions. The Tribunal found no material evidence from the Corporate Debtor to substantiate claims of fraud. The FIR did not list the Operational Creditor as an accused, and the Adjudicating Authority observed that the Corporate Debtor acknowledged the debt in an email dated 21.11.2019, post-FIR filing. This acknowledgment undermined the claim of a pre-existing dispute. The Tribunal agreed, finding no real pre-existing dispute and noting that the operational debt was admitted, demand notice served, and no reply was received from the Corporate Debtor. Conclusion: The Tribunal concluded that the Adjudicating Authority correctly admitted the Section 9 Application for initiating CIRP of the Corporate Debtor. The Demand Notice was neither defective nor ineffectively served, and no pre-existing dispute was substantiated. The appeal was dismissed, and the Operational Creditor was directed to comply with the Adjudicating Authority's directions regarding expenses.
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