2024 (11) TMI 836 - AT - IBC

Service of notice - notice issued under Section 8 of the Code was not in accordance with law - appellant argued that the Tribunal has committed a patent error in dismissing the application on the ground that the notice was not given to the juristic person but has been addressed to the KMP of the CD - HELD THAT - Undisputedly, the issue of notice under Section 8 that too on a printed proforma (Form 3) is a sine qua non for the purpose of invoking Section 9 of the Code for filing an application under Section 9 of the Code by the OC. In case, the notice is not issued then the cause of action is not complete and application under section 9 cannot be maintained. In the present case, though the notice has been issued on 31.03.2021 and it is also on Form 3 but the same has been addressed to Mr. Sameer Singh, Director, Bibhuti Bhushan Rath, Chief Financial Officer and Mr. S. Subudhi, Manager Commercial of the Corporate Debtor in their capacity of KMP of the CD but no notice has been addressed to the company (CD), namely, Mesco Kalinga Steel Ltd. through its managing director etc., therefore, the said notice cannot be termed to have been delivered to the CD and therefore, the same cannot be taken to be a notice issued under Section 8 of the Code. In so far as the delivery of notice is concerned, Rule 5 of the Rules prescribes the procedure in which Rule 5(2)(a) provides that notice has to be sent to the Registered office for which various modes have been provided, namely, it can be sent by hand, registered post or speed post with acknowledgement but the notice has to be sent of the CD at its registered office. Rule 5(2)(b) provides for delivery of notice by electronic mail to the KMP of the CD but it does not apply to the present case because no electronic mail has been sent, therefore, it is not required to make any observation in this regard. Form-3 specifically provides for a notice to mention the name of the CD and delivered at the address of the registered office of the corporate debtor. In so far as the decision in the case of Niraj Kumar 2023 (1) TMI 1147 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI is concerned, that was a case where the dispute was about the nomenclature of the Company because the name of the company was Lex Innova Digital Payments Pvt. Ltd. which was mentioned as LI Digital Payments Pvt. Ltd. and in this regard, the judgement is not on the issue which has been addressed before this Court, therefore, the said judgment is on its own facts and has settled the law which is not applicable to the present case. There are no error in the impugned order which may require any interference by this Court. Hence, the present appeal fails and the same is dismissed.

Summary

Issues Involved:

1. Validity of the statutory demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC).
2. Requirements for serving a demand notice to the Corporate Debtor (CD) under the IBC.

Issue-wise Detailed Analysis:

1. Validity of the Statutory Demand Notice under Section 8 of the IBC:

The primary issue in this case was whether the statutory demand notice, as required under Section 8 of the Insolvency and Bankruptcy Code, 2016, was properly served upon the Corporate Debtor. The Tribunal observed that the notice was addressed to three Key Managerial Personnel (KMP) of the Corporate Debtor but not to the Corporate Debtor itself. The Tribunal emphasized that under Section 8(1) of the IBC, the operational creditor must deliver a demand notice to the corporate debtor. The form and manner of serving such notice are prescribed under Rule 5 of the Adjudicating Authority Rules, 2016. The Tribunal concluded that the failure to serve the demand notice directly to the Corporate Debtor constituted a non-curable defect, rendering the petition under Section 9 of the IBC not maintainable. The Tribunal noted that the notice should have been addressed to the Corporate Debtor, a juristic person, and not merely to its managerial personnel.

2. Requirements for Serving a Demand Notice to the Corporate Debtor under the IBC:

The Tribunal highlighted the statutory requirements for serving a demand notice under Section 8 of the IBC. It was clarified that the demand notice must be addressed to the Corporate Debtor at its registered office. Rule 5(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, outlines the permissible modes of delivery, including hand delivery, registered post, speed post, or electronic mail to a whole-time director or designated partner or KMP. However, in this case, the notice was not addressed to the Corporate Debtor itself, and thus, it failed to meet the statutory requirements. The Tribunal rejected the interpretation that delivering the notice to the registered office of the Corporate Debtor, even if addressed to the KMP, was sufficient. The Tribunal emphasized that the notice must explicitly be addressed to the Corporate Debtor, thereby ensuring that the entity, as a separate legal entity, receives the notice.

The Tribunal also addressed the appellant's reliance on a previous decision, stating that the facts of that case were different and not applicable to the present case. The Tribunal reiterated that the statutory requirement for addressing the notice to the Corporate Debtor was not fulfilled, and thus, the petition under Section 9 could not be maintained.

In conclusion, the Tribunal dismissed the appeal due to the failure to properly serve the statutory demand notice to the Corporate Debtor, as required by the IBC and the relevant rules. The Tribunal's decision underscores the importance of adhering to statutory requirements for serving demand notices in insolvency proceedings.