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TMI Blog2017 (8) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the demand notice under Section 8 of 'I & B Code' was issued through an Advocate of Singapore and that the appellant has not enclosed any certificate from a 'Financial Institution' maintaining the accounts of the 'Operation Creditor' in terms of Clause (c) of sub-section (3) of Section 9 of the 'I & B Code' held that the petition preferred by appellant, a foreign company having office at Singapore, under Section 9 was not maintainable 3 Before deciding the issue, it is desirable to notice the relevant facts and the provisions of '18; B Code'. 4. The appellant, a foreign company is not constituted under Companies Act 1956 or/ Companies Act 2013, having account with one 'Macquarie Bank', Australia. The appellant has no office in India, nor any account with any of the Bank or 'Financial Institution' as defined under sub-section (14) of Section 3 of 'I & B Code', which reads as follows:- "Definitions: - 3. In the Code, unless the context otherwise requires: - (14) financial institution" means- (a) a scheduled bank; (b) financial institution as defined in section 45-I of the Reserve Bank of India Act 1934 (2 of 1934); (c) public financial institution as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and (d) such other information as may be specified. (4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional. (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order- (i) admit. the application and communicate such decision to the operational creditor and the corporate debtor if- (a) the application made under sub-section (2) is complete; (b) there is no repayment of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (ii) reject the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority Rules 2016' for short) are also enacted in exercise of the power conferred by Clauses (c), (d), (e), (D of sub-section 239 read with sections 7, 8, 9 and 10 of the 'I & B Code'. The rules provide the procedure required to be followed by filing an application by corporate insolvency resolution process. As per Rule 6 of the 'Adjudicating Authority' Rules 2016, an operational creditor shall make an application for initiating the corporate insolvency process under section 9, in Form 5 accompanied with documents and records required therein. As per sub-rule (2) of Rule 6 it is mandatory again to dispatch a copy of application filed with the adjudicating authority, by registered post or speed post to the registered office of the Corporate Debtor. 13. The provisions of sub-section (3) mandates the operational creditor to furnish copy of invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor, an affidavit to the effect that, there is no notice given by the corporate debtor relating to dispute of unpaid operational debt, a copy of the certificate from the 'Financial Institutions' maintaining accounts of the operational creditor co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a provision is mandatory or directory would, in the ultimate analysis, depend upon the intent of the law-maker. And that has to be gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequences which would follow from construing it in one way or the other." 16. Therefore, it is clear that the word 'shall' used in sub-section (3) of section 9 of 'I & B Code' is mandatory, including clause 3 therein." 8. Learned counsel appearing on behalf of appellant, tried to distinguish the judgement in 'Smart Timings Steel Ltd.' on the ground that the said company had not enclosed any other evidence in support of the debt and default of debt. Reliance was placed on Form-5 enclosed with Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 (hereinafter referred to as "Adjudicating Authority Rules"). As per Rule 6 of 'Adjudicating Authority Rules', the 'Operational Creditor' is required to make an application in Form-5. In the said Form-5 at Part V, particulars of operational debt (documents, records and evidence of default) have been mentioned, as quoted below: - "Part-V PARTICULARS OF OPERATIONAL DEBT [DO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 8 of 'I & B Code was not issued by the 'Operational Creditor' but by a Lawyer of Singapore. 12. Section 8 of 'I & B Code' is as follows: - "8. Insolvency resolution by operational creditor: (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. Persons who may initiate corporate insolvency resolution process. Initiation of corporate insolvency resolution process by financial creditor. Insolvency resolution by operational creditor. (2) The corporate debtor shall, within a period often days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from the receipt of this letter failing which we shall initiate a corporate insolvency resolution process in respect of [name of corporate debtor]. Yours sincerely, Signature of person authorised to act in behalf of the operational creditor Name in block letters Position with or in relation to the operational creditor Address of person signing 16. From bare perusal of Form-3 and Form-4, read with sub-Rule (1) of Rule 5 and Section 8 of the 'I & B Code, it is clear that the 'Operational Creditor' can apply himself or through a person authorized to act on behalf of the 'Operational Creditor', who hold same position with or in relation to the 'Operational Creditor'. Thereby such person(s) authorized by 'Operational Creditor', holding position with or in relation to the 'Operational. Creditor' can only apply. 17. In view of such provision we hold that an advocate / lawyer or Chartered Account or a Company Secretary or any other person in absence of any authority by the 'Operational Creditor', and if such person do not hold any position with or in relation to the 'Operational Creditor', cannot issue notice under Section 8 of 'I & B Code', which otherwise can be treated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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