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TMI Blog2018 (1) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... rth Singh and Arijeet Banerjee, Advs. For The Respondent : Virender Ganda, Sr. Adv., Abhishek Sharma and Ms. Ashly Cherian, Advs. ORDER This is an application which has been filed by the Operational Creditor namely RAMCO Systems Ltd. under the provisions of Sections 8 and 9 of Insolvency and Bankruptcy Code, 2016 (for brevity IBC, 2016) against the Corporate Debtor namely Spicejet Limited. The transaction leading to filing of the present Petition, it is averred in the Petition is that the Operational Creditor and Corporate Debtor agreed and entered into an Aviation Software Solutions Agreement dated 13.5.2013 and pursuant to the said agreement, Operational Creditor had issued invoice No. INAVN/DIN1/0007/14, amounting to ₹ 1,12,36,000/- to the Corporate Debtor for payment of license fee along with execution of documents and this was followed up with another invoice bearing No. INAVN/DIN1/0008/14 dated 30.5.2013 amounting to ₹ 89,88,800/- and in relation to the said invoice it is averred by the Operational Creditor that a sum of ₹ 26,98,880/- was paid by the Corporate Debtor towards part payment of the invoice and there yet remains a balance of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being issued to the Operational Creditor on the part of the Corporate Debtor, the above Application has been preferred wherein an operational debt in a sum of ₹ 4,87,87,200/- is claimed as the amount in default from 24.4.2017. 4. The Respondent has filed a detailed reply wherein the claim as made by the Operational Creditor is sought to be resisted on the following grounds: i. In relation to the demand notice dated 24.4.2017, it is contended that the same has been issued without attaching the invoices based on which the purported debt is claimed by the Operational Creditor and is sought to be established. In connection with the same it is also pointed out that invoice No. INAVN/DIN2/0001/15 for the amount of ₹ 59,83,170/- and invoice NO.INAVN/DIN2/0002/15 for an amount of ₹ 33,70,800/- both dated 23.7.2014 had never been issued to the Corporate Debtor and hence taking into consideration the provisions of Section 9(5)(ii)(c), it is contended that this Tribunal is required to reject the Application inasmuch as the invoices had never been delivered to the Corporate Debtor by the Operational Creditor giving rise to the claim. ii. Despite sufficient time havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot known. Even though in the response dated 19.1.2016, the Petitioner/Operational Creditor had repeated that payment in relation to three invoices were outstanding dated 17.5.2013, 30.5.2013 and 23.07.2014 for a total amount of ₹ 1,56,43,890/- however, had failed to provide details of the same even at that stage when the response was sent by the Operational Creditor nor even at the present stage either at the time of issue of demand notice or at the time of filing of this Application, the said invoices have been annexed. v. The balance confirmation letter in the circumstances cannot be considered as an acknowledgment of debt and it is pointed out that no ledger account had been produced by the Operational Creditor before this Tribunal in order to sustain the claim. vi. It is also pointed out by the Respondent in its reply that different amounts/ claim are being made by the Operational Creditor inasmuch as in the legal notice dated 10.11.2016 a sum of ₹ 1,24,25,000/-is claimed as unbilled license fee which is also repeated in another legal notice dated 13.1.2017. However, in the demand notice it had been escalated to ₹ 1,42,88,750/-. vii. The Respondent al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to principal amount outstanding arising out of three invoices dated 17.5.2013, 30.5.2013 and 23.07.2014 as well as unbilled amount all to the extent of ₹ 2,99,32,640/- in addition to interest at 18% per annum amounting to ₹ 1,88,54,560/-. Further it is also contended that the invoices itself reflect that the payments were required to be made within a period of 30 days of the execution of the agreement. It is also pointed out in the rejoinder that the Limitation Act will not apply as held by the Hon'ble Appellate Tribunal in Neel Kamal's case and in the circumstances the claim as made by the Operational Creditor should be sustained. 6. We have carefully considered the plea of the rival parties before us. Before going into the merits of the claim certain pertinent objections have been raised by the Corporate Debtor which are required to be dealt with. First among them is the plea of limitation. However, in relation to the said plea, the Hon'ble NCLAT has time and again reiterated by way of several of its judgments that Limitation Act, 2013 has no application insofar as the claim made under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of law viz. whether the Limitation Act would apply to this proceeding, open. 11. In this case even if it is accepted that the Limitation Act, 1963 is applicable for initiation of Corporate Insolvency Resolution Process, in such case Article 137 of the Limitation Act, 1963 will be applicable, which is quoted below: Description of application Period of Limitation Time from which period begins to run Any other application for which no period of limitation is provided elsewhere in this division. Three years When the right to apply accrues 12. Insolvency and Bankruptcy Code, 2016 has come into force with effect from 1st December, 2016. Therefore, the right to apply under I B Code accrues only on or after 1st December, 2016 and not before the said date (1st December, 2016). As the right to apply under section 9 of I B Code accrued to appellant since 1st December, 2016, the application filed much prior to three years, the said application cannot be held to be barred by limitation. 7. Taking into consideration the above judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld, Sr. Counsel for a Corporate Debtor upon careful perusal of the certified true copy of the resolution passed in the Board meeting held on 07.02.2017, it is seen that the name of the person namely Mr. Satish Kumar K who has signed the notice of default is not to be seen even though the name of Mr. R. Ravi Kula Chandran, Chief Financial Officer who seems to have delegated his authority given by the Board to him as well as to others subsequently to Mr. Satish Kumar K, long after the issue of notice of demand which is dated 24.4.2017 and the authorization letter as already stated is dated 22.8.2017. By now it is trite that the notice of default required to be issued under Section 8 and which is required to be in the format as prescribed in Form-3 or Form-4, as the case may be, of Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority) Rules, 2016 should be signed in relation to Corporate Debtor only by the person who is authorized to do such an act as the issue of such notice upon the Corporate Debtor envisages serious consequences and also put in motion a chain reaction which ultimately if admitted culminates in the unleashing of Corporate Insolvency Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. 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 an Operational Creditor can apply himself or through a person authorised to act on behalf of Operational Creditor. The person who is authorised to act on behalf of Operational Creditor is also required to state his position with or in relation to the Operational Creditor , meaning thereby the person authorised by Operational Creditor must hold position with or in relation to the Operational Creditor and only such person can apply. 31. The demand notice/invoice Demanding Payment under the I B Code is required to be issued in Form-3 or Form-4. Through the said formats, the 'Corporate Debtor' is to be informed of particulars of 'Operational Debt', with a demand of payment, with clear understanding that the 'Operational Debt' (in default) required to pay the debt, as claimed, unconditionally within ten days from the date of receipt of letter failing which the 'Operational Creditor' will initiate a Corporate Insolvency Process in respect of 'Corporate Debtor', as apparent from last paragraph No. 6 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horized to act on behalf of the Operational Creditor. As pointed out by the Ld. Sr. Counsel for the Respondent/ Corporate Debtor that in the notice issued under Section 8 dated 26.4.2017 even though the name of the individual and the designation has been stated but however on the date of issue of such notice no proof has been furnished on the part of the Operational Creditor to establish that the said individual has been authorized to give such a notice on behalf of the Operational Creditor. 10. Reference in this connection to the decision of the Hon'ble NCLAT passed in Palogix Infrastructure (P.) Ltd. v. ICICI Bank Ltd. 144 SCL 319 (NCLT - New Delhi) will be apposite even though rendered in so far as a Financial Creditor is concerned, more particularly in relation to who can be considered as an 'authorised person' who can act in relation to IBC, 2016 on behalf of the Corporate entity and the relevant paragraph therein is extracted hereunder:- 9. Upon perusal of the Adjudicating Authority Rules and Form-1, it may be duly noted that the 'I B Code' and the 'Adjudicating Authority Rules' recognize that a 'Financial Creditor' being a juristic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Financial Creditor'. Thus, it is clear that only an authorised person as distinct from Power of Attorney Holder can make an application under section 7 and required to state his position in relation to Financial Creditor . 32. The 'I B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882 cannot override the specific provision of a statute which requires that a particular act should be done by a person in the manner as prescribed thereunder. 33. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'. 34. xxxx 36. In so far as, the present case is concerned, the 'Financial Creditor'- Bank has pleaded that by Board's Resolutions dated 30th May, 2002 and 30th October, 2009, the Bank authorised its officers to do needful in the legal proceedings by and against the Bank. If general authorisation is made by any 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' in favour of its officers to do needful in legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistency in relation to the invoices under which it is claimed and thus it is contended that there is a dispute in existence and hence the application must be dismissed. There seems to be some credence in the representation made on behalf of the Corporate Debtor which can be discerned from the conduct of the parties prior to the issue of Section 8 notice and of filing of this application by the Operational Creditor. 13. In this connection, it is pertinent to see that as per notice/correspondence sent by the Operational Creditor dated 10.11.2016 annexed as page Nos. 84 and 85 to the typed set, the total amount claimed, leaving aside Invoice No.07/14 for which full payment had been received from the Corporate debtor, a sum of ₹ 62,89,920/- towards balance amount due in relation to Invoice 08/14 and ₹ 59,83,170/- towards Invoice No. 1/15 thereby aggregating in all to Rs.l,22,73,090/- has been claimed, in addition to ₹ 1,24,25,000/- claimed towards unbilled licence amount. Further, at page No.85 of the above said letter dated 10.11.2016, it is seen that the Operational Creditor has specifically observed as follows: We look forward to restarting the project an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims made is further accentuated by the non-compliance with the provisions of Section 9(3)(c) by the Operational Creditor and in the absence of a certificate from the Financial institution maintaining accounts of the Operational Creditor confirming that there is no payment of an unpaid operational debt by the Corporate Debtor. On the other hand the certificates produced reflect certain payments made by the Corporate Debtor and even the said certificates produced are not consistent, as rightly pointed out by the Ld. Sr. Counsel for the Corporate Debtor, with the total amount admitted to have been paid by the Corporate Debtor in the synopsis and as to how the payments have been adjusted. The onus is on the Operational Creditor under IBC, 2016 to establish that the debt is owed in absolute terms and that it should not or cannot be assailed by the Corporate Debtor in any manner other than being it illusory or moonshine. If it is otherwise than it gives rise to a plausible contention to be put up by the Corporate Debtor and the same cannot be considered as moonshine or illusory and in this connection reference to the judgment of the Hon'ble Supreme Court in Mobilox Innovations (P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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