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TMI Blog2017 (11) TMI 1899X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents can not be treated as a notice under section 8 of the I B Code and for that the petition under section 9 at the instance of the Respondents against the Appellant was not maintainable. Petition rejected as the same is incomplete. - C. P. (IB) No. 177/9/HDB/2017 - - - Dated:- 15-11-2017 - Rajeswara Rao Vittanala Judicial Member And Ravikumar Duraisamy Technical Member For the Petitioner : Hemant Daswani with Bharadwaj and Ms. U. Neeraja For the Respondent : N. V. Shravan Kumar with Challa Gunaranajan, M. Sridhar and E. Venkateswara Reddy ORDER RAVIKUMAR DURAISAMY (TECHNICAL MEMBER). - 1. The petitioner/operational creditor, i.e., Crompton Greaves Consumer Electricals Ltd., has filed the present application under section 9 of the Insolvency and Bankruptcy Code, 2016 read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 as the corporate debtor is indebted to operational creditor for the amount of ₹ 34,42,005.57. 2. The applicant is a demerged company of Crompton Greaves Ltd., pursuant to the order dated November 20, 2015 passed by the hon'ble Bombay High Court in Company Scheme P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m towards the supply of the said materials and other accessories. However, subsequently the applicant noticed that the corporate debtor had started committing defaults in payment of the invoices as per the agreed terms and a number of invoices have remained unpaid for considerable period of time. The applicant vide various e-mails constrained to bring to corporate debtors notice that there was no response from them for release of the outstanding dues and had time and again called upon the corporate debtor to take immediate steps to release forthwith the outstanding dues. (v) Despite the repeated reminders provided to corporate debtors through various means neither they have replied to the said e-mails with any constructive repayment plan nor was any response provided to the subsequent reminders sent to them on the said issue. Further, the applicant states that, having received no response, the applicant had thereafter vigorously followed up the matter with corporate debtor and the applicant have been time and again called upon to liquidate corporate debtors entire out standing due and payable to applicant which amounts to ₹ 34,42,005.57. (vi) The operational creditor ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same with interest at the contractual rate till payment and or realisation. (ix) Legal notice was sent through RPAD on July 7, 2016 by Shri V. Deshpande and Co., advocate for the operational creditor to the corporate debtor for non-payment of outstanding amount of ₹ 34,42,005.57 along with interest at the contractual rate within 21 days from the date of receipt of the legal notice, duly treating the said notice as a statutory notice under sections 433 and 434 of the Companies Act, 1956. (x) Shri E. Venkateswar Reddy, advocate for the corporate debtor replied to the notice dated July 7, 2016 vide reply dated August 5, 2016 denying all the contentions of the dues outstanding. (xi) Another legal notice was sent on August 17, 2016 by the operational creditor through RPAD to the corporate debtor for non-payment of outstanding amount and directing to repay the entire outstanding amount of ₹ 34,42,005.57 otherwise, operational creditor is ready to file a case/suit before the appropriate court against you. (xii) On April 25, 2017 notice/invoice for demanding payment of ₹ 34,42,005.57 in respect of unpaid operational debt due from the corporate debtor (Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition is liable to be dismissed at threshold. Further the equipment which is the subject matter of the claim is intact and not yet opened and in case of any variation of any of performance parameters exceeding the acceptable limits, the corporate debtor as per the terms of purchase order, may reject the equipment and in such case the applicant is obligated to pay liquidated damages or to replace the equipment. (g) The corporate debtor has not yet commenced its production and there is a delay in implementation of the project due to reasons beyond the control of corporate debtor. The corporate debtor enjoys the credit extended by 7 national banks and some of funds are yet to be disbursed. 6. The case was listed before the Adjudicating Authority for the first time for admission on September 1, 2017 and subsequently listed on September 4, 2017, September 6, 2017, September 11, 2017, September 13, 2017, September 18, 2017, September 22, 2017 and September 25, 2017. During the hearings the respondent proposed settlement of the issue in question and sought time. Accordingly, the case was listed on various dates with the consent of both the parties in to explore the possibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the notice issued under section 8 of the Insolvency and Bankruptcy Code, 2016, dated April 7, 2017 is defective. 10. At this juncture, we like to rely upon the judgment of the hon'ble NCLAT vide its judgment dated July 28, 2017 passed in Uttam Galva Steels Ltd. v. DF Deutsche Forfait AG [2017] 204 Comp Cas 511 (NCLAT) in Company Appeal (AT) (Insolvency) No. 39 of 2017 observed and held the following (pages 525 to 527) : From a plain reading of sub-section (1) of section 8, it is clear that on occurrence of default, the operational creditor is required to deliver the demand notice of unpaid operational debt and copy of the invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as is prescribed. Sub-rule (1) of rule 5 of the 'Adjudicating Authority Rules' man dates the 'operational creditor' to deliver to the 'corporate debtor' the demand notice in Form 3 or invoice attached with the notice in Form 4, as quoted below : '5. (1) An operational creditor shall deliver to the corporate debtor the following documents, namely :- (a) a demand notice in Form 3 ; or (b) a copy of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like any normal pleader notice/advocate notice, like notice under section 80 of the CPC or for proceeding under section 433 of the Companies Act, 1956, the 'corporate debtor' may decide to contest the suit/case if filed, distinct corporate resolution process, where such claim otherwise cannot be contested, except where there is an existence of dispute, prior to issue of notice under section 8. In view of provisions of the I and B Code, read with rules, as referred to above, we hold that an 'advocate/lawyer' or 'chartered accountant' or 'company secretary' in the absence of any authority of the board of directors, and holding no position with or in relation to the operational creditor cannot issue any notice under section 8 of the I and B Code, which otherwise is a 'lawyer's notice' as distinct from notice to be given by the operational creditor in terms of section 8 of the I and B Code. 11. In the instant case the advocate of the operational creditor has issued a notice under section 8(1) of the Insolvency and Bankruptcy Code, 2016 and the same is not in the format as prescribed. Further, no authority of the board of directors for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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