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TMI Blog2023 (2) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 9 is to be filed is provided in Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which says that it has to be in form -5 accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016. Section 9(3) further provides for the documents to be appended with the application. There is no dispute that a demand notice was served under Section 434(1)(a) of the Act, 1956 and despite receipt of demand notice and the expiry of statutory period, the Company Petition was filed under Section 433(e) of the Act, 1956 presumably on the ground that the Company is unable to pay its debt. The contention of Counsel for the Appellant that notice under Section 8 of the Code was also required to be served because of the first proviso to Rule 5 of the Rules, 2016 as per which the Operational Creditor was to submit all information, other than information forming part of the records transferred, required for admission of the petition under section 9 of the Code is not well founded because the language of this proviso does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second decision in Mosmetro Story (FZE) was delivered on 28.11.2017. In this case, the Appellant was the Corporate Debtor who used to purchase chemicals from the Operational Creditor. The Appellant therein had alleged that the he had already made the payment and settled the account but the Operational Creditor issued a legal notice on 19.08.2015 and 09.09.2015 for the payment of the outstanding sum of Rs. 1,98,75,342/- and thereafter filed the petition under Section 433 434 of the Act, 1956 before the High Court of Madras - In this case also the Corporate Debtor had taken a plea that since no notice under Section 8 (1) of the Code was served prior to treating the application under Section 9 of the Code, therefore, the application was not maintainable. In this case same view was expressed as has been expressed in the case of Sabari Inn Pvt. Ltd. (Supra) holding that neither the notice was issued under Section 8(1) nor other informations were placed before the Adjudicating Authority, therefore, the Company Petition stood abated. The case of Shailendra Sharma was decided on 13.01.2021, in which same issue was raised that before the petition is treated as an application filed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the verified bills of Rs. 40,26,474/-. Since the construction work did not start, therefore, the Operational Creditor sent a notice dated 28.12.2015 under Section 433 of the Companies Act, 1956 (in short the Act, 1956 ) to the Corporate Debtor and filed a Company Petition under Section 433 r/w Section 434 of the Act, 1956 on 12.04.2016 which was numbered as CP No. 26 of 2016. However, the Hon ble High Court of Orissa transferred the said petition on 19.04.2019 to NCLT, Cuttack, after enforcement of the Code, which was assigned a new number bearing T.P. No. 211/CTB/2019. After the receipt of record, notices were given to both the sides. The Operational Creditor in compliance of proviso to Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016 (in short Rules, 2016 ) presented a petition under Section 9 of the Code on 09.08.2021 in the prescribed format to which the Respondent filed the reply on 23.09.2021. 3. One of the objections to be petition was raised by the present Appellant (Respondent therein) that the application has been filed by the Operational Creditor without serving mandatory notice of demand in terms of Section 8 of the Code. However, the Adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 9, after transfer of winding up petition, without serving notice under Section 8 of the Code, is not maintainable because prior notice under Section 8 of the Code is a mandatory requirement. It is further argued that even after filing the application under Section 9 of the Code in the prescribed format, the Respondent had submitted the documents provided in Section 9(3)(b) (c) but for complying with Section 9(3)(a) which is again a mandatory requirement and if this requirement is done away with then Section 8 would become redundant. He has further argued that as per second proviso to Section 434(c) of the Companies Act, 2013 (in short the Act, 2013 ), after the transfer of such proceedings to the Adjudicating Authority, it is required to be dealt with by the Adjudicating Authority as an application for initiation of Corporate Insolvency Resolution Process (in short CIRP ) under the Code which means all the mandatory requirements for maintaining an application under Section 9 have to be complied with. He has also submitted that as per first proviso to Rule 5 of the Rules, 2016, it was incumbent upon the Operational Creditor to submit all information which includes the mandatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the parties, it would be relevant to refer to the scheme of the Code in so far as an application under Section 9 is to be filed and maintained. Section 9 of the Code deals with the initiation of the CIRP by an Operational Creditor. However, before filing an application under Section 9, it is imperative on the part of the Operational Creditor to resort to Section 8 of the Code which provides for a demand notice of the unpaid operational debt with copy of the invoice of the amount involved in default in such form and manner as may be prescribed. Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 provides for the documents to be served by the Operational Creditor to the Corporate Debtor i.e. a demand notice in form-3 in terms of Rule 5(1)(a) and copy of invoice attached with the notice in form-4 in terms of Rule 5(1)(b). After the service of the notice under Section 8(1), the Corporate Debtor, in terms of Section 8(2), within a period of 10 days, bring to the notice of the Operational Creditor about the existence of a dispute and payment of unpaid operational debt. In case, despite the expiry of period of 10 days from the date of delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixty days; and (c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer: Provided that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government. [Provided further that any party or parties to any proceedings relating to the winding up of companies pending before any Court immediately before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, may file an application for transfer of such proceedings and the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.] [Provided further that only s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto 15th day of July, 2017, failing which the petition shall stand abated: Provided further that any party or parties to the petitions shall, after the 15th day of July, 2017, be eligible to file fresh applications under sections 7 or 8 or 9 of the Code, as the case may be, in accordance with the provisions of the Code: Provided also that where a petition relating to winding up of a company is not transferred to the Tribunal under this rule and remains in the High Court and where there is another petition under clause (e) of section 433 of the Act for winding up against the same company pending as on 15th December, 2016, such other petition shall not be transferred to the Tribunal, even if the petition has not been served on the respondent.] 11. There is no dispute that a demand notice was served under Section 434(1)(a) of the Act, 1956 and despite receipt of demand notice and the expiry of statutory period, the Company Petition was filed under Section 433(e) of the Act, 1956 presumably on the ground that the Company is unable to pay its debt. The contention of Counsel for the Appellant that notice under Section 8 of the Code was also required to be served becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the Company is unable to pay its debt, for treating the application under Section 9 of the Code, notice under Section 8 of the Code is not necessary or mandatory and a petition under Section 9 shall be maintainable without service of notice under Section 8 of the Code. 16. In so far as the second question is concerned, it pertains to the correctness of the law laid down in the cases of Sabari Inn Pvt. Ltd. (Supra), Mosmetro Story (FZE) (Supra) and Shailendra Sharma (Supra). The first decision is in the case of Sabari Inn Pvt. Ltd. came on 17.11.2017. In this case, the Appellant (Corporate Debtor) entered into a contract with the Respondent Contractor therein. Although, according to the Appellant therein, pursuant to the contract, entire amount was paid but the Respondent issued a legal notice dated 07.09.2013 calling upon the Appellant to pay the outstanding sum of Rs. 12,06,508/- and thereafter filed a company petition under Section 433 434 of the Act, 1956 before the High Court of Madras. After constitution of the Tribunal and Adjudicating Authority, the said case was transferred to the Adjudicating Authority, Chennai Bench and was renumbered. In the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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