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TMI Blog2024 (5) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... ally enforce, nor be bound by, contracts on behalf of principal and pass on its liability to VIL. Validity or otherwise of the service of Demand notice - HELD THAT:- Demand notice dated 31.07.2018 was sent by registered post on 01.08.2018 to the registered address of the Corporate Debtor, which was not replied to by the Corporate Debtor. Some documentary evidence is available on record, which includes the details of the India Post and the postal receipt, which indicate that the demand notice has been issued, even though the addresses are not fully legible and correct in the receipt and acknowledgement. This will not make any material difference as both parties have been dealing in business for long and were continuously exchanging lot of emails - Furthermore, the Applicant never disputed the address on which the demand notice was issued to the Corporate Debtor. But it has merely questioned the failure of proof of the service of the statutory demand notice, which appears to be spurious granted and unsustainable. The Adjudicating Authority has clearly brought out that as per records, the date of default is 12.12.2015. The TMPL acknowledged the debt and paid certain invoices and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Videocon Industries Limited ( VIL ) while dealing with the Respondent. Therefore, in terms of Section 230 of Indian Contract Act, 1872 ( Act ), TMPL could not have been made liable to repay the dues owed by VIL. The Respondent did not serve / failed to prove the service of the demand notice issued under Section 8 of the Insolvency Bankruptcy Code, 2016. Raised the issue of improper board resolution for the authorised signatory of the Respondent. 2. TMPL used to provide services for various clients including VIL, whereby it acted as an agent of the client and would assist its clients in advertising their projects. VIL availed the above indicated services of TMPL and used to place advertisements through TMPL. TMPL in turn used to approach various companies, such as the Respondent for publication of the advertisements in its newspapers. TMPL would get monetary incentive for acting as an agent or middleman in such a transaction from the client i.e. VIL in this case. Specifically speaking, TMPL acting upon the instructions of VIL placed various purchase orders / release orders in the name of VIL on the Respondent. The Respondent in turn placed advertisements in its newspaper name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 230 of the Indian Contract Act, 1872. TMPL could not have been made liable to repay the dues of VIL, even though, the Purchase Orders (POs) were issued by TMPL to the Respondent and the Respondent delivered the invoices to TMPL. As per Section 230 of the Act, TMPL / an agent is bound by a contract entered into by it on behalf of its Principal / VIL, even though, their did not exist any contract binding TMPL s in such manner. 7. TMPL did not owe any operational debt to the Respondent in terms of Section 5(21) of the IBC because the beneficiary of the Respondent s advertising services was VIL and not TMPL. 8. The Applicant further submits that the Respondent have been directly dealing with the VIL for settlement of its dues, after taking TMPL out of the existing commercial arrangement. Therefore, TMPL could not have been made responsible for the outstanding dues of VIL, as the barter arrangement which was agreed between the Respondent and the VIL had ceased due to enforcement of the GST regime in India. By the stoppage of the barter arrangement, it did not force TMPL to get substituted in the shoes of the VIL in respect of the liability existing towards the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 27 of the General Clauses Act, 1897 and Section 114 Illustration (f) of the Evidence Act, give rise to a presumption that the service of a notice has been effected when it is sent to the correct address by registered post. This Court held as under: (SCC p. 564, para 14) 14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. 19. This Court has reiterated a similar view in Gujarat Electricity Board v. Atmaram Sungomal Poshani [(1989) 2 SCC 602 : 1989 SCC (L S) 393 : (1989) 10 Company Appeal (AT) (Insolvency) No. 1398 of 2023 7 of 16 ATC 396 : AIR 1989 SC 1433] , CIT v. V.K. Gururaj [(1996) 7 SCC 275 : 1996 SCC (L S) 579 : (1996) 33 ATC 269] , Poonam Verma v. DDA [(2007) 13 SCC 154], Sarav Investment Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund [(2007) 14 SCC 753 : (2009) 1 SCC (Cri) 935], Union of India v. S.P. Singh [(2008) 5 SCC 438 : (2008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of insolvency proceedings against it under Section 9 of the Code are tenable or not. 16. During the course of the business, the Appellant used to place Purchase Orders/ Release Orders from time to time with the Operational Creditor namely Rajasthan Patrika Private Limited. The Rajasthan Patrika Private Limited, the Respondent in this case, used to publish the advertisements in its newspapers and raised the invoices from time to time, which were duly sent to the Corporate Debtor. All the unpaid invoices aggregated to Rs.1,36,81,274/-. The fact of the publishing of the advertisements is duly acknowledged by the Appellant. The Respondent had been issuing reminders/emails to the Appellant to make payments to the Respondent towards the unpaid bills. The Demand notice was finally issued on 31.07.2018 under Section 8 of the Code, claiming an amount of Rs.1,87,52,874/-, which included both the Principal and the interest. From the records, it appears that the Appellant had failed to reply to the demand notice. 17. It is clearly brought out from the records that Release Orders were raised by TMPL for providing services of issue of advertisements of the VIL products and this was done o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts on behalf of principal. In the absence of any contact to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presumption of contract to contrary. Such a contract shall be presumed to exist in the following cases: (1) Where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (2) Where the agent does not disclose the name of his principal; (3) Where the principal, though disclosed, cannot be sued. .. 23. There is no tripartite agreement on record which could have guided the mode and responsibilities of payment. Without any agreement in place, in the facts of the instant case, the responsibility to repay the outstanding dues remains on the Appellant. As the IBC proceedings are self-contained which govern the course of action in such situations, the Appellant cannot take refuge of Section 230 Indian Contract Act, 1872 that the agent cannot personally enforce, nor be bound by, contracts on behalf of principal and pass on its liability to VIL. 24. The Appellant has tried to challenge the impugned order based on the ground of failure to the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tility, if any 27. Now we examine the validity or otherwise of the service of Demand notice in the facts of the case. Demand notice dated 31.07.2018 was sent by registered post on 01.08.2018 to the registered address of the Corporate Debtor, which was not replied to by the Corporate Debtor. Some documentary evidence is available on record, which includes the details of the India Post and the postal receipt, which indicate that the demand notice has been issued, even though the addresses are not fully legible and correct in the receipt and acknowledgement. This will not make any material difference as both parties have been dealing in business for long and were continuously exchanging lot of emails. Many emails are on record to indicate the outstanding amounts and which are being reminded by the Respondent. And also Appellant was very much present in the proceedings before the Adjudicating Authority and duly represented and defended his case, though unsuccessfully. 28. Furthermore, the Applicant never disputed the address on which the demand notice was issued to the Corporate Debtor. But it has merely questioned the failure of proof of the service of the statutory demand notice, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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