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TMI Blog2024 (11) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Subudhi, Manager Commercial of the Corporate Debtor in their capacity of KMP of the CD but no notice has been addressed to the company (CD), namely, Mesco Kalinga Steel Ltd. through its managing director etc., therefore, the said notice cannot be termed to have been delivered to the CD and therefore, the same cannot be taken to be a notice issued under Section 8 of the Code. In so far as the delivery of notice is concerned, Rule 5 of the Rules prescribes the procedure in which Rule 5(2)(a) provides that notice has to be sent to the Registered office for which various modes have been provided, namely, it can be sent by hand, registered post or speed post with acknowledgement but the notice has to be sent of the CD at its registered office. Rule 5(2)(b) provides for delivery of notice by electronic mail to the KMP of the CD but it does not apply to the present case because no electronic mail has been sent, therefore, it is not required to make any observation in this regard. Form-3 specifically provides for a notice to mention the name of the CD and delivered at the address of the registered office of the corporate debtor. In so far as the decision in the case of Niraj Kumar [ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal took cognizance of the said objection and framed the following question:- Whether statutory demand notice has been served upon the CD? 6. This issue was decided by the Tribunal by recording the following observations:- Point No. 2 9. On the respondent/corporate debtor side raised another plea that no demand notice under section 8(1) of IBC 2016 was served upon the corporate, hence the petition is not maintainable. In contra on the petitioner side argued that notice dated 31.03.2021 found in page 50 of the petition is valid statutory demand notice, which was duly served upon the key managerial personal, hence the petition is validly filed and maintainable. This is the pure question of law. 10. Section 8(1) of IBC 2016 is required the operational creditor may send demand notice to the corporate debtor. The form and manner how the notice to be served are set out in Rule 5 of the Adjudicating Authority Rules 2016. 11. The petition filed under section 9 of IBC 2016 without serving notice under section 8 of IBC 2016 is not maintainable. Indeed, failure to serve the demand notice is not curable defect. A notice under section 8 of IBC 2016 set in motion, the entire process of Inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is rule by an operational creditor shall also be filed with an information utility, if any. 16. On the petitioner side submitted that the delivery to the corporate debtor is sufficient if notice served by registered post on the director or key managerial personnel of the corporate debtor. On the petitioner side read the Rule 5 (2)(a)(b) in disjunction manner picking up under lined sentences as above. The interpretation of the petitioner side is not acceptable. 17. The section 8(1) of IBC 2016 and Rule 5(1) (2) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. shall read conjointly and to arrive plain meaning. In section 8 (1) it is mentioned that operational creditor may on occurrence of a default deliver a demand notice of unpaid operational debt demanding payment of the amount involved in the default to the corporate debtor. Rule 5(1) begins with An operational creditor shall deliver to the corporate debtor the following documents namely- Rule 5(2) describes the mode of service of demand notice on corporate debtor. It is stated that notice of/to the corporate debtor can deliver at the registered office of the corporate debtor by hand, Registered pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, Counsel for the Respondent has submitted that the notice under Section 8 of the Code is a sine qua non for invoking Section 9 of the Code by the operational creditor. It is further submitted that Section 8 categorically provides that notice has to be given to the CD. It is submitted that Rule 5 of the Rules also says that the notice in form 3 has to be delivered to the CD. He has also submitted that the legislature has used the word CD both in the Code and Rules and has nowhere said that notice can be delivered to the KMP of the CD. However, he has not denied that Rule 5(2)(b) provides for notice by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor but the present case is not of delivery of notice on the email rather it is a case where hard copy of the notice has been sent through courier, therefore, Rule 5(2) (a) shall apply. He has further submitted that Form 5 of the Rules provides for the mechanism for filing the application under Section 9 in which the instructions provides that Copy of the invoice / demand notice, in Form 3 of the Insolvency and Bankruptcy (Application to Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution 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 (4), if any (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if (a) the application made under sub-section (2) is incomplete; (b) there has been repayment of the unpaid operational debt; (c) he creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding repayment of the operational debt in respect of which the default has occurred. 13. The aforesaid Section clearly provides that an operational creditor after the occurrence of a default has to deliver a demand notice of unpaid operational copy of the invoice demanding payment of the amount involved in the default in such form and manner as may be prescribed. Section 8(2) further provides that it shall be for the corporate debtor to reply to the notice within a period of ten days of the receipt of the demand notice in which issue regarding existence of a dispute or that the amount has already been paid may be raised. There is not a single word used by the legislature that the notice can be replied by the KMP of the Corporate Debtor because everywhere the word has been used as the CD. 14. Section 3(8) of the Code defines corporate debtor which means a corporate person who owes a debt to any person; Corporate person is defined in Section 3(7) which means a company as defined in clause (20) of section 2 of the Companies Act, 2013, a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such other particulars including proof of identity as may be prescribed; and (g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed. (2) The Registrar on the basis of documents and information filed under sub-section (1) shall register all the documents and information referred to in that subsection in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act. (3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate. (4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act. (5) If any person furnishes any false or incorrect particulars of any information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The meaning of the aforesaid is that the company which is incorporated by way of procedure provided in Section 7 is called a company in terms of Section 2(20) of the Act. The effect of registration of a company is provided in Section 9 which is reproduced as under:- 9. Effect of registration. From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession 1*** with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name. 16. In view of the aforesaid various provisions of the Code, Rules and Act one thing is clear that the Company/CD is different from KMP, therefore, the legislature has consciously used the word CD in Section 8, Section 9 Rule 5, From 3 Form 5 etc. and KMP is conspicuous by its absence in all these provisions which cannot be applied in place of CD. 17. Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hief Financial Officer and Mr. S. Subudhi, Manager Commercial of the Corporate Debtor in their capacity of KMP of the CD but no notice has been addressed to the company (CD), namely, Mesco Kalinga Steel Ltd. through its managing director etc., therefore, the said notice cannot be termed to have been delivered to the CD and therefore, the same cannot be taken to be a notice issued under Section 8 of the Code. 21. In so far as the delivery of notice is concerned, Rule 5 of the Rules prescribes the procedure in which Rule 5(2)(a) provides that notice has to be sent to the Registered office for which various modes have been provided, namely, it can be sent by hand, registered post or speed post with acknowledgement but the notice has to be sent of the CD at its registered office. Rule 5(2)(b) provides for delivery of notice by electronic mail to the KMP of the CD but it does not apply to the present case because no electronic mail has been sent, therefore, we need not to make any observation in this regard. Form-3 specifically provides for a notice to mention the name of the CD and delivered at the address of the registered office of the corporate debtor. Similarly in Form 5 in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IN No. U74999DL2018PTC330177 , which matches with the CIN of the Corporate Debtor herein, as reflected in the master data annexed. 24. Since the Corporate Debtor has identified itself as lexinnova in the Appointment Letter and the Demand Notice issued under Section 8 contains both the names of the Corporate Debtor i.e, Lex Innova Digital Payments Pvt. Ltd. as well as the LI Digital Payments Pvt. Ltd. , we do not find any deficiency in the issuance of the Demand Notice by the Applicant on this ground. 13. In addition we note that even in the Settlement slip at page 117 of Appeal Paper Book ( APB in short), the word Lexinnova has been used by the Corporate Debtor Company. Further the forwarding email from the HR Team of the Company Appeal (AT) (Ins.) No. 566 of 2022 Corporate Debtor to the Respondent No.1 also uses the word Lexinnova as may be seen at page 116 of APB. We are therefore satisfied that there are no cogent reasons to disagree with well-considered findings of the Adjudicating Authority that there was no deficiency in the Demand Notice with regard to nomenclature of the Corporate Debtor Company. 14. This now brings us to the issue of effective service of the Demand Notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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