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2020 (6) TMI 730 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - application is filed by Operational Creditor - Service of notice to Corporate Debtor before initiation of CIRP - HELD THAT:- Before filing the present petition, the operational creditor has sent the demand notice as required under section 8 of IBC, through speed post as well as by email, which is enclosed at Annexure-G - It is a settled principle of law that there is a difference between the procedure for initiation of CIRP by the Financial Creditors U/ s 7 of the IBC and the Operational Creditors U/ s 9 of the IBC. So far as the Financial Creditor is concerned, as per Section 7 of the IBC, there is no need to deliver the notice before the initiation of CIRP. Therefore for the initiation of CIRP U/ s 9 of the IBC by the Operational Creditor, the Operational Creditor is required to deliver the demand notice upon the Corporate Debtor U/s 8 of the IBC. The main object of the inception of provision of Section 8 is, "This ensures that operational creditors, whose debt claims are usually smaller, are not able to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It may also facilitate informal negotiations between such creditors and the corporate debtor, which may result in a restructuring of the debt outside the formal proceedings", and that is the reason in Section 8 of the IBC, the word, 'deliver a demand notice of unpaid operational creditor' is mentioned. Under Rule 5 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, there are two modes for sending demand notice, one is, either at the registered office by hand, registered post or speed post with acknowledgement due, or second one, by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor, and on the basis of the facts stated in the application, we find, as per rule 5(2)of the insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, the applicant had to send the demand notice either by hand, through registered post or speed post with acknowledgement due at the registered office of the Corporate Debtor or by electronic mail service to a whole time director, designated partner or key managerial personnel of the corporate debtor, and on the basis of the facts stated in the application, we find, the applicant had sent the demand notice on 23.10.2019 through the speed post, as well as though courier service but both have which returned as "Addressee left without instructions" - it can be said that the applicant has not delivered notice under Section 8 of Insolvency and Bankruptcy Code, 2016, in accordance with the provision of Rule 5 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016. The applicant has not complied with the provision contained under Rule 5 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, therefore, are of the the considered view that the applicant has not delivered the demand notice as required U/ s 8 of the IBC, which is the mandatory provision of law and so on this ground in the absence of delivery of demand notice as required U/ s 8 of IBC - petition filed by the applicant/ operational creditor is not complete and not maintainable and liable to be dismissed. Petition dismissed.
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