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2020 (8) TMI 791 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - service of demand notice - advance amount for supply of goods - Operational Debt or not - Corporate Debtor resisted the Application mainly on the ground that there is no contractual relationship between them as Operational Creditor and Corporate Debtor. Whether the Adjudicating Authority can admit the Application under Section 9 of I&B Code when the demand notice has not been served as prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016? - HELD THAT:- There are four Annexures with the demand notice (A) a copy of Agreement dated 04.01.2017, (B) a copy of invoice dated 08.02.2017, (C) a copy of Bank Statement, (D) a copy of particulars of claim. The Corporate Debtor has not filed the copy of Annexures to the demand notice and according to the Operational Creditor annexure (D) copy of particulars of claim is a notice in prescribed format. Therefore, we are unable to appreciate the objection raised by the Appellant (Corporate Debtor). This objection is not raised before Adjudicating Authority. Therefore, there is no finding of Adjudicating Authority on this issue. Whether an advance amount for supply of goods can be considered as an Operational Debt under Section 5(20) of the I&B Code? - HELD THAT:- The Respondent No. 1 has not supplied any goods or provided any services to Respondent No. 2, but paid an advance amount to Respondent No. 2 for suppling Sugar. However, the Respondent No. 2 failed to supply the Sugar to Respondent No. 1. Thus, the advance amount in the hand of Respondent No. 2 cannot termed as Operational Debt. Consequently, the Respondent No. 1 does not come within the definition under Section 5(20) of I&B Code, the Operational Creditor. The Respondent No. 2 (Corporate Debtor) is released from the rigour of ‘CIRP’ and the action taken by IRP/RP and Committee of Creditors, if any, in view of the impugned order is set aside. IRP/RP will hand back the records and management of the Corporate Debtor to the Promotors/Directors of the Corporate Debtor - Appeal allowed.
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