TMI Blog2017 (8) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Insolvency Process in respect of ‘Corporate Debtor’, as apparent from last paragraph no. 6 of notice contained in form - 3, and quoted above. Only if such notice in Form - 3 or Form - 4 is served, the ‘Corporate Debtor’ will understand the serious consequences of non-payment of ‘Operational Debt’, otherwise like any normal pleader notice/Advocate notice or like notice under Section 80 of C.P.C. or notice for initiation of proceeding under Section 433 of the Companies Act 1956, the ‘Corporate Debtor’ may decide to contest the suit/case if filed, as distinct Corporate Resolution Process, where such claim otherwise cannot be contested, except where there is an existence of dispute, prior to issuance of notice under Section 8. In the present case, as the notice has been given by an advocate/lawyer and there is nothing on the record to suggest that the lawyer was authorized by the appellant, and as there is nothing on the record to suggest that the said lawyer/ advocate hold any position with or in relation to the appellant company, we hold that the notice issued by the advocate/ lawyer on behalf of the appellant cannot be treated as notice under Section 8 of the ‘I & B Code’. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) such other institution as the Central Government may by notification specify as financial institution; 5. Admittedly, Macquarie Bank, Australia is not a scheduled bank in India nor is a financial institution as defined under Section 45-I of Reserve Bank of India Act 1934 (2 of 1934). The Macquarie Bank, Australia also do not come within the meaning of Public Financial Institution as defined in clause (72) of Section 2 of Companies Act 2013 (18 of 2013). The Central Government has also not issued any Notification specifying Macquarie Bank for the purpose of sub-section (14) of Section 3 nw Section 9 of I B Code . 6. Section 9 of I B Code deals with application for initiation of Corporate Insolvency Resolution Process by Operational Creditor . Clause (c) of subsection (3) of Section 9 mandate the Operational Creditor to file the application in the form and manner accompanied with such fee as may be prescribed and also directs the Operational Creditor to furnish along with application a copy of the certificate from the Financial Institution maintaining accounts of the Operational Creditor confirming that there is no payment of unpaid operational debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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) the 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 is a record of dispute in the information utility; or ( e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub. clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority. ( 6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section . 7 The question whether filing of a copy of certificate from the Financial Institution maintaining accounts of the Operational Creditor confirming that there is no paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Institutions maintaining accounts of the operational creditor confirming that, there is no payment of an unpaid operational debt by the corporate debtor and such other information as may be stipulated. Sub-section (5) of section 9 is procedure required to be followed by Adjudicating Authority. One can say that procedural part is not mandatory but is directory. 14. The provision being directory or mandatory has fallen for consideration before Hon ble Supreme Court on numerous occasions. In Manilal Shah Vs. SardarSayed Ahmed (1955) 1 SCR 108, the Hon ble Apex Court held that where statute itself provide consequences of breach or non-compliance, normally the provision has to be regarded as having mandatory in nature. 15. One of the cardinal principles of interpretation of statute is that, the words of statute must prima facie be given their ordinary meaning, unless of course, such construction leads to absurdity or unless there is something in the context or in the object of the statute to the contrary. When the words of statute are clear, plain and unambiguous, then, the courts are bound to give effect to that meaning, irrespective of the consequences involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence of default) have been mentioned, as quoted below: - Part-V PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1 PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY) 2. DETAILS OF RESERVATION / RETENTION OF TITLE ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT REFERS 3. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER) 4. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD) 5. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY) 6. PROVISION OF LA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- ( a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; ( b) the repayment of unpaid operational debt- ( i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or ( ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation.-For the purposes of this section, a demand notice means a notice served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred 13. From the plain reading of sub-section (1) of Section 8 it is clear that on occurrence of default, the Operational Creditor is required to deliver a demand notice of unpaid operational debt, copy of invoice, demanding payment of amount involved in the default to the Corporate Debtor in such form and manner as prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized to act on behalf of the Operational Creditor , who hold same position with or in relation to the Operational Creditor . Thereby such person(s) authorized by Operational Creditor , holding position with or in relation to the Operational. Creditor can only apply. 17. In view of such provision we hold that an advocate / lawyer or Chartered Account or a Company Secretary or any other person in absence of any authority by the Operational Creditor , and if such person do not hold any position with or in relation to the Operational Creditor , cannot issue notice under Section 8 of I B Code , which otherwise can be treated as a lawyer s notice/ pleader s notice, as distinct from notice under Section 8 of I B Code. 18. The demand notice/ invoice Demanding Payment under the I B Code required to be issued in Form-3 or Form - 4. By the said notice, the Corporate Debtor is to be informed of particulars of Operational Debt , with a demand of payment, with clear understanding that the Operational Debt (in default), as claimed, is to be paid, unconditionally within ten days from the date of receipt of letter failing which the Operational Creditor will initiate a Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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