TMI Blog2021 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... hen no reasonable cause has been shown even during the course of hearing as to why such reply was not given. Petition allowed - moratorium declared. - CP (IB) 827/9/NCLT/AHM/2019 - - - Dated:- 22-3-2021 - Madan B. Gosavi, Member (J) And Virendra Kumar Gupta, Member (T) For the Appellant : Gaurav Mehta, Learned Counsel For the Respondents : Aditya J. Pandya, Learned Counsel ORDER Virendra Kumar Gupta, Member (T) 1. This application has been filed by Operational Creditor, namely, M/s. Shree Printwell Offset Pvt. Ltd. under Section 9 of Insolvency Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016 ) for initiation of Corporate Insolvency Resolution Process (hereinafter referred to as CIRP ) against the Corporate Debtor, namely, M/s. Deco Mica Ltd. The amount in dispute has been claimed at 14,57,267/- (Rupees Fourteen Lac Fifty Seven Thousand Two Hundred and Sixty Seven Only) plus interest thereon. Facts in Brief 2. The facts, in brief, are that the Operational Creditor supplied the goods to the Corporate Debtor in 2016. First invoice was raised on 06.02.2016 and the last invoice had been raised on 09.05.2016. The date of default as ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that these letters were never sent and delivered to the applicant, hence, same cannot be treated as valid basis for the plea of existence of a dispute prior to issue of notice of demand under 8 of IBC, 2016. As regard to interest part was concerned, the same was mentioned in the notice itself; hence, there was no substance in the plea of the Corporate Debtor once the notice had been accepted. 6. Learned Counsel for the Operational Creditor also relied on the judgment of NCLT Mumbai Bench in the case of TJSB Sahakari Bank Ltd. v/s M/s. Unimetal Castings Ltd. [CP (IB)-3622/I BP/MB/2018] for the proposition that a debt which is claimed before barred by limitation can be proceeded if the same appears in the Books of Account/Balance Sheet of the Corporate Debtor. 7. It was also claimed that even reply to demand notice under Section 8 of IBC, 2016 was not made, hence, for this reason also this application was liable to be admitted. Our Conclusion 8. We have considered the submissions made by both the sides and material on record. It is not in dispute that last supply has been made in May, 2016 and invoice for the same has been raised on 09.05.2016. The application has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we take note of the fact that the Corporate Debtor has not replied the notice issued under Section 8 of IBC, 2016 and for this reason alone, this application is liable to be admitted particularly when no reasonable cause has been shown even during the course of hearing as to why such reply was not given. In this regard, we consider it pertinent to reproduce the findings of NCLT, Ahmedabad Court-1 in the case of Raghuvir Buildcon Private Limited vs. Ketan Construction Limited in CP(IB) C.P. (LB.) No. 57/9/NCLT/AHM/2019 vide order dated 10.08.2020 wherein in para 25 it was held as under: 25. This factual situation, however, leads to another dimension. In the case of operational debt, the proceedings for initiation of CIRP u/s. 9 are materially different from proceedings u/s. 7 of IBC, 2016 as in the case of claims of Operational Creditor delivery of notice of demand u/s. 8 of IBC, 2016 to the Corporate Debtor before filing of application is a must. It is an incurable defect. Thus, an application filed u/s. 9 of IBC, 2016 without delivery of notice of demand u/s. 8 of IBC, 2016 on the Corporate Debtor then such application is liable to be rejected at the very outset.. The Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso (Section 9(5)(ii)(a)). It may also reject the application where there has been repayment of the operational debt (Section 9(5)(ii)(b)), or the creditor has not delivered the invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)). 25. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (See Section 4 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to hold on to the company without paying its debts. Both the Tribunal and the Appellate Tribunal will do well to keep in mind this principal objective sought to be achieved by the Code and will strictly adhere to the time frame within which they are to decide matters under the Code. Further, findings of Hon'ble Supreme Court in the case of Innovative Industries Ltd. Vs. ICICI Bank and Ors held in para 29 are reproduced as under: 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 2. The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process or until this Adjudicating Authority approves the Resolution Plan under sub-section (1) of the Section 31 or passes an order for liquidation of Corporate Debtor Company under Section 33 of the Insolvency Bankruptcy Code, 2016, as the case may be. 3. The Operational Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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