2019 (9) TMI 1461 - Tri - Insolvency and Bankruptcy

Petition under Insolvency Code dismissed; notice of demand service failure cited. Operational creditor can explore other avenues.

The Tribunal rejected the petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor due to the failure in ... Maintainability of application - initiation of CIRP - Corporate Debtor started default in making payment of outstanding invoices and failed to make payment for the goods supplied and invoices raised by Operational Creditor - service of demand notice - Corporate Debtor said that there appears to be some delay in making the payments but the respondent was making regular payment to the petitioner. HELD THAT:- Prior to going to the merits of the case by this Tribunal, it was observed that the notice of demand enabling the filing of the present petition has not been sent by the Petitioner 'Kutch Chemicals' rather it was sent by 'Panoli Intermediates India Pvt. Ltd.'. Thus the Tribunal is of the view that that failure of delivery of notice of demand upon the Corporate Debtor by the Operational Creditor makes this application liable to be rejected as held by the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 194 of 2019 in the matter of M/S KRYSTAL INTEGRATED SERVICES PVT. LTD. VERSUS M/S INDIAONTIME EXPRESS PRIVATE LIMITED [2019 (9) TMI 417 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] relying upon the decision of the Hon'ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT]. There are no merit in the submissions of the Operational Creditor in order to sustain the plea that notice under section 8, IBC, 2018 should be deemed to served - this petition on the issue of maintainability arising out of service of notice of demand having not been delivered upon the corporate debtor in accordance with the provisions of section 8 of IBC, 2016 read with Rule 5 of AAA Rules 2016 stands rejected in exercise of section 9(5)(ii)(c) of IBC, 2016 but without cost. Issues:1. Invocation of Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Respondent for initiating Corporate Insolvency Resolution Process.2. Allegations of default in payment by the Corporate Debtor.3. Response filed by the Corporate Debtor, disputing the delivery of demand notice and regular payment claims.4. Observations regarding the failure of delivery of notice of demand by the Operational Creditor.5. Rejection of the petition based on the issue of maintainability arising from the service of notice of demand.6. Permission for the operational creditor to approach other forums regarding the claim.Analysis:The petition was filed by Kutch Chemical invoking Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Respondent, alleging default in payment. Kutch Chemical claimed that the Corporate Debtor, VMA Chemicals, had defaulted in making payments for goods supplied since January 2017, resulting in an outstanding amount of Rs. 43,80,765 as of October 1, 2018. The demand notice was delivered to the Corporate Debtor, but no payment was made nor any dispute raised by the Corporate Debtor.In response, the Corporate Debtor contended that no demand notice was received and challenged the maintainability of the petition under Section 9. They acknowledged some delay in payments but claimed regular payments were being made to the petitioner. The Tribunal observed that the notice of demand was sent by Panoli Intermediates India Pvt. Ltd. instead of Kutch Chemicals, rendering the application liable to be rejected. Citing a precedent, the Tribunal held that the failure of proper delivery of the notice of demand made the petition unsustainable under Section 9(5)(ii)(c) of the Insolvency and Bankruptcy Code, 2016.The Tribunal rejected the petition based on the issue of maintainability due to the failure in the service of the notice of demand. The order of rejection, however, did not prevent the operational creditor from seeking other avenues for the claim. The Registry was directed to communicate the order to the Operational Creditor promptly, allowing them to explore alternative forums for their claim if desired.