Operational Creditors Must File Individually Under I&B Code

The tribunal found that a joint application by operational creditors under Section 9 of the I&B Code was not maintainable, as operational creditors are required to act individually. It emphasized the mandatory requirement of filing a certificate from a recognized financial institution, which was not met in this case. The tribunal also ruled that a demand notice issued by a lawyer was invalid, and there was an existence of a dispute, rendering the petition under Section 9 non-maintainable. Consequently, the tribunal set aside the impugned order, dismissed the joint application, and allowed the appellant company to function independently.

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Issues Involved:
1. Maintainability of a joint application by two or more operational creditors under Section 9 of the I&B Code.
2. Mandatory requirement of filing a certificate from a recognized financial institution along with an application under Section 9 of the I&B Code.
3. Validity of a demand notice under Section 8 of the I&B Code issued by a lawyer on behalf of an operational creditor.
4. Existence of a dispute in the present case.

Issue-wise Detailed Analysis:

1. Maintainability of a Joint Application by Operational Creditors:
The tribunal examined whether a joint application by two or more operational creditors under Section 9 of the I&B Code is maintainable. It was observed that unlike Section 7, which allows financial creditors to file an application either individually or jointly, Section 9 requires operational creditors to act individually. The tribunal concluded that the practicalities of issuing individual claim notices, varying claims, and different dates of notices under Section 8 make joint applications impractical and non-maintainable. The tribunal held that Rule 23A of the NCLT Rules, 2016, which allows joint petitions, is not applicable under the I&B Code, thus a joint application under Section 9 is not maintainable.

2. Mandatory Requirement of Filing a Certificate from a Recognized Financial Institution:
The tribunal reaffirmed its stance from the "Smart Timing Steel Ltd. case," emphasizing that filing a certificate from a recognized financial institution confirming non-payment of unpaid operational debt is mandatory under Section 9(3)(c) of the I&B Code. In this case, the certificate provided by the respondents was from Misr Bank, a foreign bank not recognized as a financial institution under Indian law. The tribunal found the certificate insufficient and the affidavit incomplete, rendering the application under Section 9 non-maintainable.

3. Validity of Demand Notice Issued by a Lawyer:
The tribunal analyzed whether a demand notice under Section 8 of the I&B Code can be issued by a lawyer. It was noted that the demand notice must be issued by the operational creditor or an authorized person holding a position with or in relation to the operational creditor. The tribunal concluded that a lawyer, in the absence of authorization from the board of directors and without holding a relevant position, cannot issue a valid notice under Section 8. In this case, the notice issued by the lawyer was deemed invalid, making the subsequent petition under Section 9 non-maintainable.

4. Existence of a Dispute:
The tribunal considered whether there was an existence of a dispute as per Section 8 read with Section 5(6) of the I&B Code. It was found that the respondents had issued a winding-up notice on December 8, 2016, which was disputed by the appellant through a detailed reply on January 3, 2017. Additionally, a document dated December 27, 2013, relied upon by the respondents, was contested by the appellant as unsigned. The tribunal referenced its decision in "Kirusa Software (P.) Ltd. v. Mobilox Innovations (P.) Ltd.," which clarified that the existence of a dispute includes disputes pending before any judicial authority. The tribunal held that the ongoing dispute and pending suit indicated the existence of a dispute, making the petition under Section 9 non-maintainable.

Conclusion:
The tribunal set aside the impugned order dated April 10, 2017, passed by the Adjudicating Authority, Mumbai Bench, and declared all subsequent orders and actions, including the appointment of an Interim Resolution Professional and any moratorium, as illegal. The joint application under Section 9 was dismissed, and the appellant company was allowed to function independently. The respondents were directed to pay the fees of the Interim Resolution Professional for the period he functioned. The appeal was allowed with no order as to costs.

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