Operational debt and default established, with advocate-issued demand notice valid under insolvency law; application admitted.
A demand notice under section 8 of the Insolvency and Bankruptcy Code may be issued by an advocate on behalf of an operational creditor, and an earlier appellate order setting aside a prior admission for service defects did not bar a fresh application on merits. On the facts, supply of goods, outstanding invoices, account confirmation, admitted liability above the statutory threshold, and duly served demand notice established operational debt and default. No pre-existing dispute or pending suit or arbitration was shown. The section 9 application was therefore admitted, moratorium was ordered, and the interim resolution process was set in motion.
Issues: (i) Whether the present application was barred by the earlier appellate order and whether notice under section 8 of the Insolvency and Bankruptcy Code, 2016 could validly be issued through an advocate. (ii) Whether the operational debt, default, absence of pre-existing dispute, and service of demand notice were established so as to warrant admission of the application under section 9.
Issue (i): Whether the present application was barred by the earlier appellate order and whether notice under section 8 of the Insolvency and Bankruptcy Code, 2016 could validly be issued through an advocate.
Analysis: The earlier order was found to have set aside the first admission not on merits but for defects in service and for issuance of the demand notice through counsel. The subsequent legal position, as noticed in the decision relied upon, recognised that a demand notice under section 8 may be issued by a lawyer on behalf of the operational creditor. The prior appellate order therefore did not operate as a merits adjudication to bar the fresh application.
Conclusion: The objection based on the earlier appellate order and the mode of issuance of notice failed, and the application was not held to be barred on that ground.
Issue (ii): Whether the operational debt, default, absence of pre-existing dispute, and service of demand notice were established so as to warrant admission of the application under section 9.
Analysis: The record showed supply of goods, outstanding invoices, account confirmation, and an admitted liability exceeding the statutory threshold. No pending suit or arbitration was shown, and the materials did not establish a pre-existing dispute sufficient to defeat admission. The demand notice was treated as duly served, the debt was found due and unpaid, and the proposed interim resolution professional had furnished the requisite declaration.
Conclusion: The requirements for initiation of corporate insolvency resolution proceedings were satisfied, and the application was admitted with moratorium and appointment of the interim resolution professional.
Final Conclusion: The corporate insolvency resolution process was directed to commence against the corporate debtor, with moratorium in force and consequential directions for public announcement and claims process.
Ratio Decidendi: An operational creditor's section 9 application is admissible where the debt and default are established, no qualifying pre-existing dispute is shown, and a demand notice issued through an authorised advocate is valid.
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