Tribunal Dismisses Insolvency Case Due to Improper Demand Notice; Applicant May Refile After Addressing Notice Issue.

The Tribunal dismissed the application (CP No. (IB)328/ALD/2019) due to non-compliance with Section 8 of the IBC and Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Applicant/Operational Creditor failed to duly serve the demand notice to the Corporate Debtor. Consequently, the application under Section 9 was deemed incomplete and not maintainable. The Tribunal granted the Applicant the liberty to file a fresh case after ensuring proper delivery of the demand notice in accordance with the prescribed rules.

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Issues Involved:
1. Whether the demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC), 2016, was duly served upon the Corporate Debtor.
2. Compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
3. Validity of the application under Section 9 of the IBC in the absence of proper service of demand notice.

Issue-wise Detailed Analysis:

1. Whether the demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC), 2016, was duly served upon the Corporate Debtor:

The Applicant/Operational Creditor sent a demand notice to the Corporate Debtor on 29.06.2019 and again on 19.07.2019. Both notices were returned with endorsements "Office Closed" and "Not Known". The Applicant argued that the notice should be deemed served based on precedents such as *State of MP v. Hiralal*, *C.C. Alavi Haji v. Palapetty Muhammad*, and *Alloysmin Industries v. Raman Casting (P.) Ltd.*. However, the Tribunal differentiated the current case from these precedents, noting that the notices were not served at any address of the Corporate Debtor, unlike the cases cited. Therefore, the Tribunal concluded that the demand notice was not duly served.

2. Compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016:

Rule 5 outlines that a demand notice must be delivered to the registered office by hand, registered post, or speed post with acknowledgment due, or by electronic mail to key personnel of the Corporate Debtor. The Tribunal found that the Applicant only attempted delivery via registered post, which was returned unserved. The Applicant did not attempt delivery by hand or electronic mail. Consequently, the Tribunal held that the Applicant did not comply with Rule 5, which mandates proper delivery of the demand notice.

3. Validity of the application under Section 9 of the IBC in the absence of proper service of demand notice:

The Tribunal emphasized the importance of delivering a demand notice under Section 8 of the IBC before initiating the Corporate Insolvency Resolution Process (CIRP) under Section 9. The purpose of this provision is to allow the Corporate Debtor an opportunity to settle the debt or raise a dispute. Since the Applicant failed to deliver the notice as required, the application under Section 9 was deemed incomplete and not maintainable. The Tribunal referenced the decision in *Eastern Travels (P.) Ltd. v. Swash Convergence Technologies Ltd.*, which supports the necessity of proper service of notice.

Conclusion:

The Tribunal dismissed the application (CP No. (IB)328/ALD/2019) due to non-compliance with Section 8 of the IBC and Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Applicant/Operational Creditor was granted liberty to file a fresh case after ensuring proper delivery of the demand notice as per the prescribed rules.

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