Appeal Granted: Order Declaring Moratorium and Appointing Interim Resolution Professional Deemed Illegal.

The appeal was allowed, and the impugned order dated 14th November 2019 was set aside. The order appointing the Interim Resolution Professional and declaring a moratorium was deemed illegal. The application under Section 9 of the I&B Code filed by the Respondent was dismissed. The AA was directed to close the proceeding and determine the fee for the Interim Resolution Professional. No costs were awarded.

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Issues Involved:
1. Whether the appeal was filed within the statutory period of limitation.
2. Compliance with the service procedure under the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016.
3. Existence of a pre-existing dispute between the parties before the initiation of proceedings under Section 9 of the Insolvency & Bankruptcy Code, 2016 (I&B Code).

Issue-wise Detailed Analysis:

1. Statutory Period of Limitation:
The Respondent contended that the appeal was filed beyond the 30-day statutory period as prescribed under Section 61(2) of the I&B Code. However, it was established that the impugned order dated 14th November 2019, and the appeal was filed on 5th December 2019, which is within the statutory period of limitation. Thus, the appeal was filed within the prescribed period.

2. Compliance with Service Procedure:
The Appellant argued that the impugned order should be set aside due to non-compliance with the service procedure prescribed under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016. The prescribed mode of service is registered post or speed post, and publication of notice is not a prescribed mode. The Respondent had sent the demand notice dated 21st May 2019 to the Appellant's registered office, which was returned due to insufficient address. A copy was also sent to the corporate address and successfully delivered. Additionally, the notice was sent via email. The Adjudicating Authority ordered substituted service by publication in the newspaper without exploring other modes like email, which was improper as per the Supreme Court's ruling in Neerja Realtors (P) Ltd. Vs. Janglu. Hence, the ex-parte hearing order based on substituted service was not proper.

3. Existence of Pre-existing Dispute:
The Appellant contended that there was a pre-existing dispute regarding the performance of services by the Respondent, which was not considered by the Adjudicating Authority. The Appellant provided email communications dated 14th July 2018, 17th October 2018, 17th January 2019, and 14th March 2019, indicating disputes over service quality, posting of wrong revenue, and issuance of post-dated cheques without informing the Appellant. The Supreme Court in Mobilox Innovation Pvt Ltd vs. Kirusa Software Pvt Ltd explained that if there is a plausible contention requiring further investigation and the dispute is not patently feeble, the application under Section 9 should be rejected. The Appellant's correspondences before the issuance of the demand notice indicated a pre-existing dispute.

Conclusion:
The appeal was allowed, and the impugned order dated 14th November 2019 was set aside. The order appointing the Interim Resolution Professional and declaring moratorium was declared illegal. The application under Section 9 of the I&B Code filed by Respondent No.1 was dismissed. The Adjudicating Authority was directed to close the proceeding and fix the fee of the Interim Resolution Professional for the period he functioned. No order as to costs was made.

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