Tribunal overturns order, allows fresh action under IBC Sections 8(1) and 9.

The Tribunal allowed the appeal, setting aside the impugned order and declaring all subsequent actions taken by the Adjudicating Authority as illegal. The Tribunal granted liberty to the First Respondent to issue a fresh Demand Notice under Section 8(1) of the IBC and, if there is debt and default, to file a fresh application under Section 9 of the IBC before the Adjudicating Authority. The Tribunal directed the Adjudicating Authority to determine any fresh application on merits, uninfluenced by the observations made in this appeal.

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Issues Involved:
1. Demand Notice Service Compliance
2. Pre-existing Dispute
3. Transfer of Winding Up Petition
4. Admission of Corporate Insolvency Resolution Process (CIRP)

Detailed Analysis:

1. Demand Notice Service Compliance:
The primary contention of the Appellant was that no Demand Notice under Section 8 of the Insolvency and Bankruptcy Code (IBC) was served on the Corporate Debtor before filing the petition. The notice was sent to an incorrect address, not the registered office as per the Ministry of Corporate Affairs (MCA) website. The Tribunal noted that the Demand Notice dated 25.09.2017 was indeed sent to an incorrect address and returned unserved. The Tribunal emphasized the mandatory nature of serving a Demand Notice under Section 8 of the IBC and concluded that the failure to serve a Demand Notice rendered the petition incomplete and non-maintainable.

2. Pre-existing Dispute:
The Appellant argued that there was a pre-existing dispute concerning the quality of goods supplied, which was acknowledged by the First Respondent in an email dated 19.01.2014. The Tribunal observed that the existence of a dispute must be prior to the receipt of the Demand Notice and must be genuine. However, since the Demand Notice was not properly served, this issue was secondary to the primary issue of notice compliance.

3. Transfer of Winding Up Petition:
The Appellant contended that the First Respondent did not comply with Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, which required submission of all necessary information for admission under Sections 7, 8, or 9 of the IBC. The Tribunal noted that the First Respondent claimed that a fresh Demand Notice was not required as the statutory notice under Section 433 of the Companies Act was part of the transferred records. However, the Tribunal held that compliance with Section 8 of the IBC was mandatory, and the failure to serve a proper Demand Notice could not be overlooked.

4. Admission of Corporate Insolvency Resolution Process (CIRP):
The Tribunal found that the Adjudicating Authority admitted the application without ensuring that a Demand Notice was served on the Corporate Debtor, which was a mandatory requirement under Section 8 of the IBC. The Tribunal concluded that the impugned order dated 01.01.2020 was not legally tenable and set it aside. The Tribunal declared all subsequent actions, including the appointment of the Interim Resolution Professional (IRP) and the moratorium, as illegal and directed the closure of the CIRP proceedings.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and declaring all subsequent actions taken by the Adjudicating Authority as illegal. The Tribunal granted liberty to the First Respondent to issue a fresh Demand Notice under Section 8(1) of the IBC and, if there is debt and default, to file a fresh application under Section 9 of the IBC before the Adjudicating Authority. The Tribunal directed the Adjudicating Authority to determine any fresh application on merits, uninfluenced by the observations made in this appeal.

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