Tribunal Upholds IBC Demand Notice Service & Operational Debt Ruling

The Tribunal found that the demand notice under Section 8 of the IBC was properly served as the Corporate Debtor responded, initiating the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC. The dispute regarding operational debt was ruled in favor of the Operational Creditor since objections were raised post-demand notice issuance. Despite the CP being filed in 2018 for debts from 2014-2015, acknowledgment in a 2016 letter confirmed timely filing within the limitation period. The Tribunal admitted the petition, declaring a moratorium, appointing an Interim Resolution Professional, and directing necessary IBC procedures.

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Issues:
1. Proper service of demand notice under Section 8 of the IBC.
2. Dispute regarding operational debt.
3. Filing of Corporate Petition (CP) within the limitation period.

Issue 1: Proper service of demand notice under Section 8 of the IBC:
The petition was filed under Section 9 of the IBC for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The demand notice under Section 8 of the IBC was sent to the registered address of the Corporate Debtor, and the Corporate Debtor replied to the demand notice. The Tribunal held that the demand notice was duly served as the Corporate Debtor responded to the notice, establishing proper service.

Issue 2: Dispute regarding operational debt:
The Corporate Debtor raised objections regarding the quality of material supplied by the Operational Creditor, but these objections were raised after the issuance of the demand notice. The Tribunal found that the dispute was raised for the first time after the service of the demand notice, indicating it was not a pre-existing dispute. Therefore, this issue was held in favor of the Operational Creditor.

Issue 3: Filing of Corporate Petition (CP) within the limitation period:
The invoices and lorry receipts provided as evidence pertained to the years 2014 and 2015, while the CP was filed in 2018. However, the Corporate Debtor had acknowledged the debt in a balance confirmation letter dated 31.03.2016. The Tribunal found that the CP was filed within the limitation period based on the acknowledgment of the debt by the Corporate Debtor.

The Tribunal admitted the petition under Section 9 of the IBC, declaring a moratorium in accordance with Section 14 of the Code. Various prohibitions were imposed during the moratorium period, including restrictions on legal actions against the Corporate Debtor and disposal of its assets. The Tribunal appointed an Interim Resolution Professional (IRP) and directed the IRP to take necessary steps under the IBC. The IRP was tasked with constituting a Committee of Creditors and submitting progress reports to the Tribunal regularly. The order was communicated to both parties, with the counsel instructed to provide a copy to the IRP promptly. The Registry was also directed to send a copy of the order to the IRP via email without delay.

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