Tribunal Upholds Section 9 Application Validity

The Tribunal upheld the judgment of the Adjudicating Authority, admitting the Section 9 Application filed by the Respondent. The Tribunal found that the notice under Section 8 of the Insolvency and Bankruptcy Code was correctly served on the Corporate Debtor, the Application under Section 9 based on a Civil Court Decree was maintainable as an operational debt, and the Corporate Debtor's status as a going concern did not affect the Application's validity. The Appeal was dismissed, and no costs were awarded.

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Issues Involved:
1. Service of Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016.
2. Maintainability of Application under Section 9 based on a Civil Court Decree.
3. Status of Corporate Debtor as a going concern affecting the maintainability of the Application.

Issue-wise Detailed Analysis:

1. Service of Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016:

The Appellant argued that the notice under Section 8 of the Code dated 06.04.2019 was not served on the Corporate Debtor as it was sent to an incorrect address. The notice was sent to '24, Sainki Farms, Delhi-110062' instead of the correct address '54-A, Sainik Farm, Khanpur, New Delhi-110062'. The Adjudicating Authority did not return any finding regarding the service of notice, which is a mandatory requirement.

The Respondent countered that the notice was sent to the correct address and was duly received by the Corporate Debtor. The Operational Creditor filed an affidavit of compliance, including a photocopy of the receipt issued by India Post. The discrepancy in the address on the postal receipt was due to a mistake by the Postal Authorities, not the Operational Creditor.

The Tribunal found that the notice was addressed correctly and was served on the Corporate Debtor. The Corporate Debtor's reply to the Section 9 Application did not mention non-receipt of the notice. The Tribunal concluded that the notice was duly served, and the first submission of the Appellant was rejected.

2. Maintainability of Application under Section 9 based on a Civil Court Decree:

The Appellant contended that the Application under Section 9 was based on a Civil Court Decree dated 08.09.2016, which cannot be considered an 'operational debt'. The Appellant argued that the Respondent should have pursued the Execution Application instead of filing under Section 9 of the Code.

The Tribunal noted that the debt arose from the supply of poly propylene by the Operational Creditor to the Corporate Debtor, which is covered under the definition of 'operational debt' as per Section 5(21) of the Code. The mere fact that the debt was adjudicated and a Decree was passed does not change the nature of the operational debt. The Tribunal held that the Application under Section 9 was maintainable and the claim was an operational debt.

The Tribunal also referenced its previous judgments, stating that the pendency of an Execution Application does not preclude the initiation of proceedings under the Code. The Tribunal rejected the Appellant's second submission, affirming the maintainability of the Section 9 Application.

3. Status of Corporate Debtor as a going concern affecting the maintainability of the Application:

The Appellant argued that the Corporate Debtor is a going concern with a significant turnover and employees, hence the Application under Section 9 should not be maintainable.

The Tribunal dismissed this argument, stating that the status of the Corporate Debtor as a going concern does not affect the right of the Operational Creditor to invoke Section 9 of the Code. The Tribunal emphasized that even a going concern must discharge its debts, and the Application under Section 9 remains valid.

Conclusion:

The Tribunal found no merit in any of the submissions made by the Appellant. The judgment of the Adjudicating Authority admitting the Section 9 Application filed by the Respondent was upheld. The Appeal was dismissed, and no order as to costs was made.

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