2022 (9) TMI 437 - Tri - Insolvency and Bankruptcy

Tribunal Allows Service by 'Unclaimed' Notice, Admits Insolvency Petition Triggered by Debtor's Default

The Tribunal found that a notice returned as 'unclaimed' constituted valid service based on legal precedents. The Corporate Debtor's acknowledgment of ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of notice - notice under section 8 of the Code when returned with the endorsement ‘Unclaimed’ is a good service or not? - HELD THAT:- Reliance placed on on CROWN WORLDWIDE HOLDINGS LTD. AND ORS. VERSUS CROWN RELOCATIONS MOVERS AND PACKERS [2016 (11) TMI 1725 - BOMBAY HIGH COURT] by the Hon’ble High Court at Bombay, where the court held that this is settled by a long line of authority on an interpretation of Section 27 of the General Clauses Act and Section 114 of the Evidence Act. Hence, is a well-established presumption that the return of packet with the endorsement “unclaimed” is good service. In this instant case it can be construed that there is no contemporaneous denial on the claim of the petitioner, by the Corporate Debtor because they have duly acknowledged the outstanding dues in the minutes of meeting dated 31 October, 2018. It is also pertinent to mention that as per the tracking record of the Petition, the delivery of the Section 8 notice was put on hold on the Addressee Instructions i.e., the Corporate Debtor. Time Limitation - HELD THAT:- It is pertinent to mention that the last bill dated 05 October, 2015 fell due on 05 November, 2015. Technically, the limitation period would end on 05 November, 2018 but since, the minutes of meeting between the parties was on 31 October, 2018, where the Corporate Debtor acknowledged the debt and assured to make the payment in four instalments. This acknowledgement of the Corporate Debtor is within the limitation period, hence, attracting section 18 of the Limitation Act, 1963. The present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Application admitted - moratorium declared. Issues:1. Validity of notice returned with 'Unclaimed' endorsement.2. Determination of default by the Corporate Debtor and acknowledgment within the limitation period.Analysis & Findings:Regarding the first issue, the Tribunal relied on legal precedents to establish that a notice returned as 'unclaimed' is considered valid service. Citing cases such as Crown Worldwide Holding Limited v. Crown Relocations Movers and Packers and Castle Industries Private Limited v. Cubs International Petrochem Limited, the Tribunal emphasized the presumption of good service in such instances. The Corporate Debtor's acknowledgment of outstanding dues in a meeting further supported this presumption, indicating lack of defense against the claim. The Tribunal also noted various efforts made by the Operational Creditor for service, including court orders and public announcements, culminating in an ex-parte decision due to the Corporate Debtor's non-response.On the second issue of default and acknowledgment within the limitation period, the Tribunal analyzed the timeline of bill payments and acknowledgments. Despite the last bill falling due in November 2015, the Corporate Debtor's acknowledgment of debt in October 2018, within the limitation period, invoked the provisions of section 18 of the Limitation Act, 1963. This acknowledgment, along with the Operational Creditor's compliance with necessary legal requirements, led the Tribunal to conclude that the petition demonstrated the Corporate Debtor's default on a due and payable debt exceeding the minimum amount stipulated by law. Consequently, the Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor.The Tribunal's order encompassed the initiation of the CIRP, imposition of a moratorium, appointment of an Interim Resolution Professional, and directives for management during the CIRP period. Additionally, financial provisions and communication protocols were outlined to ensure procedural compliance and progress monitoring. The Tribunal set a future date for filing periodical reports and issuance of certified copies, emphasizing the formalities required for further legal proceedings.In conclusion, the Tribunal's detailed analysis and order in response to the issues raised underscored the adherence to legal principles, precedents, and procedural requirements in adjudicating the matter before the National Company Law Tribunal, Kolkata Bench.