NCLAT upholds CIRP admission under Section 9 IBC, rejects agency defense and demand notice challenges

The NCLAT dismissed an appeal challenging CIRP admission under Section 9 of IBC. The appellant argued no liability existed due to acting as agent and disputed demand notice service. The NCLAT held that without a tripartite agreement, the appellant remained liable for outstanding dues and could not invoke Section 230 of Indian Contract Act to transfer liability. The demand notice was validly served to the registered address despite minor address discrepancies, as parties had continuous business dealings. The court found clear debt admission through emails dated 21.07.2017 and 18.09.2017, making limitation period restart from the admission date. With established debt, default, and no genuine dispute, the CIRP admission was upheld.

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Issues Involved:
1. Disputed Debt/Liability
2. Agency Relationship and Liability
3. Service of Demand Notice
4. Board Resolution for Authorized Signatory
5. Admission of Debt and Default
6. Period of Limitation

Summary:

1. Disputed Debt/Liability:
The Appellant contended that the debt was disputed and that TMPL did not owe any operational debt to the Respondent. It argued that TMPL acted merely as an agent of Videocon Industries Limited (VIL) and, under Section 230 of the Indian Contract Act, 1872, could not be held liable for VIL's dues. The Appellant also claimed that the Respondent failed to prove the service of the demand notice issued u/s 8 of the Insolvency & Bankruptcy Code, 2016.

2. Agency Relationship and Liability:
TMPL provided services to various clients, including VIL, by placing advertisements through TMPL. The Respondent published these advertisements and raised invoices in VIL's name, delivered to TMPL. The Appellant argued that TMPL was only an agent and not liable for the debts of VIL, as per Section 230 of the Indian Contract Act, 1872.

3. Service of Demand Notice:
The Appellant claimed that the petition u/s 9 of the IBC was filed without delivering a demand notice u/s 8 of the IBC, which is mandatory. The Appellant argued that the Respondent failed to prove the service of the demand notice, as the tracking receipt and delivery acknowledgment were insufficient.

4. Board Resolution for Authorized Signatory:
The Appellant raised the issue of an improper board resolution for the authorized signatory of the Respondent, questioning the validity of the demand notice and subsequent proceedings.

5. Admission of Debt and Default:
The Respondent argued that the impugned order was well-reasoned and based on merits, with a clear existence of debt and default. It contended that the demand notice was duly served, and the Appellant never disputed the unpaid invoices. The Respondent relied on the presumption of service of notice under Section 27 of the General Clauses Act, 1897, and Section 114 Illustration (f) of the Evidence Act.

6. Period of Limitation:
The Adjudicating Authority noted that the date of default was 12.12.2015, and the debt was acknowledged by TMPL through emails dated 21.07.2017 and 18.09.2017. This acknowledgment reset the limitation period, making the claim within the limitation period.

Conclusion:
The Tribunal concluded that there was a debt in terms of Section 5(21) of the Code, a default in terms of Section 3(12) of the Code, and no dispute was raised at any point. The Adjudicating Authority correctly admitted the application u/s 9 for Corporate Insolvency Resolution Process. The appeal was dismissed with no order as to cost.

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