AI Drafter 
TaxTMI 
TaxTMI 
2021 (3) TMI 939
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. Learned Adjudicating Authority while admitting the Section 9 Application observed as follows; "14. On going through the submissions made by the Counsel from the both the sides and on perusing the documents produced on record, this Bench takes note of the fact that the six invoices and delivery challan raised by the Petitioner have been duly acknowledged by the Corporate Debtor by putting their stamp. Hence the contention raised by the Corporate Debtor denying and disputing the invoices and delivery challans does not have any foundation. 15. The Petitioner has also duly produced the running books of Account of the Corporate Debtor regarding the transactions and invoices. This shows an outstanding Debt of Rs. 90,49,843/- due from the Corporate Debtor as on 31.0.2018. This clearly shows the amount due from the Corporate Debtor. 16. This Bench on examination, finds that the Demand Notice dated 10.09.2018 has been duly served through registered post by the Petitioner at 604, Kaushal Point, 4th Floor, Behind Uday Cinema, Ghatkopar (W), Mumbai. A proof of delivery by way of acknowledgement card has been attached by the Petitioner with his Petition. That it i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Application under Section 9 of the IBC. 4. Learned Counsel for the Appellant submitted that Section 9(3)(a) mandatorily requires that the Application should be accompanied with a copy of the Demand Notice delivered by the Operational Creditor to the Corporate Debtor; that Sections 8 & 9 of the Code should be conjointly read with Rules 5 & 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which provide for the mode of service of the Demand Notice on the Corporate Debtor, a sine qua for maintaining an Application under Section 9 of the IBC. Learned Counsel drew our attention to Page Nos. 109-115 of the Appeal Paper Book, which contained the copies of the Registered Post, Acknowledgement due sent to the Corporate Debtor and the Directors of the Corporate Debtor Company; he submitted that the notice sent to the Appellant/Mr. Abhinandan Jain was returned to the Operational Creditor with an endorsement 'closed in the period 2017-2018'. Likewise, the notice sent to Priya Arhant Jain, Mr. Arihant Jain and Mr. Shital Rikhabchand Multha were also returned with an endorsement 'closed for a period 2017-2018'. Regarding the service of notice on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... adjusted against invoice No. 24. He placed reliance on the Judgment of the Hon'ble Supreme Court in 'Babulal Vardharji Gurjar' V/s. 'Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr.', 2020 SCC Online SC 647. 'Pre-Existing Dispute' 9. Learned Counsel for the Appellant submitted that the Corporate Debtor had business transactions with one Mr. Puneet Shivkumar Agarwal since September, 2013 through his group/related companies which are as follows: "a. Akash Lifestyle Pvt. Ltd. b. Shirin Export Pvt. Ltd. c. Anmol Lifestyle Pvt. Ltd. d. Matheysh Multitrading Pvt. Ltd. e. Vallari Trading Pvt. Ltd. f. Jetspeed Tradecom Pvt. Ltd. g. Vigorous Tradelink Pvt. Ltd. h. Tanaya Enterprises Pvt. Ltd. i. Vemb Lifestyle Pvt. Ltd." 10. It is submitted that all the email correspondence from Mr. Punit Shivkumar Agarwal was done by Ms. Rashmi Shetye through her email id and vide email dated 03.11.2014, Ms. Rashmi Shetye sought confirmation from the Corporate Debtor of its credit balance with the group companies to the tune of Rs. 34,23,71,004/-. It is argued by the Learned counsel for the Appellant that the said i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... post and delivered to the Corporate Debtor and the Directors. 12. Learned Counsel for the Respondent submitted that the Corporate Debtor maintained a running account with them which is reflected in Annexure-5, (Pages 125 to 154 of the Reply Paper Book) filed before this Tribunal. It is submitted that the Appellant has failed to disclose this running account which reflects outstanding debt of Rs. 90,49,843/- due from the Corporate Debtor as on 31.03.2018. It is further submitted that the Notification dated 24.03.2020 issued by the Ministry of Corporate Affairs, Government of India, whereby the minimum threshold for triggering of an Application under Section 9 of the IBC was raised from Rs. 1,00,000 to 1,00,00,000/- is prospective in nature as laid down by this Tribunal in the case of 'Madhusudan Tantia' Vs. 'Amit Choraria & Anr.' Company Appeal (AT) (Insolvency) No. 557 of 2020 dated 12.10.2020. 13. Learned Counsel for the Respondent vehemently denied that there was any 'Pre-Existing Dispute' between the parties and further submitted that the Appellant in contravention of the provisions of the Code, withdrew an amount of Rs. 1,03,30,513/- on 03.09.2020 subsequent to the initi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and (d) such other information as may be specified. (e) any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information, as may be prescribed. (4) An operation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....b) a copy of an invoice attached with a notice in Form 4. (2) The Demand Notice or the copy of the invoice demanding payment referred to in sub-section (2) of Section 8 of the Code, may be delivered to the Corporate Debtor, - (a) at the registered office by hand, registered post or speed post with acknowledgement due; or (b) by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the Corporate Debtor. (3) A copy of Demand Notice or invoice demanding payment served under this rule by an Operational Creditor shall also be filed with an information utility, if any. (Emphasis Supplied) 16. In the instant case, it is seen from the record that Demand Notice under Section 8 was sent to the Corporate Debtor by 'Registered Post, Acknowledgement Due' to '604, Kaushal Point, 4th Floor, Behind Uday Cinema, Ghatkopar (W), Mumbai - 400086'. Rule 5 provides that the Notice is to be served on the Corporate Debtor at the Registered Address available on the Records/Portal of the MCA. A perusal of the Master Data, evidences that the Registered Address is '604, Kaushal Point, 4th Floor, Behind Uda....
X X X X Extracts X X X X
X X X X Extracts X X X X
....BC'. As long as it has been addressed properly and once served at the Registered Address, it is not the concern of the Applicant as to who receives it. 21. It is also the case of the Appellant that though the notice was admittedly served to Mr. Vipin Champawat, he is only an Independent Director and does not fall within the definition of 'Key Managerial person' of the Corporate Debtor. 22. The receipt of notice by the Independent Director further fortifies the case of the Operational Creditor, as he is a Member of the Board of Directors and it can be safely construed that the Board of Directors has knowledge of the same. It is the Board of Directors who takes a call and acts on behalf of the Corporate Debtor and the Independent Director is a part of it. Be that as it may, the Respondent had got issued a Legal Notice dated 20.08.2018 prior to the issuance of the Demand Notice in September 2018, addressed to the Corporate Debtor at the Registered Address. The same has not been denied by the Corporate Debtor. Additionally, a notarized Affidavit of service has been filed with respect to handing over a copy of the Petition to the Office of the Corporate Debtor. 23. Keeping in v....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from 21.07.2011, three years having elapsed since then in 2014, the Section 7 application filed in 2017 is clearly out of time. He has also referred to our judgment in B.K. Educational Services Private Limited v. Parag Gupta and Associates, 2018 SCC OnLine SC 1921 in order to buttress his argument that it is Article 137 of the Limitation Act which will apply to the facts of this case. 5. Mr Debal Banerjee, learned Senior Counsel, appearing on behalf of the respondents, countered this by stressing, in particular, para 7 of B.K. Educational Services Private Limited (supra) and reiterated the finding of the NCLT that it would be Article 62 of the Limitation Act that would be attracted to the facts of this case. He further argued that, being a commercial Code, a commercial interpretation has to be given so as to make the Code workable. 6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application" which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by learned counsel appearing on behal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the purpose of the application under Section 7 of the Code, in our view, neither the said provision and principles come in operation in the present case nor they ensure to the benefit of respondent No. 2 for the fundamental reason that in the application made before NCLT, the respondent No. 2 specifically stated the date of default as '8.7.2011 being the date of NPA'. It remains indisputable that neither any other date of default has been stated in the application nor any suggestion about any acknowledgement has been made. As noticed, even in Part-V of the application, the respondent No. 2 was required to state the particulars of financial debt with documents and evidence on record. In the variety of descriptions which could have been given by the applicant in the said Part V of the application and even in residuary Point No. 8 therein, nothing was at all stated at any place about the so called acknowledgment or any other date of default. (Emphasis Supplied) 28. In the instant case the documentary evidence, that is the ledger and the running account filed evidences that the first invoice dated 27.10.2014 is for an amount of Rs. 17,84,640/-, part payment of which i.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f limitation. Whether there is any 'Pre-Existing Dispute'? 30. The contention of the Learned Counsel for the Appellant that there were transactions between one Mr. Puneet Shiv Kumar Agarwal and the Operational Creditor through various group of Companies cannot fall within the definition of dispute relevant to the subject matter of the instant case, in the absence of any communication filed evidencing any 'Pre-Existing Dispute', prior to the filing of the Section 9 Application. It is pertinent to mention that in their Reply to the Application, filed before the Learned Adjudicating Authority, the Appellant apart from raising a bald denial has not filed any substantive material in support of their contentions. We are of the considered view that ratio laid down by the Hon'ble Supreme Court in 'Mobilox Innovations Private Limited' V/s. 'Kirusa Software Private Limited', (2018) 1 SCC 353 is squarely applicable to the facts of this case. At this juncture, we find it relevant to reproduce the specific paragraphs is detailed as hereunder; "40. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating aut....