AI Drafter 
TaxTMI 
TaxTMI 
2021 (6) TMI 88
X X X X Extracts X X X X
X X X X Extracts X X X X
....t invoice was raised on 06.02.2016 and the last invoice had been raised on 09.05.2016. The date of default as mentioned in Form-5 is 16.05.2016. Submissions of Operational Creditor 3. Learned Counsel for the Operational Creditor appeared and submitted that notice of demand under Section 8 of IBC, 2016 had been delivered to the Corporate Debtor on 03.10.2019. Our attention was also drawn to various documentary evidences such as tax invoices, delivery challans and other e-mails written by the Operational Creditor to Corporate Debtor. No reply was filed to such e-mails; hence, it was to be assumed that claims made by Operational Creditor had been accepted. Submissions of Corporate Debtor 4. The Learned Counsel for the Corporate Debtor appeared and submitted that the notice under Section 8 of IBC, 2016 was neither submitted in Form-3 and nor Operational Creditor enclosed copies of invoice, hence, for this reason only, application was liable to be dismissed. Another plea was taken that the debt was barred by limitation as the last invoice was of 9.5.2016 and even as per the date mentioned by the Operational Creditor in Form-5, default occurred on 16.05.2016 whereas this applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....supply has been made in May, 2016 and invoice for the same has been raised on 09.05.2016. The application has been filed on 20.11.2019. It has been claimed by the Corporate Debtor that this application was liable to be dismissed on the ground of limitation itself as there is no acknowledgement by the Corporate Debtor from the date of such invoice till the filing of application under Section 9 by the Operational Creditor. In this regard, we have gone through all the e-mails which have been attached by the applicant whereby the applicant has requested for payments from time to time. In one such e-mail dated 25.03.2017, we noted a categorical assertion made by the Operational Creditor that if no reply is received by Operational Creditor within eight days from the date of such e-mail then it will be assumed that Corporate Debtor had accepted the balance shown in the attachment which depicted the balance outstanding as per Books of Account of the Operational Creditor. The said e-mail dated 25.03.2017 is reproduced as under: From: Madhusudan collection @ pintwellindia.com Subject: Confirmation of Account statement FY. 16 to 17 Date: 25 March 2017 at 2:42 PM ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation filed u/s. 9 of IBC, 2016 without delivery of notice of demand u/s. 8 of IBC, 2016 on the Corporate Debtor then such application is liable to be rejected at the very outset.. The Petitioner/Applicant cannot be allowed to serve such notice after the filing of application u/s. 9 under any circumstances. Correspondingly, the Corporate Debtor is under an obligation as per provisions of Section 8(2) r.w. Section 8(2)(a) of IBC, 2016 to reply to such notice of Operational Creditor within a period of 10 days from the date of receipt of such notice. It is also an incurable defect. Both the parties have to be kept at par. Thus, in our view, just an application u/s. 9 is liable to be rejected without delivery of notice u/s. 8 prior to filing of such application and correspondingly an application in the absence of notice of dispute/existence of dispute being brought to the notice of the operational creditor within a period of 10 days by the corporate debtor is liable to be admitted and corporate debtor cannot be allowed to raise the issue of pre-existing dispute later on because having regard to the drastic consequences of initiation of CIRP against the Corporate Debtor, such mechanism ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 6(2), the applicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt and a copy of the certificate from the financial institution maintaining a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. 26. Another thing of importance is the timelines within which the insolvency resolution process is to be triggered. The corporate debtor is given 10 days from the date of receipt of demand notice or copy of invoice to eit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a suit or arbitration proceedings, which is pre-existing i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. Thereafter, Hon'ble Supreme Court in the case of Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India and Ors held as under: 24. A financial creditor may trigger the Code either by itself or jointly with other financial creditors or such persons as may be notified by the Central Government when a default occurs. The Explanation to Section 7(1) also makes it clear that the Code may be triggered by such persons in respect of a default made to any other financial creditor of the corporate debtor, making it clear that once triggered, the resolution process under the Code is a collective proceeding in rem which seeks, in the first instance, to rehabilitate the corporate debtor. Under Section 7(4), the Adjudicating Authority shall, within the prescribed period, ascertain the existence of a default on the basis of evidence furnished by the financial creditor; and under Section 7(5), the Adjudicating Authority has to be satisfied....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Authority approves the Resolution Plan under sub-section (1) of the Section 31 or passes an order for liquidation of Corporate Debtor Company under Section 33 of the Insolvency & Bankruptcy Code, 2016, as the case may be. 3. The Operational Creditor has not proposed the name of the Interim Resolution Professional (IRP). Therefore, this Adjudicating Authority hereby appoints Mr. Mr. Ashish Anantray Shah having Registration No: IBBI/IPA-002/IP-No. 0214/2017-18/10666 and having Email Address: [email protected] to act as an IRP under Section 13(1) (c) of the CODE. 4. The IRP shall perform all his functions as contemplated, inter-alia, by Sections 17, 18, 20 & 21 of the Code. It is further made clear that all personnel connected with Corporate Debtor, its Promoter or any other person associated with management of the Corporate Debtor are under legal obligation under Section 19 of the Code extend every assistance and co-operation to the Interim Resolution Professional. Where any personnel of the Corporate Debtor, its Promoter or any other person required to assist or co-operate with IRP, do not assist or Co-operate. IRP is at liberty to make appropriate application to t....