TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 714
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....1986 with CIN No. U31109GJ1986PTC038908, having its registered office at 704-A, Synergy Corporate Road, Prahlad Nagar, Ahmedabad, Gujarat - 380015. 3. The Corporate Debtor namely, M/s. Servotech Power Systems Ltd. is a Private Company incorporated under the erstwhile Companies Act, 1956 with CIN No. L31200DL2004PLC129397, having its registered office at 806, 8th Floor, Crown Height, Hotel Crown Plaza, Sector-10 Rohini, New Delhi-110085. 4. The Authorized Share Capital of the Corporate Debtor is Rs. 19,00,00,000/- and Paid-up Share Capital of the Company is Rs. 18,31,00,000/- as per the Master Data of the Corporate Debtor. 5. That this Petition filed under Section 9 of IBC, 2016 was listed for the first time before this Adjudicating Authority on 16.04.2021. 6. That on the preliminary hearing, it was observed that the Demand Notice issued by the Petitioner under Section 8 of IBC 2016 is based on invoices and is sent in Form 3 and not in Form 4. Therefore, a specific query was raised from the Operational Creditor as to how the Demand Notice based on invoices issued in Form 3 is in compliance of Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, ....
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....unsel for the Operational Creditor that when the Demand Notice under Section 8 of IBC, 2016 is sent in Form 3, either invoice or other document is necessary to be annexed. 12. At this stage, we feel it necessary to go through the Judgment of the Hon'ble NCLAT dated 24.02.2020 passed in the matter of Neeraj Jain Vs. Cloudwalker Streaming Technologies Private Limited in Company Appeal (AT) (Insolvency) No. 1354 of 2019 (for brevity, hereinafter referred as Neeraj Jain Case). 13. However, before discussing the principles laid down by the Hon'ble NCLAT in the aforesaid Judgment, it is necessary to visit the facts of the of Neeraj Jain case The relevant facts as narrated in the Judgment are reproduced below: "7. The instant Appeal is filed mainly on the following grounds; that the Impugned Order has been passed without appreciating the fact that the Operational Creditor has not produced any documentary evidence, including but not limited to purchase orders, acceptance letters, invoices and proof of any intimation of sale to the end customers or any post-delivery services with specific reference to the amounts sought to be claimed by the Respondent; that the Learned Adjudicat....
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.... invoice demanding payment of the amount involved' in Section 8(1) does not provide the Operational Creditor, with the discretion to send the demand notice in Form 3 or Form 4 as per its convenience. Rather, it depends directly on the nature of the operational debt and applicability of Form 3 or Form 4 as per the nature of the transaction." "45. It is important to mention that legislative provisions are made with a larger perspective to deal with all the eventualities that may arise in the implementation of the said provisions. Therefore, the use of the word "OR" in Section 8 cannot be interpreted as such, that the Insolvency and Bankruptcy Code has provided a choice or a discretion to an Operational Creditor, to provide an escape route from submission of the invoice, which can be treated as the most relevant document to prove the debt and amount in default." 16. That now, if we compare the facts of the aforesaid case with the facts of the present case in hand, the major difference we find is that no invoice was ever attached with the demand notice by the Operational Creditor in the Neeraj Jain case, whereas the Operational Creditor in the present case has annexed the invoic....
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....edged by the Respondent (Page No. 8-9; 144-169 of Appeal)." 18. Keeping in mind the facts of the instant case, we come across other subsequent Judgments of Hon'ble NCLAT, where CIR Process has been initiated on the basis of the Demand Notice issued in Form-3 attaching therewith invoices. The examples of such Judgments worth quoting are: a) Anil Duggal Vs. Roofs and Ceilings Pvt. Ltd. Judgment Dated 02.03.2020 Company Appeal (AT) (Insolvency) No. 189 of 2020 "2. The brief facts as stated in the petition are as follows; The Applicant contends that the Corporate Debtor approached the operational creditor for the supply of material for roofing etc., carpet export mart, BIDA Carpet City, Bhadohi, UP, and accordingly issued the purchase order No. 37 dated 18th October 2016. Under the said purchase order, the Applicant supplied the materials at the said site as per terms of the purchase order, and further invoices were raised by the Applicant/operational creditor." "20. In the circumstances, it is clear that the Corporate Debtor failed to make the payment despite service of the demand notice issued under Form 3 of the Insolvency and Bankruptcy (Application to Adjudicating Aut....
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....e basing on Invoices in Form 3 instead of Form 4, will jeopardize the rights of the parties or will cause prejudice to any of the party, it is necessary to compare title, subject and contents of Form 3 with Form 4. That when one compares the title of the Form 3 ("FORM OF DEMAND NOTICE/INVOICE DEMANDING PAYMENT UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016") with Form 4 ("FORM OF NOTICE WITH WHICH INVOICE DEMANDING PAYMENT IS TO BE ATTACHED"), one finds that the term 'invoice' is mentioned in the Titles of both Form 3 and Form 4. 20. Further, when we compare the Subjects of Form 3 (Demand notice/invoice demanding payment in respect of unpaid operational debt due from [corporate debtor] under the Code) with that of Form 4 (Notice attached to invoice demanding payment), one notices that the Form 4 is merely a Notice/cover page of the Invoice, whereas the subject of Form 3 clearly recognizes the term 'Invoice' demanding payment in respect of unpaid "operational debt". The term "Operational Debt" is defined under Section 5(21) of IBC 2016 as below: "Operational debt" means a claim in respect of the provision of goods or services including employment or a debt in resp....
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....ever be caused to any of the parties if the Demand Notice based on Invoices is sent in Form 3. 24. Even if we assume that the Demand Notice with Invoices has to be sent in Form 4 only, quoting of incorrect Section or erroneous label cannot be a ground of dismissal of an Application as held by Hon'ble Supreme Court in the matter of Vijaya Bank Vs. Shyamal Kumar Lodh Civil Appeal No. 4211 and 4212 of 2007 dated 6th July, 2010: "16 ....Incorrect label of the application and mentioning wrong provision neither confers jurisdiction nor denudes the Court of its jurisdiction. Relief sought for, if falls within the jurisdiction of the Court, it cannot be thrown out on the ground of its erroneous label or wrong mentioning of provision....." 25. Holding the aforesaid presumption still true, if invoices are attached with Form 3 instead of Form 4, then what remains is only the incorrect label. Further, the applicability of which Form needs to be sent, is a procedural law and the Hon'ble Supreme Court has held in the matter of Macquarie Bank Limited vs. Shilpi Cable Technologies Ltd. Civil Appeal No. 15135 Of 2017, that: "32.......it is well settled that procedure is the handmaid o....