TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 244
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.... in CP (IB) / 49 / 95 / AMR / 2022. The consequential effect of the impugned order under challenge has been, that, the application preferred by the appellant, State bank of India (the financial creditor) under Section 95 of I & B Code as against the respondent, Dr Jitendra Das Maganti has been rejected. 3. Similarly, in other Company Appeal (AT) (CH) (INS) No. 361 / 2024, the challenge is given by the Appellant to the impugned order of 22.07.2024, that was rendered by the Ld. NCLT, Amaravati Bench in CP (IB) / 50 / 95 / AMR /2022, where, by virtue of the impugned order under challenge, the application filed under Section 95 of I & B Code by the appellant, State Bank of India as against the respondent Dr. Renuka Rani Maganti, has been rejected. 4. In these two Company Appeals, the Appellant, the Financial Creditor challenges the inference drawn by the Ld. Adjudicating Authority while rejecting the Application, which is that in the absence of there being any demand notice issued as per the provisions contained under Section 95 (4) of the I & B Code, and in the absence of non-service of the Demand Notice dated 17.08.2021 on the respective personal guarantors, the entire proce....
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....bts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application; (b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor. (6) The application referred to in sub-section (1) shall be in such form and manner, and accompanied by such fee as may be prescribed. (7) the details and documents required to be submitted under sub-section (4) shall be such as maybe specified.'' 7. Ld. Counsel for the Financial Creditor, i.e. the Appellant herein, submits that, in fact, as per the language that has been used under Sub-Section (4) of Section 95, it only prescribes for, as to what would be the necessary documents, which would accompany the application being preferred under Section 95 of the Code by the Creditor/ Creditors, in context of the debt that is owed by the Debtor to such Creditor or Creditors as on the date of the application and th....
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....lly deals with the instant subject of insolvency resolution process under clause (n) of the said sub-section. Clause (n) of section 239(2) reads as under: "(n) the form, the manner and the fee for making application for initiating the insolvency resolution process by the creditor under sub-section (6) of section 95." 11. The counsel for the Appellant submits that the sub-clause (n) of sub-section (2) of Section 239 of I & B Code only permits making of Rules to prescribe the form, the manner and the fee for making application for initiating the IRP process by the Creditor under Section 95 of I & B Code and that it does not speak about making of the rules for the purposes of service of demand notice which is referred to under sub-section (4) of Section 95 and therefore, the ambit of rule-making powers will be limited to what has been prescribed under sub-clause (n) of sub- section (2) of Section 239, and since section 239(2)(n) does not explicitly mention service of demand notice, the prescription of Rule 7(1) that the demand notice shall be served on the guarantor will only be directory in nature, being a provision that has not been explicitly provided in the Code. 12....
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....etails of succession certificate, or probate of a WILL, or letter of administration, or court decree (as may be applicable), under the Indian Succession Act, 1925 (10 of 1925) (attach a copy) 12. Provision of law, contract or other document under which debt has become due (attach a copy) 13. A statement of bank account where deposits are made or credits received normally by the creditor in respect of the debt of the corporate debtor, from the date on which the debt was incurred 14. List of documents attached to this notice in order to prove the existence of debt and the amount in default 3. If you believe that the debt has been repaid before the receipt of this notice, please demonstrate such repayment by sending to us, within fourteen days of receipt of this notice, the following:-- (a) an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the guarantor; or (b) evidence of encashment of cheque for the unpaid amount issued by the guarantor; or (c) an attested copy of any record that [name of the creditor]....
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....f filing of the application under section 95. This makes the service of notice of demand a condition precedent, for initiation of Insolvency resolution process (IRP) under Section 95(1) of I & B Code by filing an Application under Section 95. Since the Rules framed and the format of service of notice (Form B) forms part of the sub-ordinate legislation and they are in consonance with the I&B Code, service of notice of demand under Rule 7(1) becomes mandatory for the purpose of initiating IRP and not directory as contended by the Ld. Counsel for the Appellant. 15. Accordingly, the argument that has been extended to the contrary at the behest of the Appellant from the point of view, that for the purposes of initiation of IRP under Section 95, no demand notice is required to be served is not acceptable by us, and is turned down. 16. The second contention of Ld. Counsel for the Appellant is that even though there is no requirement to issue a demand notice, he has issued a demand notice and served the same in the address given as per the Aadhaar card of the respondents and therefore it has to be considered as a due service of the demand notice as contemplated under section 95(4)(b)....
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....ce of 17.08.2021. He has further argued that since there was no clarity in the service of demand notice, due to variance of address and Pin Code, the entire proceedings under Section 95 of the Code would be vitiated, because, the Appellant has failed to establish 'due' service of the demand notice and has failed to comply with the prescribed parameters provided under sub-clause (b) of sub-section (4) of Section 95. 19. Ld. Adjudicating Authority has tended to agree with the contention of the Respondent that there is no 'due' service of the notice of demand. But, the admitted fact remains, that there were the Writ proceedings, being Writ Petition (C) No. 843 / 2022 (Dr. Jitendra Das Maganti V. Union of India) and Writ Petition No. 941 / 2022 (Dr. Renuka Rani Maganti V. Union of India) respectively which were preferred by the Respondents before the Hon'ble Apex Court under Article 32 of the Constitution of India, challenging the constitutional validity of Sections 95 - 100 of I & B Code, 2016, that the pleading raised by them in the said Writ Petitions were their own case, in which the Appellant had no role in raising pleadings and that the said Writ Petitions were preferred befor....
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....ency Professional for taking up individual insolvency assignment against the personal guarantors in respect of Corporate Debtor-M/s. Sevenhills Healthcare Pvt. Ltd. (xiv) That the Financial Creditor-State Bank of India issued demand notice to the petitioner-Personal Guarantor in respect of unpaid debt in default due from M/s. Sevenhills Health Care Pvt. Ltd.-Corporate Debtor for an Amount of Rs.129,58,95,550.79/- on 17.08.2021. (xv) That the Financial Creditor-State Bank of India through its Resolution Professional Mr. Chillale Rajesh has instituted an Application under Section 95 read with 7 (2) of Insolvency & Bankruptcy Code, 2016 (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantor to Corporate Debtors) Rules, 2019 in Form-C before the Hon'ble National Company Law Tribunal, Amaravati Bench at Hyderabad to initiate Insolvency Resolution Process against the Personal Guarantor on 07.04.2022.'' 22. It can be seen that as per Para 7 (XIV) of their Writ Petition the Respondents themselves have come up with the case that, the Financial Creditor, the Appellant herein, had issued demand notice to the Petitioner / Personal G....
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....y, when knowledge is already imparted and it is fully evident, harping on technicalities of service of the demand notice appears to be too hyper-technical and redundant, especially when seen from the context and the objective of I&B Code. 26. As far as the arguments pertaining to the contents of the notice, the amount of default and the recoveries sought to be made is concerned, it is not a fact disputed by the Respondent and even if it is, then too that has to be considered by the Ld. Adjudicating Authority based on merits, after giving opportunity of hearing to both the parties. 27. In that eventuality, the plea of alleged non-service of demand notice is absolutely contrary to the own case of the Respondents, when, in the Writ Petitions preferred by them in September 2022 before the Hon'ble Apex Court immediately after service of notice of demand dated 17.08.2021, the Respondents had admitted in their pleadings that, notice was served upon them and if that be so, the finding recorded by the Ld. Tribunal qua the service of demand notice and its knowledge, can be said to be faulted, and contrary to the admitted case of the Respondents. 28. Thus, the very finding on the bas....