TaxTMI 
TaxTMI 
2025 (11) TMI 606
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....the Impugned Order dated 21.02.2023, as passed in CP(IB)/100/CHE/2022 on the grounds that the date of default as mentioned in the Application is later than the date of demand notice, most of the invoices are barred by limitation and that the demand notice did not mention any date of default which is not in consonance with provisions of Section 8 and that 9(3)(b) affidavit has not been attached with the Application. 2) The Appellant contends that the notice of demand was issued by him on 18.02.2022, containing the details of the transactions and the invoices and the financial liabilities accruing from them and that full particulars of the unpaid invoices had been given in Row-7 of the demand notice of 18.02.2022. She has submitted that the format of demand notice used by her did not contain any earmarked space for recording the date of default, that Section 8 of I&B Code dated 18.02.2022, doesn't prescribe for specific mention of the date of default in the demand notice, that the said notice has been prescribed under Rule 5(1)(b) of the said Rules to be in the shape of Form-4, that Form-4 statutorily doesn't prescribe for a specific mentioning of the date of default for t....
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....e of their being any clause prescribed in the said format of notice, non-mentioning of the default date will not be fatal to the proceedings. She has further argued that Form-3 prescribed under Rule 5 (1) (a), particularly mandates providing of record of default with the information utility, whereas, Form-4, prescribed under Rule 5(1)(b) doesn't call for mentioning of any date of default, primarily because the default is easily ascertainable from the invoices. Form-4 as provided under I&B (Application to the Adjudicating Authority) Rules, 2016 is extracted here under: Form 4 (See clause (b) of sub-rule(1) of rule 5) FORM OF NOTICE WITH WHICH INVOICE DEMANDING PAYMENT IS TO BE ATTACHED (Under rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016) [Date... ] To, [Name and address of registered office of the corporate debtor] From, [Name and address of the operational creditor] Subject: Notice attached to invoice demanding payment Madam/Sir, [Name of operational creditor], hereby provides notice for repayment of the unpaid amount of INR [insert amount] that is in ....
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....judgment, which is extracted here under: 9. We have heard the arguments of learned senior counsels for the parties and perused the record. The questions which cropped up for the determination of this appeal are as under: "1. Whether it is the discretion of the operational creditor, or the nature of the operational debt, that determines the issuance of notice in Form 3 or Form 4 under section 8(1) of the Insolvency and Bankruptcy Code, 2016? 2. Whether or not, copy of the invoice is a mandatory requirement for issuance of demand notice under section 8(1) of the Insolvency and Bankruptcy Code, 2016, in Form 3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016? 3. Whether or not for filing an application, under section 9 of the Code in Form 5 under (sub-rule (1) of rule 6) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the submission of a copy of the invoice is a mandatory requirement, although the demand notice is served in Form 3?" 8) The point with which we would be concerned presently, would be that as contained under point of determination as contained therein, which ha....
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.... The two options available for initiation of the corporate insolvency process are provided to deal with all the eventualities that may occur. For example, if an operational debt is in the nature of salary dues, then in that situation, the question of submitting an invoice does not arise. To deal with such a situation, section 8 contains the provision for issuance of demand notice of the unpaid operational debt. Form 3 of the Adjudicating Authority Rules has only laid down the condition that the applicant has to give the details of the amount of debt, details of the transaction on account of which such debt fell due and the date from which such debt fell due, and as per column 7 of the said Form 3, applicant has to attach the documents to prove the existence of operational debt and the amount in default. Likewise, where the operational debt involves the generation of the invoice, then in that case, invoice raising the demand may be sent to the corporate debtor demanding the invoice amount. In such a situation, the operational creditor has to issue the demand notice in Form 4 along with the invoice. 47. Thus, it is clear that the choice of issuance of demand notice under sec....
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....n assigned by the Learned Tribunal to declare majority portion of the amount claimed as time-barred is not sustainable. She has stated that after going through the list of invoices provided in the Application, Learned Tribunal has determined that, each of the invoices as detailed prescribes are to be paid within 7 days from the date of the invoice and in that eventuality, the majority portion of the demand raised by the applicant/appellant would be barred by limitation as most of the invoices have been raised between 31.08.2017 to 18.12.2018, which will be time barred as on date of demand notice and that the amount covered by remaining invoices falling due to be paid would be falling below the threshold. But the Learned Counsel for the Appellant has drawn our attention to the terms and conditions of each of the invoices and the last being that of 10.08.2020, which contains the following conditions: 1. Payment Cash on demand. 2. Interest @ 24% will be charged if Bill/s unpaid over Seven Days after delivery. 3. Delivery ex-godown:- our risk and responsibility ceases after goods leave our godown. 4. We are not responsible for any loss or damage in t....
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....he application and communicate such decision to the operational creditor and the corporate debtor, if a) the application made under sub-section (2) is incomplete; b) there has been 3[payment] of the unpaid operational debt; c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority. 14) Upon the aforesaid conditions, we are of the view that, none of the conditions prevailed, which could be cited for the purposes of rejection of the application, at the hands of the adjudicating authority, as the application thus preferred didn't suffer from any of the discrepancies as specifically identified by the legislatur....