AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 114
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..... Counsel for the appellant submits that Ld. tribunal has dismissed the application moved by the appellant under Section 9 of the IBC on the ground that the notice under Section 8 of the IBC has not been served on the Corporate debtor as required by law. 3. Learned Counsel for the appellant submits that appellant is engaged in the business of design, manufacture, supply and erection of Pre Engineering Building Structures and it is also having a sister concern namely Phenix Building Solutions Private Limited having common directors and common shareholders with the operational creditor. 4. It is further submitted that the corporate debtor was desirous of setting up an industrial unit at Makhinga, Surat, in Gujarat and approached the operation creditor and after much deliberations the Operational creditor through its division phenix Construction Technology submitted final quotation and a purchase order was accordingly issued by the CD. This purchase order was further revised and final purchase order was issued on 06.01.2022. 5. It is further submitted that Appellant/operational creditor has completed the work to the satisfaction of the CD and issued various invoices. The comp....
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.... company has refused to accept service. 9. It is further submitted that despite the receipt of the notice the corporate debtor did not pay any amount nor gave any reply or raise any dispute and therefore appellant was compelled to file a petition for initiation of CIRP against the CD under section 9 of the IBC which was dismissed by passing the impugned judgment. 10. Learned Counsel for the appellant submits that learned tribunal has committed manifest illegality in dismissing the application on the ground of insufficient service of notice under Section 8 of the IBC, as it was evident on record that the notice under Section 8 of the IBC has been sufficiently served on the corporate debtor. 11. It is also submitted that the notice under Section 8 of the IBC was served at the address of the registered office of the corporate debtor, as provided in the office of the Ministry of Corporate Affairs and when the same has been returned for reasons such as 'refused' it must be deemed to be a complete service of the notice as provided under rule 5 of the Insolvency and Bankruptcy Code (Application to Adjudicating Authority) Rules 2016. 12. It is further submitted that the....
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....s. Timex India Group Ltd. - [2019] 105 taxmann.com 131 (para 4). 17. Ld. Counsel for the appellant also relied on Shubham Jain vs. Gagan Ferrotech Ltd. & Ors. (29.01.2021- NCLAT, CA (AT) (Ins) No. 1008 of 2019 (para 7), Bijay Pratap Singh vs. Unimax International - [2020] 118 taxmann.com 414 (NCLAT) (Paras 35 & 37) Folloed in Unimax International vs. Soho Infrastructure (P.) Ltd. -[2020] 118 taxmann.com 318 (NCLT- New Delhi) (Para 11) in order to emphasize that if a notice sent by registered post is returned as refused still it would be a valid service of the same. 18. Ld. Counsel for the appellant further relied on Shiv Glitz Hotels and Resorts Ltd. Liability Partnership v. Oravel stays Ltd., [09.09.2024, CA (AT) (Ins) 577/2024] (para 9), Tek Travels Pvt. Ltd. v. Altius Travels Pvt. Ltd. [19.04.2021, CA (AT) (Ins) No. 172 of 2020] (Para 20-22) in order to show that no opportunity to cure would be the violation of principles of natural justice. 19. Ld. Counsel for the appellant submits that there is/was no prior dispute between the parties and the alleged dispute which has been shown by the respondent has only been carved out to defeat the appeal of the appellant. 20. L....
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....levant Sections of the Insolvency and Bankruptcy Code, 2016 and relevant Regulations are reproduced as hereunder; "Sec. 8: (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation.-For the purposes of this section, a "demand no....
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....sed under sub-section (4), if any. (ii) reject the 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 repayment 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. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section." Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 5. Demand notice by operationa....
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....of demand of unpaid operational debt or a copy of the invoice demanding payment to the corporate debtor at their registered office and the demand notice is required to be in the form and manner as prescribed. 29. Perusal of the impugned order would reveal that learned tribunal has rejected the application moved by the appellant under section 9 of the IBC on following scores: - * That the demand notice dated 18th March 2024 was not served successfully on the CD in terms of rule 5 (2)(a) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 as the registered office of the respondent corporate debtor was not in possession of it and was occupied by another company and therefore the company of the CD was not in existence at the address whereon the demand notice was sent. * That the operational creditor, when aware that that CD company does not exist at that address he should have chosen some alternative mode for the service of the demand notice. * That the service stated to be made on the email address of the CD and on one Mr Dipak is also not sufficient for the reason that no evidence or material was placed on record to conne....
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....s well as at the address of the CD/Mascot's Head office situated at A-602, Empire business hub, Science City Road, Ahmedabad 380006 as displayed on CD/Mascot's website. 32. It is also reflected from part III of the form 5 that it is specifically stated therein that the demand notice dated 18th March 2024 has been successfully delivered at Mascots head office as per the address displayed on Mascots website and significantly it is also stated that the demand notice issued to Mascots registered office address has been returned with an endorsement that the company has "refused to accept the same". The emails which were sent on the above mentioned email addresses as well as the tracking report and proof of the service by speed post, as above, were also enclosed therewith. 33. Perusal of the impugned order will reveal that learned tribunal did not find the service of notice sent by the operational creditor to the CD through registered post/speed post, sufficient, on the score that the demand notice dated 18th March 2024 which was addressed to the registered office of the corporate debtor as per MCA record was undelivered as admittedly registered office is not in possession ....
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....ound the approach of learned tribunal as correct. It is to be recorded that under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, service at the registered office of the corporate debtor has to be made by hand, registered post or Speed Post with acknowledgement due, apart from service by electronic mail service to a whole time director or designated partner or key managerial personal of the CD has been provided. Therefore, if in addition to the other modes provided in the above Rule 5, the operational creditor has again sent notice through speed post on the registered office of the CD, as stated to be recorded in the records of the MCA, it can ipso facto may not be sufficient to discard the service without going into the details, as to whether the said notice has been properly served. If the notice sent by the operational creditor on the registered office of the CD, as is reflected from the record of the MCA and the same has been received with endorsement as 'refused by the CD', a crystal clear finding should have been recorded by the tribunal with regard to the fact as to why the refusal endorsed on such notice could not be acce....