Insolvency and Bankruptcy Code, 2016 – ss.8 and 9 – Insolvency resolution by operational creditor – Demand notice to corporate debtor – Valid service of statutory demand notice – Compliance – Petition u/s.9 by the appellantOperational Creditor to initiate CIRP against the respondentCorporate Debtor – Application rejected by the NCLT on the ground that the alleged demand notice was addressed/sent to the Key Managerial Personnel-KMP and no demand notice as required u/s.8(1) sent to the Corporate Debtor and thus, whether service is valid or not, does not arise at all – NCLAT upheld the same – Interference with:
Held: s.9 petition can be filed only against the corporate debtor after giving prior notice u/s.8 to the corporate debtor – s.8(1) requires the operational creditor to deliver the notice 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 – Appellant complied with the statutory requirement of sending demand notice in Form 3 to the respondent as provided u/s.8 before filing the s.9 petition – Notice sent by the appellant to the Key Managerial Personnel-KMP of the corporate debtor at the registered office address in the capacity of their official position, demonstrates that the same was issued to the corporate debtor demanding the operational debt due and payable by them – Not the case of the respondent that no notice was sent by the appellant calling upon the respondent to pay the operational debt – Also during the pendency of s.9 petition, the respondent approached the appellant for settlement, which was not fructified – Substantive right should not be allowed to be defeated merely on technicality – Respondent unable to show any substantial prejudice being caused to them on account of procedural irregularity – Notice issued by the appellant to KMP of the corporate debtor and delivered at their registered office can be construed as a deemed service of demand notice u/s.8 – Approach of the NCLT and the NCLAT rejecting s.9 petition on the technical ground that no notice was sent to the corporate debtor and the notice sent by the appellant to the KMP of the corporate debtor cannot be taken to be a notice issued u/s.8, incorrect and unsustainable in law – Furthermore, the appellant to establish as to what is the actual date of default, failing which, the application filed u/s.9 is incomplete – Issue relating to the date of default by the Corporate Debtor and novation of contract, if any, being a mixed question of law and fact, to be decided by NCLT at the time of final disposal of s.9 petition on merits – Orders passed by the NCLT and NCLAT set aside – Matter remanded to NCLT. [Paras 8.1, 10, 10.1, 14-17]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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