Anu Elastics Pvt. Ltd vs Aggarwal Elastics

Anu Elastics Pvt. Ltd. ....Appellant Vs Aggarwal Elastics ....Respondent Present: For Appellant: Shri P. Nagesh and Shri Dhruv Gupta, Advocates

For Respondent: Ms Judy James, Advocate

ORDER

10.10.2017: The respondent - M/s Aggarwal Elastics Pvt. Ltd. through

its proprietor (Operational Creditor) filed an application under Section 9 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code')

for initiation of corporate insolvency resolution processes against the

appellant - M/s Anu Elastics Pvt. Ltd. (Corporate Debtor). The Adjudicating

Authority (National Company Law Tribunal), New Delhi Bench by impugned

order dated 25th July, 2017 admitted the application, declared moratorium in

terms of Section 15 of I&B Code and called for the names of interim Resolution

Professional from Insolvency and Bankruptcy Board of India. The said order is

under challenge in this appeal.

2. The main plea taken by the appellant is that no notice was issued or

served by the Adjudicating Authority on the appellant. It is further submitted

that though there is an existence of dispute, still the application has been

admitted.

3. Learned counsel appearing on behalf of the appellant relied on a letter

dated 1st June 2016 written by a lawyer on behalf of the appellant to the lawyer

of the Operational Creditor pursuant to the legal notice dated 09.03.2016

issued on behalf of the Operational Creditor in support of the claim that there

is an existence of dispute.

4. Learned counsel appearing on behalf of the respondent - Operational

Creditor referred to an order dated 31st May, 2017 to suggest that the notice

was issued by the Adjudicating Authority by Dasti, i.e. through the Operational

Creditor returnable on 3rd July, 2017. Reliance has also been placed on the

affidavit filed by the Operational Creditor along with the postal receipt and the

tracking record to re-affirm that the notice has been served. However, from the

order dated 3rd July, 2017 enclosed by the respondent, we find that no notice

was served on the appellant. This is apparent from the order dated 3rd July,

2017 passed by the Adjudicating Authority, as quoted below:

"Affidavit of service is being filed along with the postal receipt and the tracking report which reflects that though the steps were taken at the registered office of the Corporate Debtor, the same has been received with the report, "No such office at the given address".

This is deemed sufficient and service.

None is present on behalf of the Corporate Debtor to come out for further consideration on 7th July, 2017."

5. Though it was reported that no notice has been served at the given

address, but the Adjudicating Authority wrongly treated the notice deemed to

have been served. It is a settled law that on refusal of the notice by a party, the same can be deemed to have been served, but for insufficient or on wrong

address, return of notice cannot be treated to be served. From the aforesaid

fact, we find that the impugned order dated 25th July, 2017 was passed by the

Adjudicating Authority completely in violation of rules of natural justice.

6. The letter issued on behalf of the appellant - Corporate Debtor dated 1st

June, 2016 shows that there is also an 'existence of dispute' as is clear from

the relevant portions and the preliminary objections as quoted below:

"3. That your client in order to extort money from my client, has sent false and frivolous legal notice, which even to the knowledge of your client, is based on false facts. It is in the knowledge of your client that no amount is due and recoverable from my client as my client has already paid entire amount in respect of the invoices, which have been raised by your client on my client and further your client time and again have also issued credit notes to my client as goods supplied by your client to my client were defective and the same were taken back by your client.

xxx xxx xxx

8. That the contents of para No. 8 of the legal notice are wrong and denied. It is wrong to states that my client is liable to pay amount of Rs.47,56,651.50 paise as principle amount to your client. It is again reiterated herein that my client is not liable to pay any amount to your client. It is further wrong to states that my client is also liable to pay amount of Rs.46,03,115/- to your client on account of interest."

7. For the reasons aforesaid, the impugned order cannot be sustained. The

said order is accordingly set aside.

8. In effect, order(s), if any, passed by Ld. Adjudicating Authority appointing

any 'Interim Resolution Professional' or freezing of account, if any, and all other

order (s) passed by Adjudicating Authority pursuant to impugned order and

action, if any, taken by the 'Interim Resolution Professional', including the

advertisement, if any, published in the newspaper calling for applications all

such orders and actions are declared illegal and are set aside. The application

preferred by Respondent under Section 9 of the I&B Code, 2016 is dismissed.

Learned Adjudicating Authority will now close the proceeding. The appellant

company is released from all the rigour of law and is allowed to function

independently through its Board of Directors from immediate effect.

9. Learned Adjudicating Authority will fix the fee of 'Interim Resolution

Professional', if appointed, and the Respondents will pay the fees of the Interim

Resolution Professional, for the period he has functioned. The appeal is

allowed with aforesaid observation and direction. However, in the facts and

circumstances of the case, there shall be no order as to cost.

(Justice S. J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) (Balvinder Singh) (Member (Judicial) Member (Technical)

/ns/