Centech Engineers Private Limited & Anr vs Omicron Sensing Private Limited

Centech Engineers Private Limited & Anr. ... Appellants Versus

Omicron Sensing Private Limited ... Respondent

Present: For Appellants: Shri Rahul Chitnis and Shri Aaditya Pande, Advocates

For Respondent: Shri Dhaval Deshpande, Advocate

ORDER

05.10.2017

I.A. No. 486 of 2017:

Delay in re-filing the appeal is condoned. I.A. No. 486 of 2017

stands disposed of.

Company Appeal (AT) (Insolvency) No. 132 of 2017:

This appeal has been preferred by the appellants-'Corporate

Debtor' against order dated 6th July, 2017 passed by the learned

Adjudicating Authority (National Company Law Tribunal), Mumbai

Bench (hereinafter referred to as 'Adjudicating Authority') in C.P. No.

11 12/I&BP/20 17, whereby and whereunder the application preferred

by the respondent-'Operational Creditor' under Section 9 of the

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

Code') for initiation of 'corporate insolvency resolution process' against 2

the appellants has been admitted, Moratorium has been declared, name

of the Interim Resolution Professional called for and order passed in

terms of the I&B Code.

2. Learned counsel for the appellants submitted that the demand

notice in Form-3 of the Insolvency and Bankruptcy (Application to

Adjudicating Authority) Rules, 2016 (hereinafter referred to as

'Adjudicating Authority Rules') in terms of Rule 5, was not issued by

the 'Operational Creditor' but by the Advocates Associates, namely,

'SPS & Associates'. Reliance has been placed on a decision of this

Appellate Tribunal in 'Macquarie Bank Limited Vs. Uttam Galva

Metallilcs Limited'- Company Appeal (AT) (Insol.) No. 96 of 2017,

wherein by an order dated 17th July, 2017, the Appellate Tribunal held

as follows:

"17. In view of such provision we hold that an

advocate/lawyer or Chartered Account or a Company

Secretary or any other person in absence of any authority

by the 'Operational Creditor', and if such person do not

hold any position with or in relation to the 'Operational

Creditor', cannot issue notice under Section 8 of 'I & B

Code', which otherwise can be treated as a lawyer's

notice/pleader's notice, as distinct from notice under

Section 8 of 'I & B Code'.

18. The demand notice/invoice Demanding Payment

under the I & B Code required to be issued in Form -3 or

Form-4. By the said notice, the 'Corporate Debtor' is to be

informed of particulars of 'Operational Debt', with a

demand of payment, with clear understanding that the

'Operational Debt' (in default), as claimed, is to be paid,

unconditionally within ten days from the date of receipt of

letter failing which the 'Operational Creditor' will initiate a

Corporate Insolvency Process in respect of 'Corporate

Debtor' as apparent from last paragraph no. 6 of notice

contained inform -3, and quoted above.

Only if such notice in Form -3 or Form -4 is served, the

'Corporate Debtor' will understand the serious

consequences of non-payment of 'Operational Debt',

otherwise like any normal pleader notice/Advocate notice

or like notice under Section 80 of C.P.C. or notice for

initiation of proceeding under Section 433 of the

Companies Act 1956, the 'Corporate Debtor' may decide to

contest the suit/case if filed, as distinct Corporate

Resolution Process, where such claim otherwise cannot be

contested, except where there is an existence of dispute,

prior to issuance of notice under Section 8."

4

3. In the present case, admittedly the notice has been given by

'Associate of Advocates' and there is nothing on the record to suggest

that the 'Associate of Advocates' was authorised by the respondent-

'Operational Creditor' or was holding any position with or in relation to

the respondent company, the so-called notice cannot be treated as

notice under Section 8 of the I&B Code.

4. The aforesaid fact is also accepted by the learned counsel

appearing on behalf of the respondent-'Operational Creditor', who

submits that the due amount has already been paid by the appellants-

'Corporate Debtor'.

5. In view of the aforesaid admitted position that the notice under

Section 8 was not issued in terms of the provisions of the Adjudicating

Authority Rules and I&B Code, we have no option but to set aside the

impugned order dated 6th July, 2017. The same is accordingly set

aside.

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

appointing any 'Interim Resolution Professional' or declaring

moratorium, freezing of account and all other order (s) passed by

Adjudicating Authority pursuant to impugned order dated 6th July, 2017

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 5

set aside. The application preferred by the parties under Section 9 of

the I&B Code 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.

7. Learned Adjudicating Authority will fix the fee of 'Interim

Resolution Professional', if appointed, and the respondent will pay the

fees of the Interim Resolution Professional, for the period he has

functioned. The appeal is allowed with aforesaid observations and

directions. 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)

/ ng/