D-Art Furniture Systems Pvt. Ltd vs Sudhir Sales & Service Ltd

D-ART Furniture Systems Pvt. Ltd. .. Appellant

Versus

Sudhir Sales & Service Ltd. .. Respondent

Present:

For Appellant: Shri Sumesh Dhawan, Ms. Vatsala Kak and Ms. Charu Sharma, Advocates.

For Respondent: Shri Y. Sarat Chandra, Advocate.

ORDER

21.11.2017 This appeal has been preferred by Appellant-M/s D-ART

Furniture Systems Pvt. Ltd. against the order dated 24th October, 2017 passed

by the Adjudicating Authority (National Company Law Tribunal) Principal

Bench, New Delhi in C.P. No. (IB)-313)PB)/2017 whereby and whereunder the

Adjudicating Authority taking into consideration the Preliminary objections

raised by Corporate Debtor, allowed 7 days' time to issue proper notice to the

Appellant-Corporate Debtor under sub-Section (1) of Section 8 of the

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

Code').

Company Appeal(AT)(Insolvency) No. 262 of 2017 -2-

2. Learned Counsel for the Appellant submits that the notice under sub

Section (1) of Section 8 of 'I&B Code' was issued by an Advocate so it has been

held to be illegal. In view of decision of this Appellate Tribunal in 'Uttam

Galva Steels Limited Vs. DF Deutsche Forfait AG & Anr.' - Company

Appeal (AT)(Ins) No. 39 of 2017 wherein this Appellate Tribunal observed:

"31 The demand notice/invoice Demanding Payment under the I&B Code is required to be issued in Form-3 or Form-4. Through the said formats, the 'Corporate Debtor' is to be informed of particular of 'Operational Debt', with a demand of payment, with clear understanding that the 'Operational Debt' (in default) required to pay the debt, as claimed, 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 in Form-3, and quoted above.

Only if such notice in Form-3 is served, the 'Corporate Debtor' will understand the serious consequences of non-payment of 'Operational Debt', otherwise like any normal pleader notice/Advocate notice, like notice under Section 80 of C.P.C. or for proceeding under Section 433 of the Companies Act 1956, the 'Corporate Debtor' may decide to contest the suit/case if filed, distinct Corporate Resolution Process,, where such claim otherwise cannot be contested, except where there is an existence of dispute, prior to issue of notice under Section 8."

3. According to learned Counsel for the Appellant, in absence of a separate

notice under sub -Section (1) of Section 8 of the I&B Code, no application can

Company Appeal(AT)(Insolvency) No. 262 of 2017 -3-

be entertained under Section 9 of the I&B Code. Notice issued by a lawyer

cannot be termed to be a defect occurring in the application under Section 9

of the I&B Code.

4. Having heard learned Counsel for the parties, while we accept the

submissions made on behalf of the Appellant that no Application under

Section 9 can be entertained by Adjudicating Authority before completion of

10 days of service of notice under sub-Section(1) of Section 8, learned Counsel

appearing on behalf of the Respondent submits that he has been instructed

to withdraw the application under Section 9 from the Court of the

Adjudicating Authority, Principal Bench, New Delhi with a liberty to issue

notice under sub-Section (1) of Section 8, in accordance with law and then in

the case of failure of payment, may file a fresh Application under Section 9 of

the I&B Code.

5. In view of such stand taken by the learned Counsel for Respondent, we

allow the prayer as made on behalf of Respondent and recorded above. In the

result the Company Petition No. (IB)-313)PB)/2017 is dismissed as withdrawn

with liberty to the Respondent - 'Operational Creditor' to issue proper demand

notice under Section 8(1) through its authorised representative holding post

& position with the 'Operational Creditor' and in case of failure to pay the

admitted debts it is open to the Respondent- 'Operational Creditor' to file a

fresh application under Section 9 of I&B Code.

Company Appeal(AT)(Insolvency) No. 262 of 2017

- 4 -

6. In view of the order recorded above, the Adjudicating Authority,

Principal Bench, New Delhi will close the proceeding in C.P. No. C.P. No. (IB)-

313)PB)/2017. The appeal stands disposed of with the aforesaid observation

and liberty to the Respondent. No Cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

/akc/

Company Appeal(AT)(Insolvency) No. 262 of 2017