Rajesh Arora vs M Y Agro Pvt. Ltd

For Appellant : Shri Harish Malhotra, Senior Advocate assisted by Shri Simran Jyot Singh and Shri Ruchin Middha, Advocates

For Respondent : Shri Ashok Kumar Jumesh and Shri Mithlesh Kr. Singh, Advocates

ORDER

06.11.2017 This appeal has been preferred by Mr. Rajesh Arora, Director

of Amira Pure Foods Private Limited (Corporate Debtor) against order dated 24th

August, 2017 passed by the Adjudicating Authority (National Company Law

Tribunal), New Delhi Bench, New Delhi whereby and whereunder the application

preferred by the respondent (Operational Creditor) under Section 9 of the

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

Code') has been admitted, order of moratorium has been passed, Insolvency

Resolution Professional has been appointed and orders have been passed in

terms of the I & B code.

2. As the appeal is being decided on a short question of law, it is not

necessary to notice all the facts except the relevant one.

3. The respondent (Operational Creditor) issued a demand notice under sub-

section (1) of Section 8 of the I & B Code on the Corporate Debtor on 5th June,

2017. The Corporate Debtor through an advocate replied on 28th June, 2017

and disputed the claim. Thereafter, the respondent - Operational Creditor filed

an application under Section 9 on 11th July, 2017 which has been admitted by

the impugned order dated 24th August, 2017.

4. Learned counsel for the appellant submits that the Corporate Debtor

issued cheques in favour of the Operational Creditor but they bounced;

thereafter after negotiation the admitted dues has been paid to a third party as

per wish and intimation given by the Operation Creditor. The amount has been

paid by R.T.G.S. However, aforesaid plea taken by appellant is disputed by the

learned counsel for the respondent (Operational Creditor). According to him no

meeting was held and therefore the question of payment of debt to third party

does not arise.

5. Learned counsel for the appellant next contended that the notice under

sub-section (1) of Section 8 was issued by the Operational Creditor in Form 3

was incomplete and no proper opportunity was given to the respondent to file

reply.

6. Learned counsel appearing on behalf of the appellant also referred to the

application preferred by the Operational Creditor under Section 9 in Form 5 (at

page 57) to suggest that the said application is also incomplete and therefore the

Adjudicating Authority should have rejected the application.

7. Learned counsel for the respondent submits that the returned envelops were

produced before the Adjudicating authority which was opened there and found

all the documents were enclosed therein. The aforesaid stand taken by

2 respondent makes it clear that the notices sent to the Corporate Debtor was not

served and returned unserved.

8. Learned counsel for the appellant submits that Form 3 dated 05.06.2017,

whereunder the demand notice under sub-section (1) of Section 8 was issued

therein list of documents were mentioned which were required to be attached

but no such documents were attached. Therefore, according to counsel for the

appellant the notice under sub-section (1) of Section 8 was incomplete and

therefore the application under Section 9 was not maintainable.

9. However, from the reply dated 28th June, 2017 (at page 138) we find that

the Corporate Debtor has taken a specific plea that the notice under sub-section

(1) of Section 8 was served on Corporate Debtor was not complete, relevant

portion of which reads as follows:

"That the notice as served is not complete as there is no enclosure in

tabular form enclosed with the notice demonstrating the working for

computation of default; although the Enclosure has been referred in

the averments of Notice in 2nd Para, 2nd Row and 3rd Column of notice.

further in devoid of said enclosure it is incomprehensible on what

basis M Y Agro has computed the amount of alleged debt."

10. In the said letter it is also mentioned that against the head 'Computation

of Claim is Baseless' as there is no debt due from the Corporate Debtor in terms

of the settlement and consequential there is no default, relevant portion of which

is quoted below:

"III. Computation of Claim Baseless

That M Y Agro has computed the Claim adding

along with the alleged Outstanding Debt an interest of 18%.

3 That as, already been stated, here is no debt due from Our

Client Company in terms of settlement and consequently there

is no default. Hence there is no case of interest. Without

prejudice to aforesaid it is further submitted that the exercise

of your Client to demand interest on 18% is erroneous as there

was no covenant to pay interest."

11. There is nothing on record to suggest that "Operational Creditor" served

the documents alongwith notice under Section 8(1). Therefore, the oral

submissions made on behalf of respondents cannot be accepted.

12. It is also curious to notice that in Form 5 filled up by the Operation

Creditor which is the format of application under Section 9 therein, with regard

to 'Statutory demand notice under Section 8', the following plea has been taken:

"Statutory demand notice under section 8 of Insolvency &

Bankruptcy Code, 2016 was issued by OC 10th June, 2017 to CD at

its registered office and all its Directors and KMP (Copy of Demand

notice in form - 3along with copy of Form -4 and proof of service

attached hereto as Annexure F).

All the notices issued to CD at Registered office, Corporate office

and directors at their address available on website of Ministry of

Corporate Affairs came back as undelivered to Operational Creditor

(except two notices issued to - their Company Secretary and ex-

director Mr. Shyam Poddar shown as delivered. (Copy of the delivery

status of speed post attached as Annexure F)."

13. From the statement made by the 'Operational Creditor' it is clear that the

demand notice issued to the Corporate Debtor at its registered office and to the

4 Director(s) were returned unserved. Notices were served only to the Company

Secretary and to one ex-Director, Mr. Shyam Poddar. Though such specific

statement has been made by the Operational Creditor in the application under

Section 9, the Adjudicating Authority ignoring the same and without verifying

the other facts admitted the case.

14. In view of the plea taken by the appellant and the facts as narrated above,

we hold that notice under sub-section(1) of Section 8 in form 3 was incomplete

and the application under Section 9 was not maintainable. For the reasons

aforesaid, we set aside the order dated 24th August, 2017 passed in C.P. No. (IB)-

211(ND)/2017.

15. 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.

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

Professional', if appointed, and the Corporate Debtor will pay the fees of the

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

5 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 Bansi Lal Bhat ] Member(Judicial)

/ns/gc

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