Proceedings under Section 9 of the I&B Code not valid in absence of notice under Section 8(1) to the Corporate Debtor

National Company Law Appellate Tribunal: A two-member bench comprising of S.J. Mukhopadhaya, J. (Chairperson) and Bansi Lal Bhat, J. (Member, Judicial), allowed an appeal filed against the order passed by the National Company Law Tribunal (Adjudicating Authority) whereunder application under Section 9 of Insolvency and Bankruptcy Code 2016, preferred by the respondent was admitted and Insolvency Resolution Professional was appointed.

The appeal was filed by the Director of Lepton Projects (P) Ltd. which was the ‘Corporate Debtor’. The respondent Sanghvi Movers Ltd. was the ‘Operational Creditor’. An application was filed by the Operational Creditor under Section 9 of the I&B Code, after the admission of which ‘Moratorium’ was passed and ‘Insolvency Resolution Professional’ was appointed by NCLT in terms of the Code. However, the appellant challenged the said order of NCLT contending that no notice in terms of Section 8(1) of the Code was given to the appellant before such order was passed.

The Appellate Tribunal perused the record and considered the submissions made on behalf of the parties. It was brought to the notice of the Appellate Tribunal that when the respondents reached to the office of the appellant, no one was found occupying the premises. The Appellate Tribunal also found favour with the contention of the appellant that had a demand notice in terms of Section 8(1) or notice of petition been served on the appellant, they could have settled the claim with the respondent- Operational Creditor. Further, the appellant submitted that the amount had already been paid, which was not contended by the respondent. In such circumstances, the Appellate Tribunal though it fit to set aside the impugned order. Accordingly, the order was set aside as illegal, application preferred by the respondent under Section 9 was dismissed, and the appellant was released from all rigours of law in the matter concerned. [Lepton Projects (P) Ltd. v. Sanghvi Movers Ltd., Company Appeal (AT) (Insolvency) No. 273 of 2048, dated 31-5-2018]

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