Refusal on the part of the Corporate Debtor to acknowledge the demand notice can not be questioned under section 8(1) of I&B Code: NCLAT

Corporate Debtor who refused to accept delivery of notice under section 8 of the Code, the NCLT would not be justified in holding that that notice has not been served on the Corporate Debtor as the fault would lie on the part of the Corporate Debtor for which it cannot be rewarded.. The judgement passed by the NCLAT New Delhi (principle bench), in its decision in  Sri D. Srinivasa Rao v. Vaishnovi Infratech Ltd (Company Appeal (AT) (Insolvency) No. 880 of 2020)  by Hon’ble shri Justice Bansi Lal Bhat and Justice Anant Bijay Singh.

The facts of the case was such that – when Operational Creditor documented under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“I&B Code” for short) looking for inception of Corporate Insolvency Resolution Process against Respondent-‘Vaishnovi Infratech Ltd.’ (Corporate Debtor) came to be dismissed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Special Bench (Video Conference) as far as the impugned request dated ninth June 2020 on the ground that the interest notice as ordered under Section 8(1) of the ‘I&B Code’ was not served on the Corporate Debtor as the equivalent was returned unserved.

Indignant thereof, Operational Creditor has recorded the moment advance pouncing upon the impugned request fundamentally on the ground that the conveyance of interest notice sent by the Appellant to Respondent was denied by the Corporate Debtor. Ld. counsel for the Appellant presents that refusal to acknowledge request notice would not add up to non-conveyance of notice and the solitary deduction accessible thereunder is that the Respondent-Corporate Debtor, monitoring the substance of the notification, wouldn’t acknowledge the conveyance thereof to stay away from the lawful outcomes.

An application under Section 9 of the ‘I&B Code’ can be recorded by the Operational Creditor for commencement of CIRP solely after the expiry of time of 10 days from the date of conveyance of notice pondered under Section 8(1) of the ‘I&BCode’ which commits upon the Operational Creditor to convey an interest notice of neglected operational duty upon the Corporate Debtor when default happens. The conveyance of interest notice is proposed to notify the Corporate Debtor so that in case of there being a prior question like as a Civil Suit or mediation procedures forthcoming concerning the sum in regard whereof default is asserted to have been submitted, the Corporate Debtor can carry such previous debate to the notification of the Operational Creditor.

The notice has been returned unserved by virtue of the recipient being not accessible on the given location or the setting of the recipient being non-existent or the conveyance of notice being disappointed as a result of some explanation other than that ascribed to the Corporate Debtor, the reality of notice having been returned unserved would add up to non-conveyance of notice yet for a situation like the current one where it is the Corporate Debtor who wouldn’t acknowledge conveyance of the notice, the Adjudicating Authority would not be supported in reaching the resolution that notice has not been served on the Corporate Debtor. The lone derivation accessible in the given conditions is that the Corporate Debtor knew about the outcomes and it intentionally wouldn’t recognize the notice.

And it was held that – we set aside the impugned order and remand the matter back to the Adjudicating Authority who may, after providing the Corporate Debtor an opportunity of settling the claim, pass an order of admission or otherwise of the application under Section 9 of the ‘I&B Code’ filed by the Appellant- Operational Creditor upon the recording of satisfaction in regard to its completion and other legal requirements.


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