National Company Law Appellate Tribunal
G. Ramakrishna Reddy vs Manjeet Bucha on 16 January, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
CHENNAI BENCH
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021
&
I.A. Nos. 401 and 402 of 2021
[Arising out of Order dated 04.08.2021 passed by the Adjudicating
Authority/National Company Law Tribunal, Hyderabad Bench in CP
(IB) No. 389/9/HDB/2020]
IN THE MATTER OF:
Mr. G. Ramakrishna Reddy,
Suspended Managing Director of
Nexus Feeds Limited, `
D.No- 8-1-301/86-87, Plot No. 101,
Sai Priya Residency, Lakshmi Nagar Colony,
Hyderabad, Telengana ...Appellant
Versus
1. Manjeet Bucha,
IRP of Nexus Feeds Ltd.
R/o 5-9-91 & 93, D. No. 204,
2nd Floor, Shakti Sai Complex,
Beside Udai Omni Clinic,
Chapel Road, Abids,
Hyderabad - 500001 ...Respondent No.1
2. Hemamalini Traders
31-4-8/1, 401, Sai Karteek Residency,
Purnachandra Rao Street,
Martuthi Nagar,
Vijayawada - 520004. ...Respondent No. 2
Present:
For Appellant : Mr. S.R. Rajagopal, Senior Advocate.
For Mr. Adithya Reddy, Advocate.
For Respondent : Ms. Pavithra Sundararajan, Advocate.
for R-2 For Mr. K. Moorthy, Advocate.
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021
1 of 21
J U D G M E N T
(Virtual Mode) (16.01.2022) NARESH SALECHA, MEMBER (TECHNICAL) The Present Appeal is filed against the 'impugned order' dated 04.08.2021 passed in CP (IB) No. 389/9/HDB/2020 by the 'Adjudicating Authority' (National Company Law Tribunal, Hyderabad Bench), whereby, the 'Adjudicating Authority' dismissed the Petition filed under the 'Insolvency & Bankruptcy Code, 2016' (in short 'I & B Code, 2016). Brief Facts:
2. Mr. G. Ramakrishna Reddy, Suspended Managing Director of the 'Corporate Debtor' Nexus Feeds Limited is the Appellant herein.
Manjeet Bucha, IRP of Nexus Feeds Ltd. is the 1st Respondent. Hemamalini Traders, is the 2nd Respondent is a 'Operational Creditor' of the 'Corporate Debtor'.
3. The 'Corporate Debtor' is engaged in the business of manufacturing and marketing premium quality fish feed who has engaged number of fish feed suppliers and vendors for supply of distiller's dried grain with soluble (DDGS), a form of fish feed.
4. The 2nd Respondent is a proprietor firm engaged in the business of supplying and trading of 'DDGS' and other feed material. The 2nd Respondent has entered into business relationship with the 'Corporate Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 2 of 21 Debtor' for supply of 'DDGS', soya doc, mustard doc and feed supplement since 2016 onward and have been regular supplier. The 2nd Respondent on the aggregate basis of the total invoices raised has supplied for Rs. 8,81,50,278/- out of which there were some credit notes for an amount of Rs. 35,16,195/-. The 'Corporate Debtor' used to make payment to the 2nd Respondent on an 'on account' basis from time to time till 12.09.2018 and has paid amount of Rs. 7,18,74,496/- against total outstanding amount of Rs. 9,01,45,114/- which includes interest amount payable of Rs. 55,11,029/- upto 11.03.2018.
5. The 2nd Respondent issued 'Demand Notice' under Section 8 of the I & B Code, 2016 on 18.07.2020 which was served on to the 'Corporate Debtor' on 20.07.2020 but not replied by the 'Corporate Debtor'. Subsequently, the 2nd Respondent has filed an application under Section 9 of the I & B Code, 2016. The 'Adjudicating Authority' vide an order dated 04.08.2021 admitted Section 9 application of the 2nd Respondent and aggrieved by the same, the 'Appellant' has preferred the present appeal before this 'Appellate Tribunal'. Submissions of the Appellant:-
6. The Learned Counsel for the Appellant gave overall background of the case and stated that 'impugned order' has been issued by an ex-parte order.
7. The Learned Counsel for the Appellant stated that the 'Corporate Debtor' is very respected public limited company and has been taking 'DDGS' and other feeds from the 2nd Respondent along with other vendors. The Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 3 of 21 Learned Counsel for the Appellant further stated that between 10.07.2016 to 12.09.2018, the 2nd Respondent has supplied for total value of Rs. 7,57,20,745/- The Learned Counsel for the Appellant stated that he never defaulted anytime and against the said amount of Rs. 7,57,20,745/- the 'Corporate Debtor' has paid amount of Rs. 7,61,35,315/- thus, an excess amount of Rs. 4,14,570/- was paid and a legal notice dated 25.09.2018 for refund of excess amount was issued by the 'Corporate Debtor'.
8. The Learned Counsel for the Appellant mentioned that since the 2nd Respondent did not pay excess amount, the 'Corporate Debtor' filed a civil suit for recovery of excess amount of Rs. 4,14,570/- as well as damages of Rs. 1,10,636/- before the Junior Civil Judge, Bhimavaram vide OS No. 289 of 2018, which is still pending.
9. The Learned Counsel for the Appellant refuted the averment of the 2nd Respondent that the 'Demand Notice' dated 18.07.2020 was issued and emphasised that he never received alleged 'Demand Notice'. The Learned Counsel for the Appellant further stated that the 'Demand Notice' was not sent electronically during peak of the covid lockdown. The Learned Counsel for the Appellant mentioned that he was shocked to know that the 'Adjudicating Authority' has ordered to proceed ex-parte against the 'Corporate Debtor' and listed the matter for further consideration of the 'Adjudicating Authority' on 22.07.2021.
10. The Learned Counsel for the Appellant also stated that there were pre- existing disputes and ignoring all these facts, the 'Adjudicating Authority' Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 4 of 21 erred in giving ex-parte 'impugned order' dated 04.08.2021 in gross violation of principals of natural justice and audi alterum partum. The 'Adjudicating Authority' also failed to consider the prevailing covid situations. The Learned Counsel for the Appellant further stated that aggrieved by this ex-parte order, the 'Appellant/ the 'Corporate Debtor' moved an application before the 'Adjudicating Authority' for setting aside the ex-parte order which came for hearing on 13.08.2021. However, the 'Adjudicating Authority' did not consider the same. The Learned Counsel for the Appellant stated that reason for non appearance before the 'Adjudicating Authority' were mentioned in I.A. No. 424 of 2021 filed seeking setting aside of the ex-parte order before the 'Adjudicating Authority'. The Learned Counsel for the Appellant stated that reason cited in I.A No. 424 of 2021 were many fold including 'Appellant was did not receive notice, if any, due to non receipt or misplaced of the same by the employees, the directors were effected by covid, managing director went for open heart surgery and could not attend officer for one and a half year etc.'.
11. The Learned Counsel for the Appellant stated that the 'Corporate Debtor' had filed a civil suit for recovery of excess amount of Rs. 4,14,570/- as well as damages of Rs. 1,10,636/- before the Junior Civil Judge, Bhimavaram, Andhra Pradesh vide OS No. 289 of 2018 which is still pending. The Learned Counsel for the Appellant emphasised that the 'Adjudicating Authority' had heard and disposed Section 9 application of the 2nd Respondent much after submission of civil suits and the fact of which Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 5 of 21 not brought by the 2nd Respondent to the notice of the 'Adjudicating Authority' especially since the cause of action and scope of dispute in both the suit and the matter before the 'Adjudicating Authority' involving excess amount and recovery is the same.
13. The Learned Counsel for the Appellant cited this 'Appellate Tribunal' judgment as reported in 2020 SCC OnLine NCLAT 663 where ex-parte 'impugned order' was set aside holding that there was a pre-existing dispute.
14. The Learned Counsel for the Appellant summarised his case and urged this 'Appellate Tribunal' to set aside the 'impugned order' dated 04.08.2021 and allow his appeal.
Respondents Submissions:-
15. The Learned Counsel for the 2nd Respondent denied all the averments made by the 'Appellant'. The Learned Counsel for the 2nd Respondent stated that on the aggregate bases of the total invoices raised has supplied for Rs. 8,81,50,278/- out of which there were some credit notes for an amount of Rs. 35,16,195/-. The 'Corporate Debtor' used to make payment to the 2nd Respondent on an 'on account' basis from time to time till 12.09.2018 and has paid amount of Rs. 7,18,74,496/- against total outstanding amount of Rs. 9,01,45,114/- which includes interest amount payable of Rs. 55,11,029/- upto 11.03.2018. The Learned Counsel for the 2nd Respondent further stated that his claim was more than Rs. 1 crore and proper 'Demand Notice' was issued to the 'Corporate Debtor' which was not Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 6 of 21 replied and hence the 'Adjudicating Authority' was absolutely correct in admitting Section 9 application.
16. The Learned Counsel for the 2nd Respondent emphasised that the 'Corporate Debtor' failed to make outstanding payment of principle amount of Rs. 1,44,63,630/- plus interest @ 24% p.a.
17. The Learned Counsel for the 2nd Respondent stated that the he did not receive any legal notice of the civil suit dated 25.09.2018 and no clean/legible copy of the said notice along with proof of service was served on the 2nd Respondent and he is trying to mislead the 'Tribunal'. The Learned Counsel for the 2nd Respondent further stated that similarly the 2nd Respondent was kept in dark regarding baseless civil suit before Civil Judge Bhimavaram, Andhra Pradesh and was made aware much later after initiation of proceeding under Section 9 application. The Learned Counsel for the 2nd Respondent vehemently opposed plea of so-called pre-existing dispute which are not genuine and merely illusionary and cannot be consider in view of the ratio of decision of Apex Court held in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd.
18. The Learned Counsel for the 2nd Respondent stated that 'Demand Notice' dated 18.07.2020 was delivered as evidence by receipt of 'Blue Dart'.
19. The Learned Counsel for the 2nd Respondent mentioned that he made two attempts to serve the copy of the petition in CP (IB) No. 389/2020 on 31.12.2020 and on 30.01.2021, however both were returned as undelivered Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 7 of 21 stating 'unclaimed' filed before the 'Adjudicating Authority' under Section 9 of the I & B Code, 2016 and the 2nd Respondent filed a memo intimating 'unclaimed' delivery dated 23.07.2021 before the 'Adjudicating Authority' attaching proof of service.
20. The Learned Counsel for the 2nd Respondent stated that after issuing the 'impugned order' including appointment of 'Interim Resolution Professional' matter has already reached finality on 04.08.2021 and therefore, became 'resjudicate'.
21. The Learned Counsel for the 2nd Respondent refuted that their was any pre-existing dispute prior to initiation of Section 9 application and cited that the Hon'ble Supreme Court of India has held clearly in Mobilox Innovation (Supra) that within ten days of the receipt of the 'Demand Notice' or copy of the invoice, the 'Corporate Debtor' must bring to the notice of the 'Operational Creditor' existence of dispute. The Learned Counsel for the 2nd Respondent further stated that since 'Corporate Debtor' did not reply to Demand Notice dated 18.07.2020, the 'impugned order' was legally valid.
22. The Learned Counsel for the 2nd Respondent concluded his pleadings with a request to dismiss the appeal which has been filed only to deny the legal dues of the 2nd Respondent as 'Operational Creditor'.
Findings
23. Heard Learned Counsel for the Appellant and the Respondents and also perused record made available to us. Several issues have been raised Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 8 of 21 in the Appeal which are required to be deliberated upon before coming to final conclusion.
(I) Whether, the 'Adjudicating Authority' was right in proceeding against the 'Appellant' on ex-parte basis.
(II) Whether, Section 9 application filed by the 2nd Respondent was complete in all respect, followed laid down procedures and met the threshold limit.
(III) Whether, any dispute was pre-existing which should have been considered by the 'Adjudicating Authority'.
24. Issue (I) Whether, the 'Adjudicating Authority' was right in proceeding against the 'Appellant' on ex-parte basis.
• Before examining above issue, it would be desirable to look into the relevant rules for the same as provided in NCLT Rules , 2016.
"38. Service of Notices and processes.- (1) Any notice or process to be issued by the Tribunal may be served by post or at the e-mail address as provided in the petition or application or in the reply; (2) The notice or process if to be served physically may be served in any one of the following modes as may be directed by the Tribunal; -
(a) by hand delivery through a process server or respective by authorised representative;
(b) by registered post or speed post with
acknowledgment due;
(c) or service by the party himself.
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 9 of 21 (3)Where a notice issued by the Tribunal is served by the party himself by hand delivery, he shall file with the Registrar or such other person duly authorised by the Registrar in this behalf, the acknowledgment together with an affidavit of service and in case of service by registered post or by speed post, file with the Registrar, or Such other person duly authorised by the Registrar in this behalf, an affidavit of service of notice alongwith the proof of delivery.
(4) Notwithstanding anything contained in sub-rules (1) and (2), the Tribunal may after taking into account the number of respondents and their place of residence or work or service could not be effected in any manner and other circumstances, direct that notice of the petition or application shall be served upon the respondents in any other manner, including any manner of substituted service, as it appears to the Tribunal just and convenient. (5) A notice or process may also be served on an authorised representative of the applicant or the respondent, as the case may be, in any proceeding or on any person authorised to accept a notice or a process, and such service on the authorised representative shall be deemed to be a proper service.
(6) Where the Tribunal directs a service under sub-
rule (4), such amount of charges, as may be determined by the Tribunal from time to time, but not exceeding the actual charges incurred in effecting Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 10 of 21 the service, shall be deposited with the registry of the Tribunal by the petitioner or applicant."
"49. Ex-parte Hearing and disposal.- (1) Where on the date fixed for hearing the petition or application or on any other date to which such hearing may be adjourned, the applicant appears and the respondent does not appear when the petition or the application is called for hearing, the Tribunal may adjourn the hearing or hear and decide the petition or the application ex-parte.
(2) Where a petition or an application has been heard ex-parte against a respondent or respondents, such respondent or respondents may apply to the Tribunal for an order to set it aside if such respondent or respondents satisfies the Tribunal that the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him or them upon such terms as it thinks fit.
Provided that where the ex-parte hearing of the petition or application is of such nature that it cannot be set aside as against one respondent only, it may be set aside as against all or any of the other respondents also"
• This 'Appellate Tribunal' observes that the 'Adjudicating Authority' during proceedings held on 08.07.2021 in CP (IB) No. 389/ 9/ HDB/ 2020 hearing the petition filed by the 2nd Respondent herein/ Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021
11 of 21 Appellant and the Appellant herein/ Respondent that the 'Adjudicating Authority' had recorded that 'notices served but no one appeared for the Corporate Debtor'. The 'Adjudicating Authority' also recorded 'matter to proceed ex-parte against corporate debtor' and 'matter to appear for further consideration on 22.07.2021' • In the 'impugned order', the 'Adjudicating Authority' mentioned the fact based on averments made by the 2nd Respondent herein/ the 'Applicant' therein, that despite notice served upon the 'Corporate Debtor', there is non appearance on behalf of the 'Corporate Debtor' and even earlier after delivery of 'Demand Notice' neither any reply was sent by the 'Corporate Debtor' nor any payment was made and no dispute was raised between 10 days on receipt of 'Demand Notice'. • This 'Appellate Tribunal' observes from the record available by the 2nd Respondent in his counter filed vide Diary No. 1074 dated 20.12.2021 that the 'Demand Notice' dated 18.07.2020 was issued to the 'Corporate Debtor' and the same was confirmed as delivered by 'Blue Dart' and date of delivery is stated to be 20.07.2020 at 12.36 hours. Similarly, this 'Appellate Tribunal' observes that the 2nd Respondent has filed detailed 'memo for proof of submissions of unclaimed delivery served on the Respondent dated 23.07.2021' where following documents were attached as a proof for submission of delivery.
S.No. Particulars
1. Memo for Proof of Submission of Unclaimed Delivery of the Petition served on Respondent. Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 12 of 21
2. Copy of the envelope containing the unclaimed petition send by Speed Post Receipt vide Tracking No. EN458914612IN dated 31-12- 2020.
3. Copy of the envelope containing the unclaimed petition send by Speed Post Receipt vide Tracking No. EN40085336IN dated 30-01-2021. • This 'Appellate Tribunal' further notes the the 'Adjudicating Authority' order dated 01.03.2021 recorded :-
"Counsel for Operational Creditor is present in person. There is no representation from the side of Corporate Debtor.
List the matter for hearing on 09.03.2021."
Similarly, the 'Adjudicating Authority' recorded order dated 08.07.2021:-
"Learned Counsel for Operational Creditor appeared.
Notices served but no one appeared for the Corporate Debtor.
Matter to proceed ex-parte against Corporate Debtor. Matter to appear for further consideration on 22.07.2021."
Similarly, the 'Adjudicating Authority' recorded order dated 22.07.2021 "Learned PCS for Petitioner appeared.
Heard. Orders are reserved."
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 13 of 21 • Based on all above averments made as well as order sheets recorded by the 'Adjudicating Authority', it is clear that the 'Demand Notice' was served on the 'Corporate Debtor' which is evident from proof of delivery and which was not replied by the 'Corporate Debtor'. • The reason cited by the 'Corporate Debtor' as evident from I.A. No. 424 of 2021 before the 'Adjudicating Authority' also seems not convincing and of evasive nature as seen from the preceding paragraphs.
• Similarly, copy of petition was also unclaimed by the 'Appellant' herein/ 'Respondent' therein as discussed earlier. This 'Appellate Tribunal' also observes that the matter was not disposed ex-parte by the 'Adjudicating Authority' on the first date of hearing itself but after repeated orders finally the matter was disposed as the 'impugned order' 04.08.2021. Hence, this 'Appellate Tribunal' do not find any error in the 'impugned order' on this ground.
25. Issue (II) Whether, Section 9 application filed by the 2nd Respondent was complete in all respect, followed laid down procedures and met the threshold limit.
• As per I & B Code, 2016 the application filed under Section 9 is required to be preceded by issue of 'Demand Notice' under Section 8 of the I & B Code, 2016.
"8. Insolvency resolution by operational creditor. -
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 14 of 21 (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor -
(a) existence of a dispute, 1 [if any, or] record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(b)the 2 [payment] of unpaid operational debt-
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.
Explanation. - For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding 3 [payment] of the operational debt in respect of which the default has occurred.
9. Application for initiation of corporate insolvency resolution process by operational creditor. -
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 15 of 21 (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under subsection (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.
(3) The operational creditor shall, along with the application furnish-
(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt 1 [by the corporate debtor, if available;] 2 [(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and
(e) any other proof confirming that there is no payment of any unpaid operational debt by the Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 16 of 21 corporate debtor or such other information, as may be prescribed.] (4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub- section (2), by an order- (i) admit the application and communicate such decision to the operational creditor and the corporate debtor if, -
(a) the application made under sub-section (2) is complete;
(b) there is no 3 [payment] of the unpaid operational debt;
(c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if -
(a) the application made under sub-section (2) is incomplete;
(b) there has been 1 [payment] of the unpaid operational debt;
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 17 of 21
(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under subclause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section." • From the record available, it is noticed that the 'Demand Notice' dated 18.07.2020 was sent to the registered office of the 'Appellant' with claim for unpaid 'Operational Debt' of principal amount of Rs. 1,44,63,630/- along with interest from 16.011.2018 to 14.08.2019 of Rs. 26,03,453/- thus, total amount claimed of Rs. 1,70,67,083/-. The date of default was mentioned as 16.11.2018. The 'Demand Notice' also attached various documents including purchase order placed by the 'Corporate Debtor, invoice raised by the 2nd Respondent/ 'Operational Creditors', proof of part payment, communication between the parties and the working for computation of the default amount. The 'Demand Notice' was clearly delivered as evident from document of 'Blue Dart'.
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 18 of 21 • Section 8(2) of the I & B Code, 2016 stipulate that the 'Corporate Debtor' shall within a period of 10 days on receipt of the 'Demand Notice' bring to the notice of the 'Operational Creditor' existence of dispute or proof of payment made by sending attested copy of record of electronic transfer of unpaid amount or sending an attested copy of record that 'Operational Creditor' has encashed a cheque issued by the 'Corporate Debtor'. In the present case the 'Demand Notice' was issued on 18.07.2020 and no reply was sent to the 'Corporate Debtor' within 10days of receipt of the 'Demand Notice' i.e. from the dated of 20.07.2020 (date of delivery of demand notice) or even later. • It is therefore clear that the Rules stipulated under Section 8 & Section 9 of the I & B Code, 2016 were strictly followed by the 'Adjudicating Authority'. The total outstanding debt was Rs. 1,70,67,083/- which is more than minimum threshold of Rs. 1 crore.
• According to Section 9(5) of I & B Code, 2016 the 'Adjudicating Authority' within 14 days of receipt of application, shall admit the application and communicate such decisions if the application made is complete, there is no payment of unpaid 'Operational Debt', the notice of payment has been delivered by the 'Operational Creditor' there is no record of dispute. The Hon'ble Supreme Court of India has also held in catena of the judgments that the role of the 'Adjudicating Authority' should be limited to establish that debt is due, remains unpaid and default has occurred with minimum threshold of Rs. 1 crore, then the 'Adjudicating Authority' should admit the Section 9 Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 19 of 21 application. The Apex Court has also held that their should be minimum judicial interventions.
• Based on all above, this 'Appellate Tribunal' has no hesitation in holding that the 'Adjudicating Authority' has not erred on this issue.
26. Issue (III) Whether, any dispute was pre-existing which should have been considered by the 'Adjudicating Authority'. • As already discussed in preceding paragraphs that the fact of pre- existing dispute, if any, are required to be brought to the notice of 'Operational Creditor' withing 10 days of the receipt of 'Demand Notice' dated 18.07.2020 which was delivered to the 'Appellant' on 20.07.2020. It is seen that no reply was given to the said 'Demand Notice' and as such no pre-existing dispute was brought to the notice of the 'Operational Creditor' i.e. 1st Respondent herein. • Similarly, despite attempting to serve the petition filed under Section of I & B Code, 2016, no one from the 'Corporate Debtor' attended the proceeding before the 'Adjudicating Authority' and as such the 'Adjudicating Authority' was not informed of any pre-existing disputes. • From the averment made by the 2nd Respondent herein even he was kept in dark regarding OS No. 289 of 2018 filed before the Junior Civil Judge, Bhimavaram, Andhra Pradesh by the 'Appellant' herein. Admittedly, even the 'Appellant' has mentioned that the said OS is still pending.
Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 20 of 21 • As such, the 'Adjudicating Authority' has correctly observed in the 'impugned order' that 'in view of the fact that the Corporate Debtor failed to raise any dispute'.
• As such this 'Appellate Tribunal' does not find any error on this issue in the 'impugned order'.
27. In fine, this 'Appellate Tribunal', is of the considered opinion that there is no `Legal Infirmity', in the 'impugned order'. The `Appeal', is `devoid of any merits', and accordingly it is dismissed, but, without costs. The connected pending `Interlocutory Applications', if any, are Closed.
[Justice M. Venugopal] Member (Judicial) [Naresh Salecha] Member (Technical) Simran Company Appeal (AT) (CH) (Ins.) No. 198 of 2021 & I.A. No. 401 and 402/2021 21 of 21