Duty of Operational Creditor to provide correct address of Corporate Debtor before preferring an application under S. 9 of the I&B Code

National Company Law Appellate Tribunal: While delivering the judgment in an appeal filed to quash the order passed by the National Company Law Tribunal, Chennai Bench, whereby it admitted the application preferred by the respondent firm under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) for initiation of Corporate Insolvency Resolution Process against the appellant, a two Member Bench comprising of S.J. Mukhopadhaya, J. (Chairperson) and Balvinder Singh, Technical Member, set aside the impugned order holding that the application preferred by the respondent was not maintainable.

The appellant and the respondent entered into an agreement whereby the respondent provided SMS sending services for and on behalf of the appellant. There was a dispute regarding payment for services. The respondent claimed certain outstanding amount and the appellant alleged poor services as provided by the respondent. The respondent preferred the above said application and the impugned order was passed.

The appellant challenged the impugned order contending violation of rules of natural justice as no notice was served on the appellant under S. 8 of the I&B Code or under Rule 5(3) of the I&B (Application to Adjudicating Authority) Rules, 2016. It was also contended that since there existed a dispute as to the debt amount, the application under S. 9 was not maintainable.

The NCLAT perused the impugned order and found that the notice sent by the respondent was not served on the appellant. The Adjudicating Authority, instead of directing the respondents to issue fresh notice on correct and present address, observed, “However, the petition was sent to proper address”. It was held that it was the duty of the “Operational Creditor” to provide the correct and present address of the ‘Corporate Debtor” before preferring any application under Section 9 of the I&B Code and the impugned order could not be upheld having passed in violation of rules of natural justice.

As regards the existing dispute with regard to the debt amount, the Tribunal referred to an earlier case Company Appeal (AT) (Insol.) No. 6 of 2017, for interpretation of the meaning of “dispute” and “existence of dispute, if any” and held that, there being an “existence of dispute”, the petition under Section 9 preferred by respondent was not maintainable.

Accordingly the appeal was allowed and the impugned order was set aside directing that any orders passed by the Adjudicating Authority pursuant to the impugned order, be set aside. [M/s Bhash Software Labs Pvt. Ltd. v. M/s Mobme Wireless Solutions Ltd., 2017 SCC OnLine NCLAT 205 , dated August 29, 2017]

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