NCLAT| A mistake in demand notice does not make an application defective unless some prejudice is suffered resulting from such mistake


National Company Law Appellate Tribunal, Chennai: While dealing with a case related to mistake in demand notice, a bench comprising of Dr. Deepti Mukesh (Judicial Member) and Sameer Kakar (Technical Member) held that such a mistake will not make the application defective unless until some prejudice is suffered by the respondent because of such mistake.

“…the Corporate Debtor has not and would not be prejudiced by fact that Operational Creditor has mentioned the wrong date of default due to its inadvertence.”

In the present matter, an application is filed by the applicant, Operational Creditor under S. 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with R. 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 seeking the admission of the application to initiate the Corporate Insolvency Resolution Process (CIRP) against the respondent, Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (IRP) before the Tribunal. The applicant later submitted an additional affidavit dated 03-01-2023 admitting a typographical error in date of default as per the statutory notice to rectify and defile the present Application before this Tribunal.

The Respondent accepted that there is a debt due to the applicant but also questioned the maintainability of the application filed by the applicant in respect of the date of default as per the statutory notice as mentioned by the applicant in the application.

The Tribunal accepted the respondent’s argument that there is typographical error in mentioning the date of default in S. 8 notice and opined that the same is rectified and taken on record by this Tribunal.

The Tribunal relied on Rajendra Bhai Panchal v. Jay Manak Steels, 2020 SCC OnLine NCLAT 730 where it was held that “…a mistake in a ‘Demand Notice’ does not necessarily mean that it is defective. If a ‘Corporate Debtor’ wants to question the validity of the demand it is for it to show that the prejudice was suffered by it as a result of defect.” and observed that the respondent would not suffer due to mentioning of wrong date of default by the applicant.

The Tribunal observed that the applicant’s application is not hit by limitation, moreover, the availment of services rendered by the applicant and the debt and default arising therefrom is not disputed by the respondent, thus prima facie proving the existence of debt and subsistence default on the part of the respondent.

The Tribunal opined that the application filed by the applicant is required to be admitted under S. 9(5) IBC and appointed Mr. R. Raghavendran as the Interim Resolution Professional based on the latest list furnished by Insolvency and Bankruptcy Board of India subject to the condition that no disciplinary proceedings are pending against him. The Tribunal further opined that the duration of the period of moratorium should be as per S. 14(4) IBC.

While admitting the application, the Tribunal directed the applicant to pay a sum of Rs. 2,00,000/- (Rupees Two Lakh Only) to the Interim Resolution Professional after he file the necessary declaration form to meet out the expenses to perform the functions assigned to him.

[Credberg Advisors India (P) Ltd. v. Platinum Holdings (P) Ltd., 2023 SCC OnLine NCLT 12, decided on 01-02-2023]

Advocates who appeared in this case :

Mr. Varun Srinivasan, Counsel for the Applicant;

Mr. Om Prakash (Senior Advocate) and Mr. M. Ravi, Counsel for the Respondent.

*Ritu Singh, Editorial Assistant has put this report together.

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