Counfreedise vs Timex India Group Ltd.

The present CA is filed by the Corporate Debtor seeking following prayers:

Under the circumstances stated hereinabove it is humbly prayed to this Hon’ble Tribunal that the petition filed under section 9 of the Insolvency

and Bankruptcy Code, 2016 read with rule 6 of the Insolvency and Bankruptcy Rules, 2016 by the operational creditor be dismissed with heavy costs

in favour of the Respondent Pass such other order and further order as this Hon'ble Court may deem fit and proper in the interest of justice.

Prayed accordingly.

The main contention of the applicant is that in the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity the

'Code') wherein as per provisions of the Code it is mandatory for the operational creditor to serve the demand notice under provisions of section 8 of

the Code at the registered office of the Corporate Debtor. It is further stated that the demand notice dated 4th October, 2017 under Section 8 of the

Code was sent to the corporate and branch office of the respondent and not at the registered office as reflected on the website of the MCA Portal.

The applicant further submits that Section 8(1) of the Code and Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority)

Rules, on conjoint reading makes it categorically clear that the service of demand notice is mandatorily to be served at the registered office of the

corporate debtor. It is the case of the applicant that admittedly the service of notice is not made at the registered office of the corporate debtor as

reflected in the Master Data of the MCA. It is the cardinal rule of interpretation that when a statute prescribes for a particular act in a particular

manner, the same shall not be done in any other manner and if done in any other manner the same shall not be considered as per law. Hence, in the

present case, since the compliance of service of demand notice under Section 8 is not at the registered office of the corporate debtor as prescribed

under law, the present application should be dismissed at the threshold. The applicant has relied upon the judgement dated 24.11.2017 of the

Hon’ble Madras High Court in C.R.P.D. No. 2864 of 2017 holding that the service of demand notice u/ s. 8 of the Code at registered office of the

corporate debtor is mandatory, thereby setting aside the order passed by the NCLT, Chennai Bench on 7th July, 2017 entertaining the petition without

complying the mandatory requirement of service of Section 8 notice at registered office of corporate debtor. The applicant further mentioned that

against the said order of the Hon’ble Madras High Court dated 24.11.2017, SLP was preferred before the Hon'ble Supreme Court and the said

SLP was dismissed by order dated 16.11.2018. Hence, the order of the Hon'ble Madras High Court as on date holds water and is binding on this

Tribunal.

Ld. counsel has further relied on following judgements:

i) L. Chandra Kumar v. Union of India (AIR 1997 SC 1125); and

ii) East India Commercial Co. Ltd. Calcutta and Anr. V. Calcutta Customs, Calcutta (AIR 1962 SC 1993).

iii) Shri Bradakent Mishra ][.v. Bhimsen Dixit (1973) 1 SCC 446;

iv) Union of India & Ors. V. Kamalaxi Finance Corporation Ltd., AIR 1992 SC 711,

v) K.N. Agarwal v. CIT [1991] 189 ITR 769,

vi) State of Andhra Pradesh v. C.T.0 (1988), 169 ITR 564; and

vii) Odisha Power Generation Corporation Ltd. v. State of Odisha and Ors. [(W.P.) (C) No. 17017 of 2014]

The ratio of all these orders if gathered suggests that the Hon'ble High Courts being highest court of the State are empowered to exercise judicial

superintendence, over other courts and tribunals falling under its territory. Relying on the said ratio it is argued that in the present case also the

decision of the Honble Madras High Court is binding.

The Id. counsel for respondent (the original applicant) has argued that the corporate debtor has received the demand notice sent under section 8 of

the Code at the corporate office without any objection or opposition or any remark. It is further argued that the corporate debtor has admitted that

notice under Section 8 was duly replied by the corporate debtor vide reply dated 14.10.2017 raising dispute. Thus, till the filing of the present

application the respondent had never raised the objection to the receiving or replying to the said notice under section 8 and at the stage of final hearing

this issue raised by corporate debtor should not be considered and the matter be heard on merit. Thus, preliminary objection not being raised at the

initial stage, cannot be tenable at this stage specially after completion of the pleadings. The id. counsel for applicant has annexed a copy of the order

of NCLAT in Company Appeal (Insolvency) No. 684/2018 passed on 21st January, 2019, observing that if demand notice under section 8(1) is served

on corporate debtor either on its registered office or its corporate office it should be treated to be valid service. Para 6 of the order reads as under:

In view of the aforesaid facts we hold that the Adjudicating Authority erred in rejecting the application under Section 9 on wrong presumption that

demand notice is to be served on the Registered Office of the Corporate Debtor and not on Corporate Office (Industrial Area Office herein). If the

demand notice under Section 8(1) is served on Corporate Debtor either on its Registered Office or its Corporate Office, it should be treated to be valid

service of notice under Section 8 and application under Section 9 on failure of payment, if filed after 10 days is maintainable.

In view of the present latest judgment of the Honble NCLAT which is binding on NCLT, it leaves no doubt that demand notice under section 8 of

the Code can be served at registered office/corporate office.

As a consequence of above deliberation, the application is dismissed.