Application U/S 9 IBC Can't Be Rejected Over Issuance Of Demand Notice In Wrong Form When Invoices Contained In Notice Are Unchallenged: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain, Justice Mohammad Faiz Alam Khan and Mr. Naresh Salecha (Technical Member) has held that an application under Section 9 of the IBC cannot be rejected on a hyper-technical plea that, since the claim was based on invoices, the demand notice should have been issued in Form 4 of Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, not in Form 3, especially when the notice included all invoices, which were not challenged by the Corporate Debtor as fake or fabricated. The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by National Company Law Tribunal (NCLT) New Delhi by which it dismissed an application under section 9 of the IBC filed by Operational Creditor (OC). The Appellant submitted that the Appellant had attached all the invoices with the demand notice issued in form 3, therefore, there is complete compliance of Rule 5 of the Rules. It was further argued that the finding recorded by the Tribunal that there is pre existing dispute between the parties is also bad because it has relied upon selective emails dated 29.09.2018 and 08.10.2018, which have also been referred in the impugned order, to hold that there was deficiency of service on the part of the Appellant. It was also contended that no dispute with the Appellant has ever been raised by the Respondent in the form of notice, suit, arbitration etc. and even no liability has been crystallized by the Custom because of an appeal against custom order is pending. Per contra, the Respondent submitted that the Appellant has erroneously contended that the customs clearance was done by the customs broker and that this dispute is not notified to it. The demand notice dated 02.05.2022 is in form 3 of the Rules. It was further argued that in the demand notice issued on the basis of invoice then it has to be in Form 4. Operational debt has been claimed on the basis of invoices for which a notice under form 3 is not issued but in form 4 and reliance has been placed in the case of Neeraj Jain. The Tribunal observed that the demand notice with invoices fulfils the requirements to prove the existence of operational debt and the amount of default. If the notice sent in form 3, OC has to give particulars of unpaid operational debt whereas in the notice sent on form 4, the OC has to only attach the invoices on which its claim is based without giving any further particulars. It further held that the mere fact that the notice under section 8 of the IBC was issued under Form 3 cannot lead to the dismissal of the Application under section 9 when the notice was issued along with invoices which have not been challenged by the Respondent as fake or fabricated. The Tribunal further observed that the NCLT overlooked the fact that the Restaurant on the vessels were inaugurated by the Union Ministry on 17.11.2018 which continued to operate until 13.03.2020 as confirmed by emails from the Restaurant Manager. The Respondent raised the dispute regarding seizure of vessels only on 25.11.2020 long after the inauguration with no prior notice, suit or arbitration. Additionally, Sunrich which has been appointed by Respondent as its customs/port agent for vessel import document is responsible and the liability of the Appellant as to the demand raised by the Customs is not crystallised. Accordingly, the present appeal was allowed and the impugned order was set aside. Case Title:KNK Ship Management Versus Thrani Industries Ltd. Case Number:Comp. App. (AT) (Ins) No. 2149 of 2024 Judgment Date: 11/09/2025 Click Here To Read/Download The Order

Application U/S 9 IBC Can't Be Rejected Over Issuance Of Demand Notice In Wrong Form When Invoices Contained In Notice Are Unchallenged: NCLAT

Mohd Malik Chauhan

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