Case Title: Mukul Agarwal v. Royale Resinex Pvt. Ltd & Anr
The NCLAT has observed that the pendency of an execution petition does not bar the operational creditor from filing a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.
The brief facts of the case are that The Operational Creditor Royal Resinex Pvt Ltd. supplied polypropylene to the Corporate Debtor Greatech Telecom Technologies Pvt Ltd., and resinex filed a civil suit against the Corporate Debtor for recovery of an amount of Rs.16,44,500/-. The Additional District Judge, Rohini Court decreed the same for the claim amount plus interest of 12% p.a.
Thereafter, the decree-holder Resinex issued a demand notice under Section 8 of the Code claiming the amount of debt as Rs.25,04,630/- which was totally ignored by Greatech.
After that, Resinex moved an application u/s 9 of the Code before the Court and the Adjudicating Authority admitted the Application and appointed an Interim Resolution Professional (“IRP”). Aggrieved by the same, the suspended director of the judgment debtor Greatech has moved an appeal.
The primary submissions of the appellant corporate debtor were that:-
The notice under Section 8 of the Code issued by the Operational Creditor was not served upon him, which is a mandatory requirement. Therefore, owing to the non-compliance of which the application under section 9 deserved to be rejected on this ground alone.
The said application filed u/s 9 of the Code was filed on the basis of a Civil Court Decree and the same cannot be said to be an Application for an ‘operational debt’.
In response to the submissions made by the Appellant, the Counsel for Respondents submitted that the notice u/s 8 of the Court was indeed served upon the Appellant and the same was also duly received by it but the Appellant chose to ignore the same and no reply was received from its end. Furthermore, it was strongly put forward by the Respondent that the Appellant in its reply to the application under section 9 did not state that it has not received any notice as per the mandate under section 8.
With regard to the Appellant’s second submission, the Respondent contending it as incorrect replied that the debt, which was due on the Corporate Debtor was towards the supply of polypropylene, which was supplied by the Operational Creditor to the Corporate Debtor. The amount of debt stood crystallized by judgment and Decree dated 08.09.2016 in Civil Suit No.149 of 2015.
The Hon’ble Bench after hearing the exhaustive arguments advanced by both parties came to a conclusion that the notice u/s 8 was indeed delivered to the Appellant and the same is reflected by the bare reading of the records in the file coupled with the postal receipt submitted by the Respondent. With regard to the submission that a Civil Court Decree alters the nature of the claim, the Bench categorically stated that, “The mere fact that when the Corporate Debtor did not pay the amount, suit for recovery was filed in the year 2016 by the Operational Creditor, which was also Decreed on 08.09.2016, does not in any manner effect the transaction out of which the amount fell due. The fact that amount was adjudicated, and a decree was passed, in no manner take away the nature of ‘operational debt’.”