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M/s. Sonitech Travels Co. v/s Centre For Vocational Training & Entrepreneurship Studies

    Company Petition No. (IB)-259 (ND) of 2017

    Decided On, 15 September 2017

    At, National Company Law Tribunal New Delhi

    By, THE HONOURABLE MS. INA MALHOTRA
    By, JUDICIAL MEMBER & THE HONOURABLE MR. S.K. MOHAPATRA
    By, TECHNICAL MEMBER

    For the Operational Creditor: Md. Shajahan Islam, Advocate. For the Corporate Debtor: Uttam Dutt, Tarun Sharma, Advocates.



Judgment Text

S.K. Mohapatra, Technical Member

1. This is an application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity "the Code") read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity "the Rules") for initiation of corporate insolvency resolution process in respect of the respondent-corporate debtor.

2. In brief the applicant-M/s. Sonitech Travels Co. a proprietorship concern, claims to be an operational creditor having its registered office at H-147, B-Block, Gopal Nagar, Najafgarh, New Delhi-110 043. It is the case of the applicant that the respondent-company (the corporate debtor) has availed of transportation/travel services provided by the applicant from the years 2011 to 2012 and accordingly the bills/invoices were raised and issued to the corporate debtor's company for such services availed of by the corporate debtor. It is stated that the bills/invoices issued in this regard were duly received and acknowledged by the respondent-corporate debtor. It is claimed that a sum of Rs. 18,60,921 (rupees eighteen lakhs sixty thousand nine hundred and twenty one only) (plus interest at 24 per cent, per annum) is outstanding against various bills/invoices raised for the services tendered. Copies of bills/in Voices issued by the applicant-company duly received and acknowledged by the corporate debtor including the ledger account have been placed on record.

3. The corporate debtor in their reply to the application submitted that operational debt claimed by the applicant pertains to the period 2011-2012 and hence the same is hopelessly time barred. It is also their case that significant payments to the applicant after verification of the invoices have been made. It is alleged that the applicant has raised invoices even for work not undertaken and that the invoices are forged and fabricated. Additionally it is stated that the bill/invoices annexed with the application were only received subject to their verification and scrutiny. It is alleged that the invoices raised by the applicant contain inflated and forged figures, hence the same are disputed.

4. In connection with non-compliance with sub-section (3)(c) of section 9 of the Code, the respondent has contended as follows :

"That as per section 9(3)(c) of the IBC it is a mandatory requirement for the operational creditor to file along with the application for initiation of corporate insolvency resolution process, the copy of the certificate from the financial institutions maintaining accounts of the operational creditor, confirming that there is no payment of an unpaid operational debt by the corporate debtor. In the present case the operational creditor has deliberately not filed any such certificate and hence the application is liable to be dismissed on this ground alone."

5. It is seen from the records that vide order dated August 24, 2017 the 5 applicant was informed that the petition suffers from certain technicalities. Time was duly afforded to the applicant to remove the objections with respect to filing of certificate as required under section 9(3)(c) of the Code. Nevertheless, the requisite certificate from the financial institutions maintaining accounts of the operational creditor has not yet been furnished by the applicant. Needless to say that the seven days period afforded to rectify the defect has already been over.

6. Under sub-section (5) of section 9 of the Code, if application is not complete the adjudicating authority is required to give 7 days' time to the applicant from the date of receipt of notice to rectify the defect in the application.

7. The hon'ble National Company Law Appellate Tribunal in its judgment dated May 1, 2017 in the matter of J. K. Jute Mills Co. Ltd. v. Surendra Trading Co. (2017) 204 Comp Cas 483 (NCLAT), has held that time is the essence of the Code and that in case the applicant fails to remove the defects within 7 days' as provided under the proviso, the application is liable to be rejected.

8. In the present case time was afforded to the applicant on August 24, 8 2017, for removal of the aforesaid defect. The applicant has filed certified bank statements along with copy of report of the chartered accountant dated July 29, 2017 on August 30, 2017, which cannot be termed as compliance with sub-section (3)(c) of section 9 of the Code. Despite opportunity afforded admittedly the applicant -has failed to complete the required documents till date.

9. Sub-section (3) (c) of section 9 of the Code provides as follows :

"(3) The operational creditor shall, along with the application furnish-.. .

(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor."

(emphasis given)

10. The word "shall" used in sub-section (3) of section 9 of the Code shows mandatory requirement, which includes, inter alia, clause (c) of sub-section (3). Therefore, on a bare perusal of the

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abovementioned provision it is clear that furnishing of certificate from the relevant financial institution by the applicant, inter alia, is a mandatory requirement under section 9 of the Code and in the absence of such certificate from the financial institution maintaining accounts of the operational creditor, the application filed by the applicant is clearly incomplete. 11. As a sequel to the above discussion the present application filed by the operational creditor is rejected being incomplete. Let copy of the order be supplied to the parties.
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