PCI Ltd. v. Ashimori India (P.) Ltd.

INSOLVENCY AND BANKRUPTCY CODE, 2016

--Initiation of corporate insolvency resolution process by operational creditor--Petition against non-payment of balance amount regarding supply and installation of plantsDemand notice under section 8 issued by an Advocate--Not duly authorized to issue notice on behalf of operational creditor --When demand notice under section 8 had been issued by an Advocate, who had not been duly authorized to issue such a notice on behalf of operational creditor, then application for initiation of corporate insolvency resolution process was to be dismissed.--Corporate debtor issued purchase order to operational creditor for supply and installation of plants and the same was complied by the operational creditor. However, the corporate debtor did not pay a balance sum to the operational creditor. Therefore, the operational creditor issued demand notice under section 8, but no payment was made, so it filed application under section 9 against the corporate debtor. Corporate debtor had raised objection that the notice had been issued by an Advocate who had not been duly authorized to issue such a notice on behalf of the operational creditor, therefore, the application was not maintainable.Held: Demand notice under section 8 on behalf of the operational creditor could not be issued by any person in the absence of any authority of Board of Directors, and holding no position with or in relation to the operational creditor. However, no such authorization to issue such a notice by the Advocate on behalf of the operational creditor had been produced by the operational creditor. Hence, the application was to be dismissed.