NATIONAL COMPANY LAW APPELLATE TRIBUNAL

COMPANY APPEAL (AT)(Insolvency) No.608 of 2020

(Arising out of Order dated 8.6.2020 passed by the National Company Law Tribunal,
New Delhi Bench in Company Petition No. (IB) 1895 /ND/2019)

IN THE MATTER OF :

Ashok Agarwal
Proprietor of M/s Shree Marketing .. Appellant
G-308, Preet Vihar, Vikas Marg,
New Delhi 110002.

Versus
Amitex Polymers Private Limited
17 Tribhuan Complex Ishwar Nagar,
Friends Colony, New Delhi 110065. …Respondent

Present:
For Appellant : Mr.Pankaj Bhagat, Advocate
For Respondent: Notice delivered – yet no appearance

JUDGEMENT
Venugopal M.J
Preamble

The Appellant has focused the instant appeal being dissatisfied with
the impugned order dated 8.6.2020 passed by the ‘Adjudicating Authority’
(National Company Law Tribunal, New Delhi Bench) in (IB)
No.1895/ND/2019 in dismissing the application filed by the
Appellant/Petitioner/Operational Creditor (under Section 9 of The
Insolvency and Bankruptcy Code 2016.

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2. Earlier, the ‘Adjudicating Autority (National Company Law Tribunal,
New Delhi Bench) while passing the impugned order dated 8.6.2020 in (IB)
No.1895/ND/2019 at Paragraphs Nos.10 to 14 had observed the following:

10. “At this juncture, we would like to mention this

fact that the Appellant admit that he filed the
present application for the amount which has been
settled in Civil Suit No.6912/2016 and on the basis
of a consent decree, the said amount became due
and for that amount, the present application has
been filed. Therefore, we would like to consider
this whether decree comes under the definition of
Corporate Debt or not. AT this juncture, we would
like to quote the following definition of Section
3(10) and the same is quoted below:

Creditor “means any person to whom a debt is

owed and includes a financial creditor, an
‘Operational Creditor’, a ‘Secured Creditor, an
‘Unsecured Creditor’ and a ‘Decree Holder’.

11. From the perusal of the aforesaid definition, we

find that of course definition of creditor includes a
‘Financial Creditor’, an ‘Operational Creditor’,
‘Secured Creditor’, ‘Unsecured Creditor’ and a
‘Decree Holder’ but this definition does not shows
that the ‘Decree Holder’ means a ‘Financial
Creditor’ or an ‘Operational Creditor’. The words
financial creditor and operational creditor are

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 defined under section 5(7) and 5(20) of IBC Code
and the same are quoted below:

“Financial Creditor” means any person to whom a

financial debt is owed and includes a person to whom
such debt has been legally assigned or transferred to;
“Operational Creditor” means a person to whom an
operational debt is owed and includes any person to
whom such debt has been legally assigned or
transferred.
12. At this juncture, we would also like to refer the definitions of
financial debt and operational debt and the same are quoted
below:

Section 5(8) of IBC, 2016

“Financial Debt” means a debt alongwith interest, if any, which

is disbursed against the consideration for the time value of
money and includes-

(a) money borrowed against the payment of interest

(b) any amount raised by acceptance under any acceptance
credit facility or its de-materialised equivalent;
(c) any amount raised pursuance to any note purchase facility or
the issue of bonds, notes, debentures, loan stock or any similar
instrument;
(d) the amount of any liability in respect of any lease or hire
purchase contract which is deemed as a finance or capital lease
under the Indian Accounting Standards or such other accounting
standards as may be prescribed;
(e) receivables sold or discounted other than any receivables sold
on nonrecourse basis;

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 (f) any amount raised under any other transaction, including any
forward sale or purchase agreement, having the commercial
effect of a borrowing;

Explanation – For the purposes of this sub-clause:

(i) any amount raised from an allottee under a real estate

project shall be deemed to be an amount having the
commercial effect of a borrowing; and
(ii) the expressions, “allottee” and ‘real estate project”
shall have the meanings respectively assigned to them
in clauses (d) and (zn) of section 2 of the Real Estate
(Regulation and Development) Act, 2016 (16 of 2016;]
(iii) any derivative transaction entered into in connection
with protection against or benefit from fluctuation in
any rate or price and for calculating the value of any
derivative transaction, only the market value of such
transaction shall be taken into account;
(iv) any counter-indemnity obligation in respect of a
guarantee, indemnity, bond, documentary letter of
credit or any other instrument issued by a bond or
financial institution;
(v) the amount of any liability in respect of any of the
guarantee or indemnity for any of the items referred to
in sub-clauses (a) to (h) of this clause;

Section 5(21) of IBC, 2016

“Operational Debt” means a claim in respect of the provision of goods

or services including employment or a debt in respect of the 6[payment] of
dues arising under any law for the time being in force and payable to the
Central Government, any State Government or any local authority;

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 13. If we shall read all the definitions together then we find that
the Financial Creditor means any person to whom a financial debt
is owed and includes a person to whom such debt has been
legally assigned or transferred to whereas an Operational
Creditor means a person to whom an operational debt is owed
and includes any person to whom such debt has been legally
assigned or transferred. Since the present application has been
filed under Section 9 of the IBC, therefore, we can say that the
applicant claimed that on the basis of consent decree an
Operational Debt became due but when we shall read the
definition of Operational Debt then we find that the decree is not
included as an Operational Debt, of course definition of Creditor
include decree holder but definition of Operational Creditor does
not include decree holder.

14. At this juncture, we would like to refer the latest decision of

Honourable National Company Law Appellate Tribunal passed in
the matter of Digamber Bhondwe Vs.JM Financial Asset
Reconstruction Company Limited in which Honourable National
Company Law Appellate Tribunal held that “we further reject the
submission that because in Section 3(10) of The Insolvency and
Bankruptcy Code 2016 in definition of ‘Creditor” the “Decree
Holder” is included. It shows that decree give cause to initiate
application under Section 7 of The Insolvency and Bankruptcy
Code 2016. Section 3 is in Part I of The Insolvency and
Bankruptcy Code 2016. Part II of The Insolvency and Bankruptcy
Code 2016deals with “Insolvency Resolution And Liquidation for
Corporate Person”, & has its own set of definitions in Section 5.
Section 3(10) definition of “Creditor” includes “financial

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 creditor”, “operational creditor” “decree-holder” etc. But Section
7 of Section 9 dealing with “Financial Creditor” and “operational
creditor” do not include “decree holder” to initiate CIRP in Part
II.” And when we shall consider the case in hand in the light of
aforesaid decision then we are of the considered view that a
decree-holder does not come within the definition of Operational
Creditor, therefore, the present application is not maintainable.”
and ultimately held that the present application was not
maintainable as the applicant is not an ‘Operational Creditor’ and
dismissed the application.
Appellant’s submissions:

3. The Learned Counsel for the Appellant contends that the Appellant is
the proprietor of M/s Shree Marketing and that the Appellant/Operational
Creditor is engaged in many other things, in the business of procuring and
selling of Goods/Materials/operational supplies, industrial etc., to increase
their profit by payment aggregation and providing goods material at
competition price by directly buying from large manufacturers and enabling
its customers to increase business efficiencies against cash payment or on
credit basis.

4. The Learned Counsel for the Appellant points out that the
Respondent/Corporate Debtor had approached the Appellant/Operational
Creditor and represented that it was in requirement of Goods/Material
manufactured/supplied by the appellant and requested the
Appellant/company to supply the same to it. Accordingly, the
Respondent/Corporate Debtor placed the ‘Purchase Order’ dated 17.2.2011
and the Corporate Debtor through its purchase orders offered to make
payment within a period of 45 to 60 days but the payment was agreed to
be made within 30 days from the date of invoices.

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5. The Learned Counsel for the Appellant comes out with a plea that the
Appellant/Operational Creditor supplied the chemicals/materials to the
Respondent/Corporate Debtor through its ‘Purchase Orders’ against which
necessary ‘Invoices’ were raised. As a matter of fact, copies of ‘Invoices’
were sent to the Respondent/Corporate Debtor together with
chemicals/materials and the same was acknowledged by the Respondent
by affixing its ‘Rubber Stamp’ and signature on the back of the respective
Invoices. Added further, the Invoices clearly stipulate that the payment
shall be made from the date of Invoice as agreed between the parties.

6. It is the grievance of the Appellant that the Respondent/Corporate

Debtor had failed to make the balance payment, which was duly agreed up
and therefore, the Appellant/Operational Creditor had approached the
Respondent/Corporate Debtor on numerous occasions demanding balance
payment. To put it up shortly, there were various communications and
visits including but not limited to 29.4.2011, 25.5.2011, 4.5.2011,
11.5.2011, 13.5.2011, 20.6.2011, 24.6.2011, 31.8.2011, 27.9.2011 and
28.9.2011 by the Appellant/Operational Creditor demanding the payment
of the balance ‘Debt’ amount.

7. The Learned Counsel for the Appellant/Operational Creditor brings to

the notice of this Tribunal that there is an admitted ‘Debt’ of Rs.7,50,000/-
(Rupees Seven Lakhs Fifty thousand only) towards Principal amount, in
respect of Goods received by the Respondent/Corporate Debtor admitted
to be paid in the ‘Settlement Agreement’ dated 16.8.2018. According to
the Appellant, a Civil Suit in C.S.No.6912 of 2016 was filed by the appellant
against the Respondent/Corporate Debtor and Another and during the
pendency of the said suit, the ‘Settlement Agreement’ dated 16.8.2018 was
entered into and executed between the Respondent/Corporate Debtor and
the Appellant/Operational Creditor and further that the ‘Corporate Debtor’
had promised and assured to pay the whole sum.

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8. The Learned Counsel for the Appellant adds to point out that the
Respondent/Corporate Debtor had submitted a ‘Written Undertaking’ dated
25.10.2018 before the Learned Additional District Judge, Saket Court, New
Delhi and in view of the fact the aforesaid ‘Debt’ was admitted on two
occasions, both by way of ‘Written Agreement’ and ‘Undertaking’ and
recorded in the presence of Learned Additional District Judge, Saket Court,
New Delhi, ‘Admissions’, ‘Promise’, ‘Assurance’ and ‘Undertaking’ to pay the
‘Debt’ is squarely covered under Section 25(3) of the Indian Contract Act,
1872.

9. The Learned Counsel for the Appellant submits that in the Civil Suit
in C.S.NO.6912 of 2016, a ‘Civil Decree’ dated 25.10.2018 was passed by
the Learned Additional District Judge, Saket Court, New Delhi. In this
connection, it is the version of the Appellant that since the ‘Decree’ is in the
nature of ‘Consent Decree’, the same also would fall and get covered under
the ingredients of Section 25(3) of the Indian Contract Act, 1872.

10. The Learned Counsel for the Appellant contends that the
Appellant/Operational Creditor issued a ‘demand notice’ under Form 3 on
11.3.2019 and in fact, the said notice was sent though Speed Post on
13.3.2019 at the registered postal address and email on the registered
email as was available on the web portal of the Registrar of Company,
‘Ministry of Corporate Affairs’.

11. The Learned Counsel for the Appellant forcefully contends that
despite to notice having been served upon the Respondent/Corporate
Debtor failed to pay the balance amount and also not responded to the
notice. Therefore, the Appellant/Operational Creditor was per forced to file
the Company Petition before the Adjudicating Authority.

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12. The Learned Counsel for the appellant submits that the
Respondent/Corporate Debtor was once again served with a ‘Notice’
together with a ‘Paper Book’ of the Company Petition in
(IB)No.1895/ND/2019 and that the Respondent/Corporate Debtor had
appeared and filed its ‘Reply’ on 26.12.2019.

13. The Learned Counsel for the Appellant takes a stand that during the
pendency of the Company Petition, the Respondent/Corporate Debtor
deposited with the Appellant/Petitioner numerous cheques as detailed in
the ‘Reply’ but the said cheques were dishonoured, which unerringly points
out that the ‘Debt’ was due, the same being admitted by the Respondent.
That apart, the Company Petition was ‘Heard’ in which the judgement was
reserved on 22.1.2020. In reality, during the inter period, viz. ‘Reservation
Judgement’ on 22.1.2020 and passing of the judgement on 8.6.2020, the
Respondent/Corporate Debtor deposited a sum of Rupees Six Lakhs in the
accounts of the Appellant which shows that the Respondent/Corporate
Debtor admitted its liability, as recorded in its (1) ‘Settlement Agreement’,
(2)’Undertaking”, (3) ‘Court Decree’, (4) Issuance of Cheques’.

14. The Learned Counsel for the Appellant emphatically submits that a
‘Decree Holder’ can also file a winding up petition, in spite of the option of
enforcing the ‘Decree’ by filing a ‘Execution Petition’. Further, it is the stand
of the Appellant that a Liability is only crystallized in the form of a ‘Decree’
or ‘Award’.

15. The Learned Counsel for the Appellant refers to the order of the
Honourable Madras High Court dated 31.03.2015, In the Matter of Sims
Metal Management Limited v. Sabari Exim Private Limited reported in ‘India
Kanoon ‘at Paragraph 2, it is observed as under:

“2. It is trite to say that winding-up of proceedings and a suit

for recovery of money are not one and the same. It is also

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 established that the right to move a petition for winding-up is a
statutory right of a creditor (Eurometal Limited v. Aluminium
Cables Conductors (U.P.Pvt.Ltd.). The position that when a suit
is filed for recovery of the amount, a petition for winding-up is
also simultaneously maintainable, is well settled.

16. In the decision of Seethai Mills Ltd. V. N.Perumalsamy and

Another, reported in (1980)1 MLJ P 443, the Division Bench of the
Madras High Court had observed as follows:

……….”The question for consideration, therefore, is whether, simply because

a creditor has instituted a suit against a Company and obtained a decree,
he has no remedy under Section 434(1)(a) and he has to confine his
remedy only under Section 434(1)(b) of the Act. We are of the opinion
that there is no such mutually exclusive dichotomy between Section
434(1)(a) and Section 434(1)(b) of the Act. From the very language of
Section 434(1)(b), it may be stated that it does not even contemplate a
money decree or order for payment of money and it generally uses the
expression “if execution or other process issued on a decree or order of any
court in favour of a creditor of the Company’. Therefore, the decree or
order that is comtemplated by Section 434(1)(b) is not confined only ti a
money decree or an order for payment of money. On the other hand, it is
general in nature. However, what we have to concentrate on is, whether a
person who had obtained a decree for money against a Company will cease
to be a creditor because of that fact, so as to take his case out of creditor,
who has instituted a suit and obtained a decree against the Company, will
still be a creditor of the Company to whom money is due by the Company.
It may be that the original debt had merged in the decree and the person,
who was originally a creditor, had become a decree-holder afterwards, but
that does not in any way destroy his character as a creditor or the character
of the money due to him from the Company as a debt. Thus, the position

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is that merely because a decree is obtained the creditor does not cease to
be a creditor of a Company.”
17. The Learned Counsel for the Appellant cites the decision in the Matter
of Madhuban Pvt.Ltd. v.Narain Dass Gokal Chand [1971] 41 Comp Cas 685
at 692-693 stated therein as follows (P.692):

The learned counsel submitted that it was not necessary in

the case of a creditor holding a decree against the company
to serve a notice. Specific provision, on the other hand,
was made for taking out execution of the decree in such a
case, which was not done in this case. The argument, of
the learned counsel, however is without any merits.
Clauses (a) and (b0 provide two alternative methods of
showing that the company is unable to pay its debts. A
creditor does not cease to be a creditor, if he obtains
a decree in his favour against the company. Clause
(a) becomes applicable when a creditor has served on the
company a demand under his hand requiring it to pay the
sum due and the company has neglected to pay the same.

The provision, in Clause (b) that if the creditor has a decree

of a court in his favour and the execution is returned
unsatisfied in whole or in part, the company shall be
deemed to be unable to pay its debts, does not mean that
the effect of Clause (a) is negative in the case of a decree-
holder creditor. The object of the two clauses is the same,
that is, to show that the company concerned is unable to
pay its debts. Action can be taken under either of them’.

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18. In another decision reported in 2014 183 CC 395(BOM) (Intesa
Sanpaolo SPA V. Videcon Industries Limited), wherein at Paragraph 42, it
is held as under:

42. It is trite to say that winding-up proceedings and a suit

for recovery of money are not one and the same. It is
also established that the right to move a petition for
winding-up is a statutory right of a creditor.
(Euromental Limited Vs. Aluminium Cables Conductors
(U.P.Pvt.Ltd.). The position that when a suit is filed for
recovery of the amount, a petition for winding-up is
also simultaneously maintainable, is well settled.”

19. The Learned Counsel for the Appellant adverts to the judgement of
the Honourable Supreme Court dated 29.1.2019 in Civil Appeal No.1291 of
2019 (Arising out of SLP (Civil) No.6221 of 2018) Swaraj Infrastructures
Pvt.Ltd. V. Kotak Mahindra Bank Ltd. Dated 29.01.2019 held as under :

“20. We may only end by saying that cases like the

present one have to be decided by balancing the interest
of creditors to whom money is owing, with a debto
company which will not go in the red since a winding up
petition is admitted against it. It is not open, for persons
like the appellant to resist a winding up petition which is
otherwise maintainable without there being any bona fide
defence to the same. We may also hasten to add that the
respondent cannot be said to be blowing hot and cold in
pursuing a remedy under the Recovery of Debts Act and
a winding up proceeding under the Companies Act, 1956,
simultaneously. Here, it is important to refer to the
judgement of Lord Atkin in Lissenden v.
C.A.C.Bosch, Ltd., (1940) 1 All E.R.425, at 436-437,

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 which says: ‘The doctrine of election could have no place
in the present case. The applicant is not faced with
alternative rights. It is the same right that he claims, but
in large degree. In Mills v. Duckworth, (1938) 1 All
E.R.318, a plaintiff who had been awarded damages for
negligence had taken the judgement sum out of a larger
sum paid into Court and had then appealed against the
quantum of damages, and was met by a similar objection
to his appeal. Greer, L.J., in overruling the objection,
pointedly said, at p.321: “He (the plaintiff) said: ‘I am not
going to blow hot and cold. I am going to blow hotter.”
Here the applicant is not faced with a choice
between alternative rights. He has exercised an
undisputed right to compensation, and claims to have a
right to more. One has not lose one’s right to a second
helping. It is most respectfully submitted that one has
taken the first.” When secured creditors like the
respondent are driven from pillar to post to recover
what is legitimately due to them, in attempting to
avail of more than one remedy at the same time,
they do not “blow hot and cold”, but they blow hot
and hotter.”

46. If a creditor, with or without a decree of an Indian

Court, can file a petition for winding up based upon a
original cause of action, pending the suit and after decree,
there is no warrant to deprive a creditor with a decree of
foreign Court to present a petition for winding up,
independently of the decree, in the Company court having
jurisdiction.

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20. The Learned Counsel for the Appellant relies on the judgement of
Honourable Supreme Court in the Matter of K.Kishan v. Vijay Nirman
Company Private Ltd., dated 14.8.2018 in Civil Appeal No.21285 of 2017 –
Annexure C., wherein it is observed that though ‘Arbitral Awards’ can be
accepted as ‘Operational Debt’ it should be of nature of ‘Undisputed Debt’
and further in the case of Sushil Ansal v. Ashok Tripathi & Others Company
Appeal No.452 of 2020 passed by the Hon’ble NCLAT on 14.8.2020 to
enable the initiation of ‘CIRP’ by the ‘Operational Creditors’.

21. The Learned Counsel for the appellant points out that in the
judgement dated 14.8.2018, this Tribunal in the Matter of Sushil Ansal v.
Ashok Tripathi & Others in Company Appeal No.452 of 2020 had observed
and held that a ‘Decree Holder’ cannot institute a Petition under Section 7
of The Insolvency and Bankruptcy Code 2016.

22. In fact, as against the judgement of this Tribunal in Dinesh Kumar &
Ors. V. Sushil Ansal & Ors. (vide its Co.Appeal AT(Ins)452 of 2020 dated
14.8.2020 a Civil Appeal Diary No(s).20399/2020 was filed by the
appellant Dinesh Kumar and Others and that the Honourable Supreme
Court on 9.10.2020 at Paragraph 3 had observed the following and issued
a notice, including the newly added Respondent returnable in 4 weeks.

An Appraisal

23. At the outset, this Tribunal relevantly points out that in the petition
by the Appellant/Operational Creditor for initiation of ‘CIRP’ under section
8 and 9 read with Section 14 and 33 of The Insolvency and Bankruptcy
Code 2016 and Rule 6 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules 2016 under Part IV of Particulars of

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Operational Debt, ‘Debt’ in S.No.1, the total amount of ‘Debt’ was
mentioned as Rs.7,50,000/- (Rupees Seven Lakhs Fifty Thousand only),
towards Principal amount in respect of Goods received by the Corporate
Debtor and admitted, to be paid in the ‘Settlement Agreement’ dated
16.8.2018.

24. Besides the above, Rs.1,35,000/- (Rupees One lakh Thirty Five
Thousand only) towards Penalty of Rs.5,000/- (Rupees Five Thousand only)
per instalment per month as per ‘Undertaking’ given by the Corporate
Debtor (Respondent) and recorded as per order dated 25.10.2018 by the
Learned Additional District Judge, Saket Court, New Delhi in Civil Suit
No.6912 of 2016 in the case of Ashok Agarwal(Appellant) V. Amitex
Polymers Pvt.Ltd and Anr.(First Respondent/Corporate Debtor). In fact,
the total dues were mentioned as Rs.8,85,000/- (Rupees Eight Lakhs Eighty
Five Thousand only).

25. The real grievance of the appellant is that the aforesaid Debt sum is
payable, as admitted by the Respondent/Corporate Debtor and as recorded
in its ‘Undertaking’ and ‘Consent Decree’ passed by the Learned Additional
District Judge, Saket Court, New Delhi dated 25.10.2018, as per
‘Settlement Agreement’ executed on 16.8.2018 between the Operational
Creditor and Operational Debtor.

26. Before the ‘Adjudicating Authority’, the Respondent/Corporate

Debtor took a stand that the Company Petition filed by the
Appellant/Petitioner was not maintainable and the same was to be
dismissed in view of the fact that the outstanding amount is not a ‘Debt’ as
contemplated under the definition of Section 3(11) of I & B Code, 2016.

27. A careful perusal of the reply filed by the Respondent/Operational

Creditor before the Adjudicating Authority clearly indicates that the
Appellant/Petitioner describes himself to be a proprietor of the firm

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M/s ‘Shree Marketing’ and by means of that definition of the word ‘person’
as per Section 3(23) of the Code, though it includes ‘individual’ it does not
include within its ambit of sole proprietory concern. In short, the plea of
the Respondent/Corporate Debtor is that the Appellant/alleged Operational
Creditor in the petition before the Adjudicating Authority is that the dispute
was settled despite the Court that the Respondent/Corporate Debtor by the
Appellant/Operational Creditor because of the reason that the
Apepllant/Petitioner had received 10 post dated cheques for specifying
amounts therein with Schedule being indicating and therefore the Company
petition filed by the Appellant/Operational Creditor is to be dismissed in the
interests of justice.

28. The other plea taken on behalf of the Respondent/Corporate Debtor

before the Adjudicating Authority was that the demand notice was not
received by the Respondent/Corporate Debtor and even though the notice
was sent on 13.11.2019, which was booked from the ‘Jungpura SO’, the
same was not delivered to the Registered Office/Pincode of the
Respondent/Corporate Debtor and that the notice was returned to the
‘Jungpura SO’.

29. In this connection, it is not out of place for this Tribunal to make a
relevant mention that the ‘Adjudicating Authority’ in the impugned order at
Paragraph 8 had clearly mentioned that the tracking report clearly showed
that ‘address’ furnished by the Appellant/Operational Creditor was
insufficient and could not be delivered on the registered address of the
Corporate Debtor, rather it was returned.

30. Furthermore, the Adjudicating Authority in the impugned order had

proceeded to observe that in the ‘e-mail’ sent on 1.4.2019, it was
mentioned that the notice which Appellant/Petitioner sent was returned
with a remark ‘Left’ and thereafter, the applicant sent the demand notice

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through e-mail “[email protected]’. Also that the Adjudicating
Authority had stated in the impugned order that the ‘master data’ enclosed
by the Applicant as Annexure Page 2 also showed the name of the Directors
of the Corporate Debtor Company (Respondent) but in the master data, e-
mail ID of the Director was not given rather one e-mail ID of which the
Applicant(Appellant) claimed to send the demand notice was given . But
from perusal of the same, it cannot be said that this e-mail ID is one of the
persons as required under Rule 5(2) of the Adjudicating Authority Rule. In
fact, the Adjudicating Authority in the impugned order opined that the e-
mail ID on which the Applicant(Appellant) had delivered the demand notice
was neither of a whole time Director or Designated Partner or Managerial
Director, Corporate Debtor and held that the demand notice as required
under section 8(1) of Insolvency and Bankruptcy Code was not delivered
etc.

31. In regard to the plea taken on behalf of the Respondent/Corporate

Debtor before the Adjudicating Authority that notice was served on the
Company’s official e-mail ID at its registered office, it is to be pointed out
that a Company, a juristic entity cannot be served personally and if the
registered office of a company is locked/closed, then if no one on behalf of
the Company had received the notice(s), then the
Appellant/Petitioner/Operational Creditor cannot be found fault with
especially bearing in mind the presumption to be raised under Section 27
of the General Clauses Act.
32. To put it precisely, in decision of the Honourable Supreme Court in
the case of State of Madhya Pradesh v. Hiralal and others (1996) 7 SCC
523, it is observed and held that when notice/letters are sent and rather
received back ‘not available in the house’, ‘house locked’ or ‘shop closed’
respectively, the notices should be deemed and treated to be served on the
‘Addressee’.

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33. Be it noted that in the decision of Nasha Toys Pvt Ltd. Versus Harshad
Corporation [2002] 110 CompCas 324 Gauhati , it is held that if notices
under section 434(1)(a) of the Companies Act is received back with the
unserved remarks “addressee left’, it amounts to sufficient service if the
notice was sent to the registered office.

34. Before the Learned Adjudicating Authority, the

Respondent/Corporate Debtor, according to the Appellant was regularly
appearing and hence the non-serving of notice to the
Respondent/Corporate Debtor at the extreme cannot be put against the
Appellant/Operational Creditor in the considered opinion of this Court.

35. In view of the fact that service of notice under section 8 of the ‘The
Insolvency and Bankruptcy Code 2016’, Respondent/Company at its official
e-mail ID as available in the web site portal is a valid service, it is held by
this Tribunal to be a valid and proper service upon the
Respondent/Corporate Debtor, in the eye of law.

36. At this stage, this Tribunal relevantly points out the definition under
Section 3(10) of the Code which speaks of ‘Financial Creditor’ meaning in
person to whom a debt is owed and includes a ‘Financial Creditor’,
‘Operational Creditor’, ‘Secured Creditor’, ‘Unsecured Creditor’ and a
‘Decree-Holder’.

Section 3(11) of the Code rules to ‘Debt’ meaning a liability or obligation in

respect of a claim which is due from any person and includes a ‘Financial
Debt’, ‘Operational Debt’.

Section 3(12) of The Insolvency and Bankruptcy Code 2016 defines ‘default’
meaning non-payment of debt when whole or any part or instalment of any
amount of debt has become due and become payable and is not (paid) by
the debtor or the Corporate Debtor, as the case may be.

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Section 3(23) of The Insolvency and Bankruptcy Code 2016 says ‘person’
includes

a) an individual;
b) a Hindu Undivided Family;
c) a Company;
d) a trust;
e) a partnership;
f) a limited liability partnership; and
g) any other entity established under a statute;
and includes a president outside India;

Section 5(20) of The Insolvency and Bankruptcy Code 2016 defines an

‘Operational Creditor’ meaning a person to whom an Operational debt is
owed and includes any person to whom such debt has been legally assigned
or transferred.

Section 5(21) of The Insolvency and Bankruptcy Code 2016 pertains to an

‘Operational Debt’ meaning a claim in respect of the provision of goods or
services including employment or a debt in respect of the [payment] of
dues arising under any law for the time being in force and payable to the
Central Government, any State Government or any legal authority.

Section 5(7) of The Insolvency and Bankruptcy Code 2016 deals with
Financial Creditor means any person to whom a financial debt is owed and
includes a person to whom such has been legally assigned or transferred
to.

37. It is significant to point out that Section 9(3)(c) of the Code is a

procedural provision, which is directory in the nature, seen in the light of
‘Adjudicating Authority’ Rules read with Code clearly demonstrate.

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38. In fact, the Insolvency Proceedings can be ignited against the
Corporate Debtor, if a default is committed in payment of the debt that is
due and becomes payable by the Corporate Debtor.
39. Decree:
For a fuller and better appreciation of the controversies centering
around the present case, it is worthwhile, for this Tribunal to refer to the
‘Consent Decree’ dated 25.10.2018 in C.S.No.6912 of 2016 passed by the
ADL.District Judge/03-South East/Saket Court Complex, New Delhi, in the
matter of Ashok Agarwal Proprietor of M/s Shree Marketing ,G-349, Preet
Vihar, Vikas Marg, New Delhi 110002 –Plaintiff (Appellant) V. Amitex
Polymers Private Limited,17 Tribhuan Complex Ishwar Nagar, Friends
Colony, New Delhi 110065 -1st defendant (Respondent) which runs as
under :
“It is ordered that suit of the present matter has been settled
between the plaintiff and the defendant at the total amount of
Rs.7,50,000 (Rupees Seven Lac Fifty Thousands only) to be paid
in monthly instalments as per the settlement agreement dated
16.08.2018, Ex.P-1 starting from 20.09.2018 (total six months).
In case of default of any installment, a penalty of Rs.5000 per
installment per month shall be paid by the defendants from
15.11.2018 onwards. Statement of counsel for the plaintiff and
AR of defendant are recorded separately. Court fee be refunded
to the plaintiff as per Section 16A of the Court Fee Act.’

40. In the instant case, the Appellant/Petitioner has come out with a plea
that the Respondent/Corporate Debtor had admitted to pay a sum of
Rs.7,50,000/- towards the Principal sum in respect of goods received by
the Respondent/Corporate Debtor, as per ‘Settlement Agreement’ dated
16.8.2018 etc. Furthermore, Rs.1,35,000/- towards ‘Penalty’ of
Rs.5,000/- per instalment per month as per ‘Undertaking’ given by the

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Respondent/Corporate Debtor and the same was recorded by the Learned
Additional District Judge, Saket Court, New Delhi in Civil Suit No.6912 of
2016 in the case of Ashok Agarwal v. Amitex Polymers
Pvt.Ltd.(Respondent/Corporrate Debtor) and Another. Therefore the total
dues claimed by the Appellant/Operational Creditor as per ‘Consent Decree’
passed by the Competent Court of law is Rs.8,85,000/- as seen from Part
IV of Application wherein the “Particulars of Operational Debt’ were
mentioned.
41. Even a ‘person’ who is a proprietor of a firm is an ‘Individual’ as per
Section 3(23) inclusive definition of The Insolvency and Bankruptcy Code
2016, in the considered opinion of this Court. As such, the Appellant is not
incompetent in his ‘Individual’ capacity as proprietor of M/s Shree
Marketing, New Delhi.

42. This Tribunal aptly points out the decision in Punjab National Bank
Dharamshala V. Premsagar Chaudhary and others reported in AIR 1996
Himachal Pradesh at P 86, wherein it is observed and held that it can be
safely inferred that in terms of compromise, the ‘Judgement Debtor’/was
to make payment of those it can be presumed that there is a subsequent
order directing the payment of money is embodied in terms of compromise
and thus, the execution is well within time. It may not be out of place to
clarify here that as per terms of compromise, the ‘Joint Debtor’- 3rd
objector, was to pay Rs.30,000/- which in fact actually paid and was to
further keeping on paying Rs.3,000/- p.m commencing from 7.3.1989 and
the starting point of limitation would be when the default committed in the
payment of such payment in terms of compromise.

43. Considering the fact that the Appellant/Operational Creditor in the

Company petition in IB 185/ND/2019 before the National Company Law
Tribunal, the Principal Bench had come out with a plea that the
Respondent/Corporate Debtor owes a sum of Rs.8,85,000/- and for which

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a demand notice dated 11.3.2019 was issued to the Respondent/Corporate
Debtor for which no reply was issued by the Respondent/Corporate Debtor
to the Appellant/Operational Creditor and this Tribunal taking note of the
prime fact that the Appellant/Operational Creditor is a ‘Decree Holder’ as
per the ‘Consent Decree’ passed on 25.10.2018 in Civil Suit No.6912 of
2016 by the Learned Additional District Judge, Saket Court, New Delhi, this
Court comes to an irresistible and inescapable conclusion that a ‘Decree
Holder’ is no way excluded from the purview of the ambit of the term
‘Operational Creditor’ as per Section 5(20) of The Insolvency and
Bankruptcy Code 2016 and the contra view taken by the ‘Adjudicating
Authority’ in the impugned order is clearly held by this Tribunal as an
unsustainable one in the eye of Law.

44. In the present case, the Appellant/Operational Creditor supplied the

goods based on invoices beginning from 19.2.2011 to 26.3.2011 amounting
in all to a sum of Rs.7,28,072/- and in due discharge of legal liability/lawful
debt towards payment of dues/Invoices by the Respondent/Corporate
Debtor had paid a sum of Rs.1,10,221/- as mentioned by the
Appellant/Operational Creditor in the Application in Part IV under caption
of ‘Particulars of Operational Debt’.

45. In totality, a sum of Rs.7,50,000/- being the due amount towards

‘Principal’ and Rs.1,35,000/- towards ‘Penalty’ is equal to Rs.8,85,000/-
was claimed by the Appellant/Operational Creditor for the goods supplied
by the Appellant/Operational Creditor through the various Invoices as
stated supra, it is bounden duty of the Respondent/Corporate Debtor to
pay the due amount in issue.

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46. The other aspect of the matter to be significantly pointed out is that
the Respondent/Corporate Debtor through its purchase orders had offered
to make payment to the Appellant/Corporate Debtor within a period of 45-
60 days and in fact the payment was agreed to be made within 30 days
from the date of Invoice. As a matter of fact, the Respondent/Corporate
Debtor had not made any payment in respect of the due amount even after
the ‘Consent Decree’ passed by the Competent Court of law.

47. Section 3(10) of The Insolvency and Bankruptcy Code 2016 defines
‘Creditor’ and even in the said definition a ‘Decree Holder’ cannot be
excluded to file an Application under the Code. Going by the definition 3(10)
of ‘Creditor’, it includes ‘Financial Creditor’, ‘Operational Creditor’.

48. Be that as it may, in the light of detailed qualitative and quantitative

discussions and also this Tribunal keeping in mind the entire conspectus of
the attendant facts and circumstances of the instant case in a holistic
fashion comes to a resultant conclusion that the impugned order passed by
the National Company Law Tribunal, New Delhi Bench dated 8.6.2020 as
an incorrect and invalid one in the eye of law. Viewed in that perspective,
this Tribunal to prevent aberrational justice and to promote substantial
cause of justice set aside the impugned order in IB 1895 dated 8.6.2020
passed by the National Company Law Tribunal, New Delhi Bench.
Resultantly the Appeal succeeds.

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DISPOSITION :

49. In fine, the instant Appeal is allowed. The impugned order in IB 1895
dated 8.6.2020 passed by the National Company Law Tribunal, New Delhi
Bench is set aside by this Tribunal for the reasons assigned in the instant
Appeal. No costs. I.A.1622 of 2019 (seeking exemption to file certified
copy of the impugned order dated 8.6.2020) is closed. However, the
Appellant/Operational Creditor is directed to file certified copy of the
impugned order dated 8.6.2020 in IB No.1895 by the ‘Adjudicating
Authority’(National Company Law Tribunal, New Delhi Bench) within 2
weeks from Today.

[Justice Venugopal M]
Member(Judicial)

[Kanthi Narahari]
Member (Technical)

5th February, 2021

HR

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