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NCLAT & IBC Code - Demand Notice From Operational Creditor Mandatory

In Lepton Projects (P) Ltd. v. Sanghvi Movers Ltd., A two-member bench of the NCLAT allowed an appeal filed against the order passed by the National Company Law Tribunal whereunder application under Section 9 of Insolvency and Bankruptcy Code 2016, preferred by the respondent was admitted and Insolvency Resolution Professional was appointed.

The appeal was filed by the Director of Lepton Projects (P) Ltd. which was the ‘Corporate Debtor’. The respondent Sanghvi Movers Ltd. was the ‘Operational Creditor’. An application was filed by the Operational Creditor under Section 9 of the I&B Code, after the admission of which ‘Moratorium’ was passed and ‘Insolvency Resolution Professional’ was appointed by NCLT in terms of the Code. However, the appellant challenged the said order of NCLT contending that no notice in terms of Section 8(1) of the Code was given to the appellant before such order was passed.

NCLAT found favour with the contention of the appellant and the order was set aside as illegal.

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