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NCLAT-Duty of Operational Creditor to provide correct address of Corporate Debtor under Insolvency Code

In M/s Bhash Software Labs Pvt. Ltd. v. M/s Mobme Wireless Solutions Ltd., the appellant challenged the order passed by NCLT admitting the application preferred by the respondent firm under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) for initiation of Corporate Insolvency Resolution Process against the appellant. The Appellant alleged violation of rules of natural justice as no notice was served on the appellant under Section 8 of the I&B Code or under Rule 5(3) of the I&B (Application to Adjudicating Authority) Rules, 2016. It was also contended that since there existed a dispute as to the debt amount, the application under S. 9 was not maintainable.

The NCLAT perused the impugned order and found that the notice sent by the respondent was not served on the appellant. The Adjudicating Authority, instead of directing the respondents to issue fresh notice on correct and present address, observed, “However, the petition was sent to proper address”. 

It was held that it was the duty of the “Operational Creditor” to provide the correct and present address of the ‘Corporate Debtor” before preferring any application under Section 9 of the I&B Code and the impugned order could not be upheld having passed in violation of rules of natural justice.

As regards the existing dispute with regard to the debt amount, the Tribunal referred to an earlier case Company Appeal (AT) (Insol.) No. 6 of 2017, for interpretation of the meaning of “dispute” and “existence of dispute, if any” and held that, there being an “existence of dispute”, the petition under Section 9 preferred by respondent was not maintainable.

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