A demand notice served on Key Managerial Personnel at the registered office constitutes valid service under the Insolvency and Bankruptcy Code, ensuring procedural defects do not obstruct substantive rights.

JUDGMENT :

R. MAHADEVAN, J.

1. This appeal has been filed against the judgment and final order dated 03.10.2024 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi¹[For short, "the NCLAT"] in Comp. Appeal (AT)(Ins.) No. 247 of 2023 filed by the appellant herein. By the impugned order, the NCLAT dismissed the company appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016²[For short, “the IBC”] against the order dated 24.01.2023 passed by the Adjudicating Authority viz., National Company Law Tribunal, Cuttack Bench³[For short, “the NCLT”], which dismissed the petition bearing CP(IB) No. 45/CB/2021 filed by the appellant under Section 9 of the IBC seeking to initiate Corporate Insolvency Resolution Process⁴[For short, “the CIRP”] against the respondent herein.

2. The facts of the case as presented by the appellant, are summarized as under:

2.1. The appellant is the Operational Creditor, engaged in the business of manufacture and sale of Low Ash Metallurgical Coke⁵[For short, “the LAM Coke”]

at its plant at Kalinganagar Industrial Complex, Jaipur Road, Odisha. The respondent is the Corporate Debtor, engaged in the business of minerals and metals.

2.2. On 11.10.2019, the appellant – Operational Creditor (seller) and the respondent – Corporate Debtor (buyer) entered into a contract for sale and purchase of LAM Coke for 12,000 MT +/- 10% at seller's option subject to the terms viz., (a) the respondent agreed to purchase the LAM Coke at the price of INR 18,800 per metric tonne + GST from the appellant; (b) the delivery period was up to 10.11.2019; and (c) 100% advance payment was to be paid by the respondent through RTGS/NEFT or by opening a Letter of Credit⁶ [For short, “the LoC”] prior to dispatch of the material.

2.3. Subsequently, the said contract was amended on many occasions with respect to delivery period and date of lifting under clause 3 of the contract.

In terms of the last amendment dated 18.12.2019, the date of lifting was extended upto 10.01.2020. Accordingly, the appellant supplied LAM Coke to the respondent and payment was made.

2.4. While so, the respondent sent emails dated 12.11.2019 and 16.11.2019 to the appellant, requesting delivery of 1700 MT of LAM Coke, with an assurance that LoC would be opened shortly. Based on the same, the appellant issued delivery orders for 1700 MT of LAM Coke on credit basis, but payment was not made, and the same remained due and payable by the respondent.

2.5. In this regard, the respondent – Corporate Debtor sent an email on 25.11.2019, admitting their default and assured that the outstanding payment for 1700 MT of LAM Coke will be made at the earliest. However, no payment was made, which compelled the Operational Creditor to issue a legal notice dated 23.11.2020 to the Corporate Debtor through its Director, Sameer Singh, demanding the outstanding payment for supply of 1700 MT of LAM Coke amounting to INR 3,34,16,661.60 along with penal interest at 15% per annum.

2.6. Since no response was received from the Corporate Debtor, the Operational Creditor issued a demand notice in Form 3 on 31.03.2021 in compliance with section 8 of the IBC, to the Corporate Debtor at its registered address through its Key Managerial Personnel viz., Director, Chief Financial Officer and Manager, Commercial, demanding payment of INR 4,19,77,245.17 (which included principal amount of INR 3,34,16,661.60 and penal interest calculated till 31.03.2021) due and payable as on 30.09.2020.

2.7. Though the Corporate Debtor received the demand notice, they did not send any reply. Hence, the Operational Creditor filed an application bearing CP(IB) No. 45/CB/2021 before the NCLT under Section 9 of the IBC, to which, the respondent filed their reply on 24.09.2022 inter alia stating that they were unable to pay the outstanding amount due to circumstances beyond their control.

2.8. However, by order dated 24.01.2023, the NCLT dismissed the application observing that notice dated 31.03.2