23 August 2021
Matter: Tudor India Pvt. Ltd. v. Servotech Power Systems Ltd.
Order dated: 02 July 2021.
Summary:
Tudor India Pvt. Ltd (Tudor), an operational creditor of Servotech Power Systems Ltd. (Servotech), issued a Demand Notice in Form-3 to Servotech and thereafter filed an application for initiation of Corporate Insolvency Resolution Process (CIRP) against Servotech. The issue before the NCLT, New Delhi Bench, was whether the demand notice issued by Tudor to Servotech, which was in Form-3, was valid or not. The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 provides two forms to an operational creditor for delivering a demand notice to a corporate debtor i.e., Form-3 or Form-4.
The NCLT noted that Form-3 requires filing a notice or invoice and has seven columns wherein detailed information is to be provided. On the other hand, Form-4 is a cover page of the invoice in which an operational creditor is not required to provide details. Form-3 covers instances where the debt arose against an invoice or other documents that prove the existence of the debt (ex. – for supply of goods). It also covers debts where an invoice was not generated, like the salary of an employee. It also informs the corporate debtor of its statutory right of replying to the operational creditor within ten days.
On this basis, the NCLT held that no prejudice could be caused to a party if a demand notice supported with invoices was delivered in Form-3. However, in the present case, the usage of Form-3 was held to be valid as it was annexed with an invoice.
