Can Joint/ Collective application be made by Operational Creditors for CIRP?
January 15, 2019 by Ridhima Chachra
In Uttam Galwa Steel Limited v DF Deutsche Forfait Ag. Limited., two operational creditors (DF Deutsche Forfait AG and Misr Bank Europe Gmbh) filed a joint application against the Corporate Debtor for initiation of CIRP.
The NCLT Bench held that Section 8 and Section 9 of Insolvency and Bankruptcy Code, 2016, state that notice to the corporate debtor against the default has to be served individually by an operational creditor. The presence of the word “an” in section 8 makes it clear that individual operational creditor has to send notice individually. Also, Section 9 makes it clear that if the operational creditor does not receive any reply or proof of existence of any dispute from the corporate debtor, he individually can file for initiation of corporate insolvency resolution process.
Our view is that it is not practical for two or more operational creditors to file for a joint application. Such joint application under Section 9 is not maintainable.
In Ishwar Kandelwal v. Amrapali Infrastucture Private Limited(C.P. no (I.B.)21/PB/2017, Order dated 22/03/2017), the applicant claimed debts from 11 different Companies under the same group as mentioned in the petition, however the application was made against just one Company. The application was dismissed by the Bench as the amount of debt claimed by the applicant should correspond to the debt owed by the Corporate Debtor named in the application and not otherwise. The fact that debt is owed by Companies belonging to the same group doesn’t justify the application made against just one of the Companies.
(However, as per Section 7 of the IBC Code, the financial creditors may either himself or jointly with other financial creditors make an application before the Adjudicating authority for initiation of CIRP. But in the case of the Operational Creditor due to the process of issue of demand notice u/s 8 and other above mentioned reasons joint application can’t be filed by the operational creditors.)