MACQUARIE BANK LIMITED versus SHILPI CABLE TECHNOLOGIES LTD.

Citation: [2017] 13 S.C.R. 751 · Decided: 15-12-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

Cited by 7 judgment(s) · cites 10 · see the full citation network in Lexace

Judgment (excerpt)

[2017] 13 S.C.R. 751 
MACQUARIE BANK LIMITED 
v. 
SHILPI CABLE TECHNOLOGIES LTD. 
(Civi!Appea1No.15135of2017) 
DECEMBER 15,2017 
[R. F. NARIMAN AND NAVIN SINHA, JJ.] 
Insolvency and Bankntptcy Code, 2016: 
s.9(3)(c) - Provision in relation to operational debt, contained 
A 
B 
in s.9(3)(c) of the Code if mandatory or directory - Held: Sub-
C 
clause (c) of s.9(3) makes it clear that a copy of the certificate from 
the financial institution maintaining accounts of the operational 
creditor confirming that .there is no payment of an unpaid operational 
debt by the corporate debtor is certainly not a condition precedent 
to trigger the insolvency process under the code - The expression D 
"confirming" makes it clear that this is on~y a piece of evidence, 
albeit a very important piece of evidence, which only "confirms" 
that there is no payment of an unpaid operational debt - This 
becomes clearer when one goes to sub-clause (d) of s.9(3) which 
requires such other information as may be specified has also to be 
furnished along with the application - Read with the Code, the E 
Adjudicatory Authority Rules form a self-contained code being 
contemporanea expositio by the Executive which is charged with 
carrying out the provisions of the Code - The tnie constntction of 
s. 9(3)(c) is that it is a procedural provision, which is directory in 
nature, as the Adjudicatory Authority Rules read with the Code 
F 
clearly demonstrate - The Insolvency and Bankntptcy (Application 
to Adjudicating Authority) Rules, 2016 - r. 6 and Form 5 - Doctrines/ 
Principles - Principle of Contemporanea expositio. 
ss.8 and 9 - Demand notice of an unpaid operational debt 
issued by a lawyer on behalf of the operational creditor - Propriety 
of - Held: Proper - s.8 of the Code speaks of an operational creditor G 
delivering a demand notice -Intention of Legislature was not to 
restrict such demand notite being sent by the operational creditor 
himself. otherwise the expression used would perhaps have been 
"issued" and not "delivered" - Delivery, therefore, would postulate 
H 
751 
752 
SUPREME COURT REPORTS 
[2017) 13 S.C.R. 
A 
that such notice could be made by an authorized agent - Further, 
Form of demand notice and Form of application by operational 
creditor to initiate corporate insolvency resolution process, i.e. 
Forms 3 and 5 require such authorized agent to state his "position 
with" or "in relation" to the operational creditor - Expression "in 
B 
relation to" is a very wide expression, which specifically includes a 
position which is outside or indirectly related to the operational 
creditor - Both expressions "authorize to act" and "position in 
relation to the operational creditor" go to show that an authorized 
agent or a lawyer acting on behalf of his client is included within 
the aforesaid expression - Further, a conjoint reading of s.30 of 
C the Advocates Act and ss.8, and 9 of the Code together with 
Adjudicatory Authority Rules and Forms thereunder would yield 
result that a notice sent on behalf of the operational creditor by a 
lawyer would be in order - Advocates Act, 1961 - s.30 -
Interpretation of Statutes - Harmonious Construction - The 
0 
Insolvency and Bankruptcy (Application to Adjudicating Authority) 
Rules, 2016 - Forms 3 and 5. 
E 
F 
Allowing the appeals, the Court 
HELD: Whether. in relation to an operational debt, the 
provision contained in Section 9(3){c) of the Code is mandatory. 
1.1 From sub-clause (c) of Section 9(3) of the Insolvency 
and Bankruptcy Code, 2016, it is clear that a copy of the certificate 
from the financial institution maintaining accounts of the 
operational creditor confirming that there is no payment of an 
unpaid operational debt by the corporate debtor is certainly not a 
condition precedent to triggering the insolvency process under 
the Code. The expression "confirming" makes it clear that this 
is only a piece of evidence, albeit a very important piece of 
evidence, which only "confirms" that there is no payment of an 
unpaid operational debt. This becomes clearer when one goes 
to sub-clause (d) of Section 9(3) which requires such other 
G information as may be specified has also to be furnished along 
with the application. [Para 14] [774-F-G] 
H 
1.2 When Form 5 under Rule 6 of the Insolvency and 
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 
is perused, it becomes clear that Part V thereof speaks of 
MACQUARIE BANK LIMITED v. SHILPI CABLE 
753 
TECHNOLOGIES

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