Sanjaya Kumar Ruia Vs. Magna Opus Hospitality Pvt. Ltd. (CP No. 65/I & BP/NCLT/MB/MAH/2017) - Synopsis
Team SoOLEGAL 1 Feb 2021

In this case, Sanjaya Kumar Ruia Vs. Magna Opus Hospitality Pvt. Ltd. (CP No. 65/I & BP/NCLT/MB/MAH/2017), the Operational Creditor, that is the Chartered Accountant, rendered professional services as well as consulting services to the Corporate Debtor. The Corporate Debtor had refused to pay professional fees as well as consulting service charges to the Operational Creditor. In support of this, the plaintiff submitted documentation that he had audited the accounts of the Debtor Company, as well as a letter from the Debtor Company offering advisory services. The main issue before the National Company Law Tribunal was that, whether the term ‘Professional Service’ shall come under the definition of ‘Operational Creditor’ under Section 5(2) of Insolvency Bankruptcy Code, 2016. The Bench was of the view that, the term "Services" used in the definition of 5(21) has not been specified in accordance with the Insolvency Bankruptcy Code 2016. However, the word "Services" in the Black Law Dictionary is "the act of doing something useful to a person or company, usually for a fee." In the same way, the definition of the "Service Charge" as per the dictionary is a charge accessed for the success of the service. The Tribunal, therefore, ruled that the professional service rendered by the Chartered Accountant certainly comes under the scope of "Services" as set out in the meanings of "Operational Debt" under Section 5(21) of the Code. In the light of the documents provided by the appellant, the Tribunal held that there was a "debt" as well as a “default” as specified under Section 3(11) and Section 3 (12) of the Insolvency Bankruptcy Code 2016 respectively. As in this case, there is an existence of default hence, Section 8 of the Code will come into operation. The Bench was of the view that, while the Corporate Debtor is allowed to determine the presence of a dispute within 10 days of receipt of the Demand Notice in sub-section 8(2) of the Code, in the present case the "Operational Debtor" had not replied at all. The Tribunal had held that, in this case, Section 9 of the Code shall come into effect and the Bench had admitted the petition and also interim resolution professional was allotted. 


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