# In the matter of Aruna Hotels Limited Vs Mr N Krishnan CA (AT) Nos. 59, 87 & 88-2017

> NCLAT judgment dated 2017-08-02. Citation: TCN-2017-NCLAT-00142. The case involves three appeals (Company Appeal (AT) (Insolvency) No. 59, 87, and 88 of 2017)…

- **Court:** NCLAT
- **Order date:** 2 Aug 2017
- **Citation:** TCN-2017-NCLAT-00142
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/aruna-hotels-limited-vs-mr-n-krishnan-ca-bdf78a6d

## Summary

### Background

The case involves three appeals (Company Appeal (AT) (Insolvency) No. 59, 87, and 88 of 2017) filed against M/s. Aruna Hotels Limited by its ex-employees, Mr. N. Krishnan, Mr. D. Ramjee, and Mr. C. Ganapathy, respectively. The ex-employees filed applications under Section 9 of the Insolvency and Bankruptcy Code, 2016, alleging non-payment of salary arrears, leading to a default of debt. The Adjudicating Authority admitted one application and directed the other two to approach the Interim Insolvency Professional. The appellant argued that the respondents did not serve proper notices under Section 8 of the I&B Code.

## Facts

M/s. Aruna Hotels Limited faced Corporate Insolvency Resolution Process (CIRP) initiated by three ex-employees: Mr. N. Krishnan, Mr. D. Ramjee, and Mr. C. Ganapathy, who claimed unpaid salary arrears. These ex-employees, acting as operational creditors, filed applications under Section 9 of the Insolvency and Bankruptcy Code, 2016. Mr. D. Ramjee claimed Rs. 2,13,65,565 towards arrears of salary and Rs. 47,03,318 towards gratuity and leave salary, totaling Rs. 2,60,68,883. Demand notices were sent by the employees on 24th March 2017. The Adjudicating Authority admitted Mr. D. Ramjee's application. The appellant, M/s. Aruna Hotels Limited, argued that the ex-employees served advocate notices under Section 8 of the I&B Code, but not in the prescribed Form-3 or Form-4.

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## Issues and analysis

### Issue 1: Whether the demand notices issued by an advocate on behalf of the operational creditors …

**Ratio:** The ratio is that the demand notice under Section 8 of the I&B Code must be issued by

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**Reasoning:** The court reasoned that Section 8 of the I&B Code, read with Rule 5 of the

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**Interpretation:** The interpretation of Section 8 and Rule 5 is strict, requiring adherence to

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**Application:** In this case, the demand notices were issued by an advocate on behalf of the

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## Parties

- **Judges:** S.J. Mukhop…; Balvinder…
- **Appellants:** M/s. Aruna Hotels…
- **Respondents:** M/s. Aruna Hotels…; N. Kris…
- **Advocates:** Mohan Par…; Gopal…; +8 more

## Timeline

- **2017-02-27 — Advocate…**: Advocate notice issued on…
- **2017-03-24 — Demand N…**: Demand notice sent by…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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