2017 (12) TMI 1652 - AT - Insolvency and Bankruptcy

Maintainability of petition under Section 7 of the I&B Code - mismatch of figures and dates of default - Held that - In the present case, the Respondents have explained the difference between the claim amount as made on 19th October, 2015 and as on the date of filing in the year 2017, which has been calculated, taking into consideration the interest payable in the meantime and the amount, if any, recovered under other proceedings. Apart from the aforesaid fact, the mere mismatch of the figures will ipso facto not invalidate the order initiating Corporate Insolvency Resolution Process under Section 7 of the I&B Code . It was held in the case of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr 2017 (9) TMI 58 - SUPREME COURT OF INDIA , that in case a Corporate Debtor commits a default of a financial debt, the Adjudicating Authority has merely to see the records of the information utility or other evidence produced by the Financial Creditor to satisfy itself that a default has occurred. The Hon ble Supreme Court further held that it is of no matter that the debt is disputed so long as the debt is due i.e payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. - In the present case, the Appellant raised dispute and pleaded mismatch of debt amount, but it has not been disputed that some debt is due and is payable to the Financial Creditor and the Corporate Debtor has defaulted in making such payment. No interference is called for against the impugned order dated 4th September, 2017 passed in Company Petition No. 551/(IB)/2017 - Appeal dismissed - decided against appellant.

Summary

Issues:
Mismatch of figures and dates of default in the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The appeal was filed against the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the Financial Creditors. The main ground of appeal was the alleged mismatch of figures and dates of default in the application. The Appellant contended that the figures presented by the Respondents did not align, raising doubts about the accuracy of the amounts claimed. Specifically, discrepancies were highlighted in the amounts mentioned by the State Bank of India and the Central Bank of India regarding the outstanding dues. The Appellant argued that the figures provided by the Respondents did not match the actual amounts owed, as evidenced by the statements of accounts submitted.

The Respondents explained the discrepancies by detailing the credit facilities extended to the Corporate Debtor and the subsequent defaults leading to the initiation of insolvency proceedings. They clarified the calculations of the dues, considering interest accrual and recoveries made through other legal actions. The Respondents cited ongoing recovery proceedings before the Debt Recovery Tribunal as further evidence of the outstanding debts. Additionally, the Respondents referenced a Supreme Court judgment emphasizing that the existence of a dispute over the debt does not invalidate the default if the debt is due and payable.

The Appellant relied on a previous decision of the Appellate Tribunal where an order initiating Corporate Insolvency Resolution Process was set aside due to a misleading claim by the Financial Creditor. However, the Tribunal distinguished this case from the precedent cited, stating that a mere mismatch of figures does not automatically invalidate the initiation of insolvency proceedings. The Tribunal reiterated the Supreme Court's stance that as long as the debt is due and payable, a dispute over the exact amount does not prevent the Adjudicating Authority from proceeding with insolvency proceedings.

Ultimately, the Tribunal found no merit in the appeal and dismissed it. The judgment emphasized that the existence of a dispute regarding the debt amount does not negate the default by the Corporate Debtor. Therefore, the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code was upheld, and no interference was warranted. The appeal was dismissed, and no costs were awarded in the case.