2017 (3) TMI 1627 - Tri - Companies Law

Corporate Insolvency Resolution process - existence of eligible debt - Held that - Tribunal cannot be misused to settle and determine the cases of disputed claims. In the instant case, as stated supra, there is no prima facie evidence to show that the petitioner has lent money to the Company with a promise to repay. When the respondent has filed adequate proof that there was no due to the petitioner and on the contrary, she is due to the Company, the Tribunal cannot enter into the disputed questions of fact, which can be resolved through process of recording evidence by a competent Civil Court. In a summary proceedings prescribed under IBC 2016, Tribunal cannot entertain a litigation where basic issues liKe Financial Creditor, default etc are in dispute. We are of the considered view that the petitioner do not come under the definition of Financial Creditor and she failed to satisfy the Tribunal about requisite ingredients of section 7 of IBC 2016 to claim any relief. The petitioner miserably failed to make out even a prima facie case to entertain this petition and she has not come to the Tribunal with clean hands as ought to be in accordance with law. Therefore, the petitioner is not entitled for any relief as sought for. It is not a fit case to initiate Insolvency process as prayed for by the petitioner/applicant.

Issues Involved:

1. Whether the petitioner/applicant qualifies as a Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Whether the petitioner is bona fide in claiming the relief.
3. What relief, if any, the petitioner is entitled to.

Issue-wise Detailed Analysis:

1. Whether the petitioner/applicant qualifies as a Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016:

The petitioner, Dr. B.V.S. Lakshmi, filed a petition under Section 7 of the IBC, 2016, seeking the initiation of a Corporate Insolvency Resolution Process (CIRP) against the respondent company, Geometrix Laser Solutions Private Limited. The petitioner claimed an outstanding debt of ?91,47,864 along with interest and legal costs. The petitioner supported her claim with the company’s annual audited financial statements for the years 2014 to 2016.

The respondent denied the claim, arguing that the petitioner was not a financial creditor and that the alleged debt was disputed. The respondent contended that the petitioner had manipulated records and suppressed material facts, including her status as a former director and promoter of the company. The respondent also cited a pending criminal complaint against the petitioner for forgery and other illegal activities.

The Tribunal examined the documents provided by the petitioner, including balance sheets and ledgers, which showed discrepancies in the amounts claimed. The Tribunal noted that the petitioner had filed a winding-up petition earlier, which was withdrawn, and subsequently filed the present petition. The Tribunal found that the petitioner had not provided prima facie evidence of lending money to the company with a promise of repayment. The Tribunal concluded that the petitioner did not qualify as a financial creditor under Section 7 of the IBC, 2016.

2. Whether the petitioner is bona fide in claiming the relief:

The petitioner argued that the respondent company had failed to repay the due amount and had denied the claim in their legal notice. The petitioner relied on various judgments to support her claim that the debt was undisputed and that the company’s ability to pay was irrelevant if it chose not to pay a particular debt.

The respondent countered that the petitioner had not come to the Tribunal with clean hands and had suppressed material facts. The respondent highlighted the petitioner’s involvement in financial transactions with the company and her status as a former director. The respondent also pointed out that the petitioner had filed a winding-up petition earlier and had withdrawn it for reasons unknown. The respondent argued that the petitioner was using legal proceedings to harass the company.

The Tribunal found that the petitioner had manipulated records and had not disclosed her status as a former director. The Tribunal also noted the pending criminal complaint against the petitioner and the disputed nature of the alleged debt. The Tribunal concluded that the petitioner was not bona fide in claiming the relief.

3. What relief, if any, the petitioner is entitled to:

The Tribunal observed that bankruptcy forums are summary proceedings and cannot delve into complex disputes over debt or claims, which fall under the jurisdiction of civil courts. The Tribunal referred to various judgments, including those of the Supreme Court, which emphasized that winding-up petitions should not be used as a means to enforce payment of disputed debts.

The Tribunal found that the petitioner had failed to establish a prima facie case and had not satisfied the requisite ingredients of Section 7 of the IBC, 2016. The Tribunal noted that the petitioner had not come to the Tribunal with clean hands and had resorted to legal proceedings conveniently.

In conclusion, the Tribunal dismissed the petition CP(IB)/19/7/HDB/2017, stating that it was not a fit case to initiate the insolvency process. The Tribunal also observed that the petitioner could pursue any other remedy available under the law.

Summary:

The National Company Law Tribunal, Hyderabad, dismissed the petition filed by Dr. B.V.S. Lakshmi under Section 7 of the IBC, 2016, seeking the initiation of a Corporate Insolvency Resolution Process against Geometrix Laser Solutions Private Limited. The Tribunal found that the petitioner did not qualify as a financial creditor and had not come to the Tribunal with clean hands. The Tribunal concluded that the petitioner had failed to establish a prima facie case and that the alleged debt was disputed. The petition was dismissed with no order as to costs, and the petitioner was advised to pursue any other remedy available under the law.

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