2017 (8) TMI 1537 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - appointment of an IRP - section 9 of the Insolvency Bankruptcy Code, 2016 - doctrine of approbate and reprobate - HELD THAT - In the present matter not only the applicant but equally the respondent/corporate debtor company in the present petition as well as in the petition before the Hon'ble Chandigarh Bench have made allegation, counter allegation against each other raising dispute on legality, enforceability and validity of such settlement agreement dated 15th March, 2016 along with an original service agreement dated 8th July, 2010. Therefore, by taking into consideration these allegations which appears to be disputed question of fact. We feel it is not proper for this court within scope of I B Code to explore the truth behind such agreements as in our humble view such disputed facts need to be ascertained by issue involved therein can be dealt with only by a competent civil court. The agreement dated 15th March, 2016 cannot be enforced nor can be acted upon through filing of the present petition under the I B Code before this Tribunal to initiate Corporate Insolvency Resolution Process against the respondent company because of the applicant himself in a parallel proceeding before a co-ordinate Bench of this Tribunal has very much disputed the contents of such agreement, free will and meeting of free minds before executing such deed and has already opted to revert back to his original contract i.e. service agreement dated 08.07.2010. Hence, in our view it is no longer open to him to fall back again seeking enforcement of the disputed agreement dated 15th March, 2016 for the purpose of initiation of the CIRP against the present corporate debtor as both of the parties to the present petition have made allegations, counter allegation against each other for making undue influence, coercion etc. Such issue needs to be agitated before a competent court of law and not before us under the I B Code. Further, we are constrained to observe such the approach of the applicant in this petition, it is not improper, so, even then it cannot be said as fair to make parallel approach in both courts by keeping in dark with each other. Such action on the part of applicant is deprecated - the present application is liable to be rejected on the ground alone, even otherwise it is found maintainable before this Bench. The present petition is not found complete and maintainable on the basis of such doctrine of approbate and reprobate - the present petition is liable to be rejected on the question of maintainability under the I B Code before this Bench of the Tribunal.

Summary

Issues Involved:
1. Default in payment of operational debt.
2. Demand notice and non-receipt of payment.
3. Non-receipt of notice of dispute.
4. Default in payment under the final settlement agreement.
5. Allegation of suppression of facts and parallel proceedings.
6. Non-joinder of necessary party.
7. Dispute over the validity and enforceability of agreements.
8. Allegations of fraud, undue influence, and coercion.
9. Disputed facts regarding the agreements.
10. Applicability of the doctrine of "Approbate and Reprobate."
11. Procedural defects and maintainability of the petition.

Issue-wise Detailed Analysis:

1. Default in Payment of Operational Debt:
The operational creditor alleged that the corporate debtor defaulted on the payment of ?59,20,49,559/- as consultancy fees under a final settlement and consultancy agreement dated 15th March 2016. The operational creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.

2. Demand Notice and Non-receipt of Payment:
The operational creditor issued a demand notice dated 21st December 2016 to the corporate debtor, which remained unpaid. The creditor provided evidence of non-receipt of payment through bank statements.

3. Non-receipt of Notice of Dispute:
The creditor claimed that no notice of dispute was received from the corporate debtor within the stipulated period of ten days from the receipt of the statutory demand notice.

4. Default in Payment under the Final Settlement Agreement:
The creditor emphasized that the corporate debtor was obligated to pay the consultancy fee under the tripartite final settlement agreement dated 15th March 2016, which replaced the original agreement dated 8th July 2010. The corporate debtor allegedly defaulted on this payment.

5. Allegation of Suppression of Facts and Parallel Proceedings:
The corporate debtor argued that the creditor suppressed material facts about the pendency of a similar petition before the NCLT, Chandigarh, based on the same set of facts and agreements. This petition was disposed of by the Chandigarh Bench by order dated 8th May 2017. The corporate debtor accused the creditor of misleading the tribunal to obtain an order.

6. Non-joinder of Necessary Party:
The corporate debtor contended that the application was liable to be dismissed for non-joinder of M/s Isolux Corsan India Engineering and Construction Pvt. Ltd., a necessary party to the proceedings.

7. Dispute over the Validity and Enforceability of Agreements:
The corporate debtor disputed the validity and enforceability of the final settlement agreement dated 15th March 2016, alleging that it was signed under coercion and undue influence. The debtor argued that the creditor himself had earlier claimed the agreement was fraudulent and void.

8. Allegations of Fraud, Undue Influence, and Coercion:
Both parties accused each other of fraud, undue influence, and coercion. The corporate debtor claimed the creditor coerced it into signing the final settlement agreement, while the creditor alleged that the agreement was induced fraudulently by the debtor.

9. Disputed Facts Regarding the Agreements:
The tribunal noted that the allegations and counter-allegations raised disputed facts about the agreements' validity, enforceability, and the circumstances under which they were signed. The tribunal opined that such disputed facts should be ascertained by a competent civil court.

10. Applicability of the Doctrine of "Approbate and Reprobate":
The tribunal relied on the doctrine of "Approbate and Reprobate," which prevents a party from accepting and rejecting the same instrument. The tribunal cited the Supreme Court's decision in R.N. Gosain v. Yashpal Dhir, which held that a party cannot claim a transaction is valid to obtain an advantage and then claim it is void for another advantage.

11. Procedural Defects and Maintainability of the Petition:
The tribunal found procedural defects in the petition and noted that the creditor did not fairly disclose the parallel proceedings. The tribunal emphasized that the I&B Code is not intended to resolve disputed facts and that such disputes should be addressed by a competent civil court.

Conclusion:
The tribunal dismissed the petition, finding it not maintainable under the I&B Code due to the existence of disputed facts, the doctrine of "Approbate and Reprobate," and procedural defects. The tribunal also imposed a cost of ?25,000/- on the creditor, payable to the corporate debtor. The tribunal clarified that its observations were not conclusive findings on the agreements' validity, which should be determined by a competent civil court.