2018 (10) TMI 1753 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of dispute or not - section 7 of the Insolvency and Bankruptcy Code, 2016 r/w rule 4 of Insolvency Bankruptcy (Application to Adjudicating Authority ) Rules, 2016 - HELD THAT - The Tribunal observes that there are disputes between the petitioners and the Respondent and there are proceedings against them in various forums in matters relating to the present petition - the Tribunal observes that, in the statements of accounts, the M/S. Colorhomes, the sole proprietorship concern and M/S. Colorhome Developers Pvt Ltd, the Respondent herein is used interchangeably. There is no segregation of the amounts paid by both the undertakings from which the liability can be drawn clearly. The Tribunal observes that the petition is liable to be dismissed under Section 5(6) and Section 5(6)(a) of the IBC, 2016 as there is a civil suit pending and there exists a dispute in the amount of debt between both the parties and also under section 7(5)(b) of the IBC, 2016 for being incomplete in details. Petition dismissed.

Summary

Issues:
Company petition under section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor.

Analysis:
1. The Corporate Debtor, a private limited Company, was incorporated under the Companies Act, 1956. The petitioners, financial creditors, claimed an amount of 00.20 crores in default by the Corporate Debtor as of December 2016.

2. The Respondent argued that the sole proprietorship borrowed funds from the petitioners, not the respondent company. The respondent mortgaged property and executed agreements for sale as security. Disputes arose over repayment demands and legal actions ensued.

3. The Respondent detailed the transactions involving borrowing from the petitioners and family members, leading to disputes, legal notices, and criminal complaints. The Respondent highlighted multiple criminal complaints and arrests related to charging of exorbitant interest.

4. The Respondent accused the petitioners of suppressing facts and filing an incomplete application under Section 7 of the IBC, knowing the borrowed amount had been repaid. The Respondent alleged false claims and omitted details in the application.

5. The petitioners contended that the Respondent had borrowed from them and filed statements of accounts showing outstanding amounts. Discrepancies were noted in the repayment claims made by the Respondent for the amounts borrowed.

6. The petitioners argued against the Respondent's attempts to combine transactions with other parties and highlighted inconsistencies in legal notices, civil suits, and criminal complaints filed by the Respondent regarding the borrowed amounts.

7. The Tribunal observed disputes and proceedings against the parties in various forums. It noted the interchangeability of the names of the sole proprietorship and the respondent company in the statements of accounts, leading to a lack of clarity in liability segregation.

8. Consequently, the Tribunal dismissed the petition under Section 5(6) and Section 5(6)(a) of the IBC, 2016 due to pending civil suits and disputes over the debt amount. The petition was also found incomplete under section 7(5)(b) of the IBC, 2016. The dismissal was without costs.