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2018 (5) TMI 1992 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - the Corporate Debtor is vexed for the second time - Existence of dispute or not - HELD THAT - The Operational Creditor had already approached Hon'ble High Court against the Corporate Debtor for recovery of some dues by way of company petition. The company petition was dismissed and the issue is settled finally and substantially. Now, it cannot be agitated before this Tribunal because if the insolvency resolution process is failed in this case, the ultimate result would be liquidation of the company (Corporate Debtor) and that issue has already been settled by the Hon'ble High Court - The Corporate Debtor is being vexed for second time over the same cause of action, i.e. for non-payment of dues. It is against the public policy and hit by broad provisions of principles of res judicata as enumerated under section 11 of Code of Civil Procedure, 1908. Existence of dispute or not - HELD THAT - It is not in dispute that the Operational Creditor had received reply to his demand notice, wherein the Corporate Debtor has raised the issue about the supply of sub-standard quality of materials - the dispute is already raised before initiation of this proceeding and hence we are not inclined to admit the petition. Both the points answered in negative - application rejected.
Issues Involved:
1. Whether the debt claimed is legally recoverable. 2. Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is maintainable. Issue-Wise Detailed Analysis: 1. Whether the debt claimed is legally recoverable: The Operational Creditor supplied various goods to the Corporate Debtor between 2009 and 2012, accumulating dues of ?44,73,178. Despite repeated demands, the Corporate Debtor did not clear the outstanding amount. The Operational Creditor filed a Company Petition in the High Court at Calcutta under Section 430(e) of the Companies Act, 1956, seeking to wind up the Corporate Debtor due to its inability to pay the dues. The High Court dismissed the petition, stating, "If a triable issue is raised the company cannot be directed to be wound up. The company should have a fair chance to defend its claim. The petitioner has clearly stated in paragraph 10 of the petition that last payment was received on 11th May, 2012 and thereafter there was no acknowledgement of any liability. The remedy appears to be barred by limitation." The Operational Creditor appealed to the Division Bench of the Calcutta High Court, which also dismissed the appeal, holding that the Company Petition was "ex facie barred by limitation." The Supreme Court dismissed the Special Leave Petition (SLP) against this order, stating, "we find no ground to interfere. The Special Leave Petition is dismissed." The Tribunal noted that the Operational Creditor, having exhausted its remedies up to the Supreme Court, approached the Tribunal under Section 9 of the I&B Code, 2016. The Tribunal acknowledged that the Corporate Debtor had replied to the statutory notice under Section 8 of the I&B Code, claiming the materials supplied were of inferior quality and the debt was time-barred. The Tribunal did not delve into the quality of materials supplied, as it required detailed inquiry and investigation, which was beyond the scope of summary proceedings. However, it emphasized that the High Court had already rejected the claim of recovery on the grounds of the debt being time-barred, which was a significant factor in the Tribunal's decision. 2. Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is maintainable: The Tribunal considered the argument that the debt shown in the balance sheet of the Corporate Debtor constituted an admission of the debt. The Operational Creditor's counsel argued that the provisions of the law of limitations were not applicable to the proceedings before the Tribunal, citing rulings and reports, including the NCLT, Delhi Bench, and the Insolvency Law Committee's report. However, the Tribunal held that the acknowledgment of debt in the balance sheet was not applicable in this case, as the facts differed from the cited rulings. The Tribunal emphasized that the issue of limitation had been adequately argued before the High Court, which had rejected the claim. The Tribunal also noted that the provisions of the law of limitation might not apply to insolvency proceedings, but this did not mean that a time-barred debt could be recovered through the Tribunal. The Tribunal's primary role was to resolve insolvency, not to facilitate the recovery of time-barred debts. Furthermore, the Tribunal highlighted that the Operational Creditor had already approached the High Court for recovery of the dues, and the issue had been settled. The Tribunal could not entertain the same cause of action again, as it would violate the principles of res judicata under Section 11 of the Code of Civil Procedure, 1908. Additionally, the Tribunal pointed out that the Corporate Debtor had raised a dispute regarding the quality of goods supplied before the initiation of the insolvency resolution process. As per Section 9(5)(ii) of the I&B Code, 2016, the Adjudicating Authority must reject the application if a dispute is raised prior to the initiation of the insolvency resolution process. Conclusion: Based on the above reasons, the Tribunal answered both issues in the negative and dismissed the application filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016. The Tribunal directed the Registry to communicate the order to both parties and provide urgent certified copies if requested.
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