2018 (8) TMI 1957 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - whether the present petition filed under the IBC is to be allowed or not? - HELD THAT - It is an admitted fact that the petitioner had filed an application under the IBC which came to be withdrawn by the petitioner through their memo dated December 12 2017 since a demand notice under section 8 of the IBC was issued under the signature of an advocate. Subsequently on December 27 2017 the petitioner filed another memo seeking withdrawal of the earlier memo dated December 11 2017 - t is also a fact that in the meanwhile the respondent has invoked an arbitration clause as was made available in the agreement entered into between the parties by its notice dated December 12 2017 that is prior to the issuance of the fresh notice under section 8 of the IBC (i. e. December 14 2017). This Tribunal duly recorded the above facts in its order dated January 12 2018 and allowed the petitioner to withdraw C. P. No. 684/IB/CB/2017 with permission to file a fresh petition under the IBC. Since evidently there is a pending arbitration proceedings without going into the other merits of the case we conclude that the present CP under the IBC is not required at present. The present petition is not maintainable under section 8(2)(a) of the IBC 2016 - Petition dismissed.

Summary

Issues:
- Interpretation of section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency resolution process.
- Dispute regarding non-payment of compensation fee for services rendered.
- Jurisdiction conflict between Insolvency and Bankruptcy Code and Arbitration and Conciliation Act.
- Consideration of pending arbitration proceedings.

Analysis:
The petitioner filed a company petition under section 9 of the Insolvency and Bankruptcy Code, 2016 seeking recovery of a substantial amount from the respondent-company for services rendered. The petitioner claimed that despite providing services and raising invoices, the respondent failed to make payments as per the agreement terms. The respondent argued that the matter was subject to arbitration proceedings invoked by them, challenging the maintainability of the IBC petition. The respondent contended that the arbitration clause in the agreement had been activated prior to the fresh notice under the IBC, indicating the existence of a dispute to be resolved through arbitration. The respondent emphasized that the Bombay High Court had appointed a sole arbitrator to adjudicate the disputes by consent of the parties, reinforcing the arbitration process.

The Tribunal acknowledged the facts presented, highlighting the withdrawal of the initial IBC petition by the petitioner due to technicalities related to the demand notice issued by an advocate. It was noted that the respondent had initiated arbitration proceedings, which were progressing with the appointment of a sole arbitrator. Given the ongoing arbitration process and the absence of a reply from the petitioner to the arbitration notice, the Tribunal concluded that the IBC petition was premature and not necessary at the current stage. Referring to legal precedents, including the judgment in Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd., the Tribunal deemed the present petition not maintainable under the Insolvency and Bankruptcy Code. The petitioner was advised to address any non-compliance by the respondent with the arbitral award through subsequent proceedings, if required.

In light of the pending arbitration proceedings and the principles outlined in relevant legal cases, the Tribunal dismissed the IBC petition, emphasizing the importance of honoring the arbitration process for resolving disputes arising from the agreement between the parties. The decision underscored the significance of abiding by the arbitration clause and allowing the arbitral tribunal to address the issues raised, with the option for the petitioner to seek redressal through the Tribunal if necessary following the arbitration outcome.