2018 (7) TMI 2131 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Operational Creditor or not - Section 5(7) read with (8) of the I B Code - HELD THAT - We are not expressing any opinion with regard to such issue as to whether Appellant is Financial Creditor or not, as the claim was not filed under Section 7 of the I B Code . If the Appellant feels that it was the case under Section 7 and wrongly filed application under Section 9 it may move in accordance with law before the Adjudicating Authority who may decide such claim independently uninfluenced by the impugned order dated 16th May, 2018. Appeal disposed off.

Summary

Issues:
1. Whether the Appellant is entitled to recover the balance amount from the Respondent along with interest.
2. Whether the Appellant qualifies as a 'Financial Creditor' under the Insolvency and Bankruptcy Code.

Issue 1:
The Appellant, M/s. Daya Engineering Works Pvt. Ltd., invested in M/s. UIC Udyog Ltd. for material supply. While most materials were delivered, a balance amount of ?12,09,443 was not supplied. The Appellant claimed the Respondent should repay this balance along with 24% interest. The National Company Law Tribunal, Kolkata, rejected the Appellant's application under Section 9 of the Insolvency and Bankruptcy Code, stating the Appellant did not fit the definition of an 'Operational Creditor.' The Appellant argued that the Respondent used the retained amount for commercial purposes, justifying the interest claim. The Tribunal did not decide on the Appellant's status as a 'Financial Creditor' under Section 5(7) and (8) of the Code, suggesting the Appellant could pursue this under Section 7 if deemed appropriate.

Issue 2:
The judgment did not conclusively determine whether the Appellant could be classified as a 'Financial Creditor.' The Tribunal advised the Appellant to seek clarification from the Adjudicating Authority if they believed their claim fell under Section 7 of the Insolvency and Bankruptcy Code. The Tribunal emphasized that any such future claim should be independent of the previous order and should be decided based on its merits. The appeal was disposed of with these observations, and no costs were awarded.

This judgment highlights the importance of correctly categorizing claims under the Insolvency and Bankruptcy Code and the need for clarity in legal proceedings to ensure fair adjudication.