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2020 (1) TMI 1243 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - scope of person - proprietary concern - existence of debt and dispute or not - HELD THAT - The Operational Creditor has filed the instant petition in the name of Octopus Marine as a Proprietary Concern and it does not come within the definition of person as contemplated under Sec. 3(23) of IBC 2016. Further the instant petition has been filed by the Petitioner in the capacity as an Operational Creditor as defined under Section 5(20) of the IBC 2016 which defines an Operational Creditor as a person to whom an Operational Debt is owed and includes any person to whom such debt has been legally assigned or transferred. Thus it is imperative on part of the Petitioner in the instant case the Operational Creditor to demonstrate and satisfy this Authority that the Petitioner is a person as defined under Section 3(23) of the IBC 2016 - in the instant case the Operational Creditor has failed to substantiate that the Petitioner is a person as defined under Section 3(23) of the IBC 2016 and as a consequence the Petition is liable to be dismissed on this ground itself as not maintainable. From the email addressed by the Corporate Debtor to the Operational Creditor it is evident that the Corporate Debtor raised a dispute with regard to quality of service which is prior to issuance of Demand Notice - it is evident that there is a pre-existing dispute between the parties in relation to the quality of service provided by the Operational Creditor. By taking into consideration the definition of a person the Proprietary Concern cannot in its own name file a petition and also in view of the pre-existing dispute between the parties we are constrained to dismiss this petition - Petition dismissed.
Issues:
- Application filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against a Limited Company. - Operational Creditor's claim of Operational Debt against the Corporate Debtor. - Dispute regarding the quality of service provided by the Operational Creditor. - Legal validity of the petition based on the definition of "person" under the IBC, 2016. Analysis: 1. The Application was filed under Section 9 of the IBC, 2016 by an Operational Creditor against a Limited Company to initiate Corporate Insolvency Resolution Process. The Operational Creditor claimed an outstanding amount of ?13,31,040 as Operational Debt as on 28.12.2017, supported by documents like work order, invoice, and letter. 2. The Operational Creditor alleged that the Corporate Debtor failed to make payments for services rendered, leading to the petition. The Corporate Debtor, in response, argued that due to the Operational Creditor's deficient crane service, an accident occurred at the work site, causing financial losses and reputational damage. The Corporate Debtor denied further payments based on unsatisfactory service. 3. The Tribunal noted that the Operational Creditor filed the petition in the name of a "Proprietary Concern," which did not meet the definition of a "person" under the IBC, 2016. Citing a previous judgment, the Tribunal emphasized the importance of the petitioner being recognized as a "person" under the law. 4. Regarding the quality of service dispute, the Tribunal examined the terms of the work order and found that the Corporate Debtor had raised concerns about the service quality before the issuance of the Demand Notice. Referring to legal precedents, the Tribunal highlighted the necessity of a pre-existing dispute for invoking insolvency proceedings. 5. Due to the lack of substantiation that the petitioner met the legal definition of a "person" and the presence of a pre-existing dispute between the parties, the Tribunal dismissed the petition without costs. The judgment emphasized the legal requirements for initiating insolvency proceedings and the significance of resolving disputes before resorting to such measures.
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