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2019 (6) TMI 1550 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - There is no default as on date as the Respondent has discharged its liabilities by paying the Applicant in various instalments as stated supra. It is a settled position of law that the provisions of Code can be invoked only in the case of existence of a default and non-payment of such default by the Corporate Debtor. Moreover the Corporate Debtor has also replied denying the liability by inter alia contending that they have discharged their liabilities and there is no such debt due. Therefore it is not a fit case to admit the case and thus it is liable to be rejected. Application dismissed.
Issues Involved:
1. Existence of Operational Debt 2. Payment and Default by Corporate Debtor 3. Admissibility of CIRP under IBC, 2016 Issue-wise Detailed Analysis: 1. Existence of Operational Debt: The Petitioner, M/s. Sunil Healthcare Limited, claimed an outstanding amount of ?53,66,640/- for the supply of capsule shells to the Respondent, M/s. Beloorbayir Biotech Limited. The Operational Creditor supplied goods under various invoices from March 2018 to May 2018, which were duly received by the Corporate Debtor. Despite repeated reminders, the Corporate Debtor failed to pay the outstanding amount. The Operational Creditor also claimed interest at 18% p.a. from the due date of payment till the date of payment. The Corporate Debtor acknowledged the debt but sought additional time to clear the dues and made partial payments totaling ?20,22,200/-. 2. Payment and Default by Corporate Debtor: The Corporate Debtor contended that the amount demanded by the Petitioner was exorbitant and incorrect. They responded to the demand notice within the prescribed period, acknowledging the debt and making partial payments. The Respondent provided a payment schedule and ledger entries showing payments made towards the outstanding dues. The Tribunal noted that the Respondent had made several payments, reducing the outstanding amount significantly. The Respondent also proposed a settlement mode, which was adhered to, clearing the dues as per their statement of accounts. 3. Admissibility of CIRP under IBC, 2016: The Tribunal emphasized that the provisions of the Insolvency and Bankruptcy Code (IBC), 2016, cannot be invoked merely for recovery of outstanding amounts but to initiate the Corporate Insolvency Resolution Process (CIRP) for justified reasons. The Tribunal referred to the Supreme Court's rulings in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited and Transmission Corporation of A.P. Ltd. vs. Equipment Conductors and Cables Ltd., which held that the existence of undisputed debt is a sine qua non for initiating CIRP. The Tribunal examined whether there was an operational debt exceeding ?1 Lakh, whether the debt was due and payable, and whether there was any dispute regarding the debt. Conclusion: The Tribunal found that the Respondent had discharged its liabilities by making payments in various installments, as evidenced by the ledger and bank statements. The Tribunal concluded that there was no default as on the date of the hearing, and the provisions of the IBC could only be invoked in case of existence of a default and non-payment by the Corporate Debtor. Since the Respondent had denied the liability and discharged the dues, the Tribunal held that it was not a fit case to admit the CIRP application. Consequently, C.P. (IB) No. 69/BB/2019 was dismissed, with the Petitioner being free to seek other remedies under applicable laws. No order as to costs was made.
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