2018 (10) TMI 1903 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - debt due and payable or not - existence of debt and dispute or not - HELD THAT - As per details furnished by the respondent, the respondent company is commercially solvent and going concern having 687 employees on its rolls, having current assets for more than ₹ 642 Crores, Reserves and surplus also for more than ₹ 643 crores, and earned total income for ₹ 43,684 lakhs for the year ended March, 31, 2018. Therefore, it is not the case of petitioner that the Respondent is commercially insolvent to pay its alleged dues. It is the case where the instant company petition do not lie under the provisions of Code. The Hon ble Supreme Court of India, in a recent case, in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, 2017 (9) TMI 1270 - SUPREME COURT has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down whenever there is existence of real dispute, the IBC provisions cannot be invoked. The instant case is not a fit case to initiate CIRP as prayed for and thus it is liable to be rejected - Petition dismissed.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 based on unpaid operational debt.

Detailed Analysis:
1. Operational Debt and Default:
The Company Petition was filed by an Operational Creditor seeking to initiate CIRP against the Corporate Debtor for failing to pay an outstanding amount of ?64,21,380. The debt pertained to marketing commission amounts due to the Petitioner for procuring orders for the Corporate Debtor from a customer. The Petitioner diligently promoted the products, raised invoices, and issued demand notices when the outstanding amount was not paid.

2. Contentions of Parties:
The Respondent opposed the Petition, claiming a bona fide dispute regarding the alleged claims. The Respondent contended that all dues as per the agreements had been paid, and the Petitioner was lethargic in rendering services. The Respondent asserted commercial solvency and disputed the alleged debt, highlighting the number of employees and financial stability of the company.

3. Legal Considerations:
The Tribunal examined the agreements between the parties, the demand notices issued, and the evidence presented. The Tribunal noted the provisions of the Insolvency and Bankruptcy Code, the Limitation Act's applicability, and recent Supreme Court judgments emphasizing the need for undisputed debt for initiating CIRP. The Tribunal emphasized the importance of documentary evidence, the existence of a dispute, and the timely initiation of proceedings.

4. Judgment and Conclusion:
After considering the facts, legal principles, and arguments presented, the Tribunal concluded that the case was not a fit one to initiate CIRP. The Tribunal rejected the Company Petition, citing lack of undisputed debt, commercial solvency of the Respondent, and failure to meet the necessary conditions for initiating insolvency proceedings. The Petitioner was not debarred from pursuing other legal remedies available under different laws.

In conclusion, the Tribunal's detailed analysis of the operational debt, parties' contentions, legal considerations, and recent judicial precedents led to the rejection of the Company Petition for initiating CIRP, emphasizing the importance of undisputed debts and compliance with legal requirements for insolvency proceedings.