2018 (7) TMI 2197 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - The provisions of the Insolvency Code are absolutely clear that if there is an existence of a dispute among the rival parties in respect of the Debt in question, then such Petition is not fit for admission . In this case, because of the peculiar features that the Petitioner itself has moved a Litigation before the Hon ble High Court of Bombay, revolving around the identical set of facts and the similar amount of Debt in question, the admission of this Petition is not permissible as laid down in the provisions of the Insolvency Code. As far as the question whether the impugned Debt falls within the definition of Operational Debt as prescribed under Section 5(21) of The Code, it is defined that a claim is to be in respect of the provision of goods or in respect of providing services including employment. Within this definition Debt is further defined as an Operational Debt where a Debt is in respect of the repayment of the dues arising under any Law for the time being in force and payable to the Central Government, any State Government or any Local Authority. Whether the impugned amount was in respect of the repayment of the dues is a subject matter before the Hon ble High Court, yet to be adjudicated upon. Thus, if there is an existence of dispute, a Petition does not deserve to be admitted. Keeping brevity in mind and since the law laid down in all these precedence is unambiguous, as also the facts of the case have demonstrated the existence of a dispute prior to filing of the Petition, hence leads to one conclusion that the Petition deserves dismissal. Petition dismissed.

Issues Involved:
1. Existence of a dispute
2. Operational Debt definition
3. Specific Performance Civil Suit and Insolvency Proceedings
4. Jurisdiction and limitation

Detailed Analysis:

1. Existence of a Dispute:
The Respondent objected to the admission of the Petition citing the "existence of a dispute." The Respondent referenced a suit for specific performance filed before the Hon’ble Bombay High Court, which involved the same evidence and claims as the Insolvency Petition. The Respondent argued that the refund sought was associated with the supply of sugar machinery to Mashkour Sugar Company Limited, Sudan, and that the advance was received on behalf of Mashkour. The Respondent denied any advance was repayable under the tri-partite agreement of 18.12.2010. The Tribunal noted that the Petitioner was contesting a "Specific Performance Civil Suit" while pressing for insolvency proceedings for the same amount, which cannot proceed simultaneously. The Tribunal emphasized that the existence of a dispute disqualifies the Petition from being admitted under the Insolvency Code.

2. Operational Debt Definition:
The Tribunal examined whether the impugned debt falls within the definition of "Operational Debt" as prescribed under Section 5(21) of the Insolvency and Bankruptcy Code. It was noted that an operational debt involves claims in respect of the provision of goods or services. The Tribunal observed that the question of whether the impugned amount was in respect of the "repayment of the dues" is a subject matter before the Hon’ble High Court and is yet to be adjudicated. Therefore, it is not permissible for the Tribunal to give an opinion on this issue, as it is sub judice before a higher judicial forum.

3. Specific Performance Civil Suit and Insolvency Proceedings:
The Tribunal highlighted that the Petitioner was already agitating the same facts and amount of debt before the Hon’ble High Court of Bombay. The Tribunal noted that the provisions of the Insolvency Code are clear that if there is an "existence of a dispute" regarding the debt, the Petition is not fit for admission. The Tribunal further stated that accepting the Petition would imply that the alleged amount is accepted as "Operational Debt," which is not permissible when the issue is sub judice before the High Court.

4. Jurisdiction and Limitation:
The Respondent argued that the claim is barred by limitation as the amount was paid in August 2011, and the first demand came in November 2017, more than six years later. The Respondent also contended that there exists no debtor-creditor relationship between the Applicant and the Respondent, and any amount paid was on behalf of Mashkour. The Respondent emphasized that the matter should have been referred to arbitration and that only courts in Sudan have jurisdiction. The Tribunal did not explicitly address these points but focused on the existence of a dispute and the pending litigation before the High Court.

Conclusion:
The Tribunal dismissed the Petition, stating that due to the existence of a dispute and the ongoing litigation before the Hon’ble High Court of Bombay, the Petition does not qualify for admission under the Insolvency Code. The Tribunal emphasized that it is not permissible to adjudicate on an issue that is sub judice before a higher judicial forum. Accordingly, the CP (IB)-20(MB)/2018 stood dismissed.

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