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2019 (12) TMI 1528 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT - The Agreement under Clause 7 (e) clearly says that the payment for services should be made immediately failing which it carries interest at the rate of 15% p.a. will be charged until the date of settlement. The invoices issued also contains a condition that the payment should be made immediately and it did not refer the element of interest in the bills. However the Petitioner charged @ 18% p.a. which is also contrary to the term and conditions of the Agreement and also invoices in question. It is also relevant to point out here that there are 36 invoices starting from 22.02.2018 to 12.11.2018 for total 36 invoices amounting to 52, 94, 136.38/- which includes principal amount of 39, 52, 469/- and interest of 13, 41, 667.38/-. Therefore the Petitioner failed to point out that whether the Agreement in question which is valid for period of 2 years was further extended or not. The Petitioner without resorting correlates the claims and Statutory Demand notice in question. The Statutory notice cannot give cause of action unless it s supported by debt which is legally payable by the other party. Therefore the Petitioner failed to make out any case with regard to the alleged outstanding amount which is under dispute and it is based on invalid Agreement. Therefore the Tribunal cannot go roving enquiry with regard to the alleged claim under the provisions of the Code which is summary in nature. The claim made in the instant Petition is not only contrary to the terms of Agreement but also in serious dispute. The Petitioner failed to respond to various emails sent by the Respondents and to correlate the bills. It is not in dispute that the Agreement in question has already expired during 2017 itself and there is a refundable security deposit of 12, 00, 000/- which is stated to have forfeited in lieu of outstanding amount. Even as per Agreement rate of 15% p.a. will be charged until the date of settlement. However the Petitioner has claimed 18% p.a. - The Adjudicating Authority should be satisfied before initiating CIRP that all extant provisions of Code in the light of object of Code stand fulfilled. As stated supra initial debt it is based on lapsed Agreement and the claim also in serious dispute. Therefore the instant Company Petition is filed in order to recover the alleged disputed outstanding amount instead of seeking to initiate CIRP on justified reasons. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. Un-disputed claim is sine qua non for initiating CIRP - The Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT has inter alia held that IBC 2016 is not intended to be substitute to a recovery forum. The instant Company Petition is filed other than the object of the Code with intention to recovery of the alleged outstanding amount - the Petitioner has failed to make out any case so as to initiate CIRP as prayed for and thus it is liable to be dismissed. Petition dismissed.
Issues Involved:
1. Maintainability of the petition under Section 9 of the IBC, 2016. 2. Validity and enforceability of the Printing Agreement dated 04.12.2015. 3. Alleged default in payment of operational debt by the Corporate Debtor. 4. Dispute regarding the amount claimed by the Operational Creditor. 5. Applicability of interest rates as per the Agreement and invoices. 6. Arbitration clause in the Agreement and its impact on the petition. 7. Admissibility of the petition under the Insolvency and Bankruptcy Code (IBC). Issue-wise Detailed Analysis: 1. Maintainability of the petition under Section 9 of the IBC, 2016: The petition filed by the Operational Creditor under Section 9 of the IBC, 2016, was opposed by the Corporate Debtor on the grounds that the petition was not maintainable either in law or on facts. The Corporate Debtor argued that the Operational Creditor misled the tribunal by filing the petition to make wrongful gains and that there was no bona fide in the contentions of the Operational Creditor. The tribunal found that the claim was seriously disputed and concluded that the provisions of the IBC are not meant for settling disputed issues or for the recovery of alleged outstanding amounts. 2. Validity and enforceability of the Printing Agreement dated 04.12.2015: The Printing Agreement between the parties was valid for two years from the date of execution and could be extended by mutual written agreement. However, the tribunal noted that the invoices in question were raised after the expiry of the Agreement, and it was not averred that the Agreement was extended beyond the initial two-year period. Thus, the tribunal could not ascertain whether the Agreement was deemed to be extended, which impacted the enforceability of the claims made by the Operational Creditor. 3. Alleged default in payment of operational debt by the Corporate Debtor: The Operational Creditor claimed that the Corporate Debtor defaulted in payment of an unpaid operational debt amounting to ?39,52,469/- along with interest at 18% p.a. The tribunal noted that the Corporate Debtor had made the last payment on 01.08.2018 and the remaining amount was not paid. The Corporate Debtor argued that they had already paid the eligible amount for the services rendered and disputed the claim made by the Operational Creditor. 4. Dispute regarding the amount claimed by the Operational Creditor: The Corporate Debtor raised several objections regarding the amount claimed by the Operational Creditor, including issues related to print wastage, the number of copies supplied, and losses suffered due to non-publication of newspapers on certain dates. The tribunal found that the claim made by the Operational Creditor was not only contrary to the terms of the Agreement but also in serious dispute. The tribunal emphasized that the IBC is not intended to be a substitute for a recovery forum and that undisputed claims are a sine qua non for initiating the Corporate Insolvency Resolution Process (CIRP). 5. Applicability of interest rates as per the Agreement and invoices: The Agreement stipulated an interest rate of 15% p.a. for delayed payments, whereas the Operational Creditor claimed interest at 18% p.a. The tribunal noted that the invoices did not refer to the element of interest and that the claim for interest at 18% p.a. was contrary to the terms and conditions of the Agreement and the invoices. 6. Arbitration clause in the Agreement and its impact on the petition: The Agreement contained an arbitration clause stating that any dispute arising out of or in relation to the Agreement should be referred to arbitration. The tribunal noted that the claim in question was filed suppressing material information and that the dispute should have been referred to arbitration as per the terms of the Agreement. 7. Admissibility of the petition under the Insolvency and Bankruptcy Code (IBC): The tribunal concluded that the petition was filed with the intention of recovering the alleged disputed outstanding amount rather than initiating CIRP for justified reasons. The tribunal emphasized that the provisions of the IBC cannot be invoked for the recovery of outstanding amounts and that the petition failed to make out a case for initiating CIRP. Conclusion: The tribunal dismissed the petition, stating that the Operational Creditor failed to make out any case to initiate CIRP. The tribunal also noted that the order would not preclude the parties from settling the issue or invoking any other remedy available under any other law.
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