2017 (12) TMI 1810 - 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 - Service of demand notice - HELD THAT - When compromise was agreed to for a lesser amount (rupees fourteen lacs) and part payment thereof have already been made, it is not clear as to how the applicant can claim default of the entire original amount. The applicant has not come with clean hands and has not disclosed complete and correct facts of the case. The discloser in the requisite Form 5 is not full and true. Instead of claiming remaining unpaid settlement amount, if any, the applicant has claimed in Part-IV of Forrn- 5 entire original due amount of ₹ 18,60,921, without mentioning the settlement and appropriation of payments already received The demand notice under Section 8 of the Code was issued in the present case on 14.10.2017. The Respondent, however, has enclosed four receipts stamped and signed by the applicant firm, dated 02.01.2017, 30.01.2017, 07.02.2017 and 07.03.2017 respectively which clearly shows that the settlement and payments mentioned therein were made much prior to the issuance of demand notice under Section 8 of the Code - there is force in the contention of the Respondent No. 1 that the amount claimed in the application is not free from clear dispute. When the claimed debt is not admitted by respondent the onus lies on the applicant to prove its claim. The applicant has not disputed the aforesaid receipts, relied upon by the respondent no. 1 company including the seal and signature of the applicant affixed therein - Admittedly there has been no admission of the claimed operational debt by the respondent. Confusion on the actual amount of default cannot be ruled out and there is clear dispute on the claimed amount of debt. Hence, the amount of claim raised by the applicant clearly falls within the ambit of disputed claim. Application dismissed.

Summary

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code against multiple debtors.
2. Applicability of Code to individuals under Part-II.
3. Dispute regarding outstanding amount and settlement between parties.
4. Onus of proof on the applicant for the claimed debt.
5. Rejection of the application under Section 9.

Issue 1: Application under Section 9 against multiple debtors
The Tribunal noted that the application was filed under Section 9 of the Insolvency and Bankruptcy Code against multiple debtors. It was highlighted that an application under Section 9 can only be lodged against a single Corporate Debtor, as per the relevant form. Therefore, the application against more than one debtor was deemed not maintainable under the Code.

Issue 2: Applicability of Code to individuals under Part-II
The Tribunal pointed out that Part-II of the Code deals with insolvency resolution and liquidation for corporate persons, while Part-III pertains to individuals and partnership firms. As the respondents were described as directors and authorized signatories of a company, they fell under the ambit of individuals under the Code. Hence, Part-II was deemed not applicable to these individuals.

Issue 3: Dispute regarding outstanding amount and settlement
The Tribunal examined the dispute regarding the outstanding amount claimed by the applicant and the settlement reached between the parties. The respondent provided receipts showing partial payments made towards a settlement amount, which the applicant had not fully disclosed. The Tribunal found that the claimed debt was not admitted by the respondent, leading to a clear dispute on the amount owed, which fell within the ambit of a disputed claim under the Code.

Issue 4: Onus of proof on the applicant for the claimed debt
Referring to a previous judgment, the Tribunal emphasized that when the claimed debt is not admitted by the respondent, the onus lies on the applicant to prove the claim. The applicant's failure to dispute the receipts provided by the respondent and the lack of complete disclosure were noted as factors against the applicant's claim.

Issue 5: Rejection of the application under Section 9
Based on the analysis of the issues, the Tribunal concluded that the application failed and was rejected. It was emphasized that any observations made in the order should not be construed as an expression of opinion on the merit of the controversy, and the applicant's right before any other forum would not be prejudiced by the dismissal of the instant application.

By considering the specific legal provisions, the Tribunal thoroughly analyzed each issue raised in the case, ultimately leading to the rejection of the application under Section 9 of the Insolvency and Bankruptcy Code.