2017 (8) TMI 4 - Tri - Insolvency and Bankruptcy

Corporate Insolvency resolution process - claim of the Operational Creditor as C&F Agent - non- performance of mutual obligations - Held that - From the averments, it is quite evident that the dispute centres on the relationship arising out of the appointment of the Operational Creditor as C&F Agent and subsequent transactions emanating out of it. The allegations arising out of the agreement seem to be mutual, wherein certain duties have been enjoined on the Operational Creditor as well, which it is claimed by the Corporate Debtor have not been performed to its satisfaction including the one relating to obtaining refund of tax deposit as well as furnishing of relevant forms which had resulted in considerable loss of monies to the Corporate Debtor. In view of the disputes in relation to accounts, as existing between the parties, it is claimed by the Corporate Debtor that there is a bonafide dispute of the accounts between the Operational Creditor and the Corporate Debtor and in the circumstances, the parties should be relegated to seek remedy elsewhere particularly, in view of the arbitration clause contained in the C&F Agreement dated 1st May, 2014 entered into between the parties on which the petitioner has also relied on for claiming the amounts. On going through the certificate as issued by the Bankers, it is seen that the said certificate is also not in consonance with the way it is required to be produced as it does not refer to the unpaid Operational Debt by the Corporate Debtor and about its non- payment. However, on the other hand, the certificate is bald in its content and produced in relation to the period between 13th March, 2017 and 17th March, 2017 and not in relation to the duration of the agreement period prior to termination. Therefore, taking into consideration the disputes as raised between the parties and as the claim also relates to and arises out of the C&F Agreement and the ascertainment of the performance or non- performance of mutual obligations as contracted between the parties, it is not possible for this Tribunal in the exercise of Summary jurisdiction to go into it, particularly in view of the limited time period available for disposal and in the circumstances, we are not inclined to admit the petition and the same is rejected without costs.

Summary

Issues:
Petition by Operational Creditor against Corporate Debtor for insolvency resolution process under IBC, 2016.

Analysis:
The Operational Creditor filed a petition against the Corporate Debtor, claiming non-payment of a refundable security deposit and outstanding amounts. The Operational Creditor stated that despite serving a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, the Corporate Debtor did not respond. The Operational Creditor sought initiation of the insolvency resolution process as per the IBC, 2016.

The Corporate Debtor contended that the Operational Creditor violated clauses of the C&F Agreement and failed to fulfill obligations. Allegations included non-compliance with tax-related formalities, unauthorized cash transactions, and failure to recover sums from third parties. The Corporate Debtor claimed a bonafide dispute regarding accounts and pointed out an arbitration clause in the agreement for resolving such disputes.

After hearing both parties, the Tribunal noted the mutual allegations and disputes arising from the C&F Agreement. The Corporate Debtor disputed the claimed amounts and expenses, stating lack of substantiation. The Tribunal observed discrepancies in the bank certificate provided and concluded that due to the complex disputes and limited time for disposal, it was not feasible to adjudicate on the matter summarily. Consequently, the petition was rejected without costs, allowing the Operational Creditor to seek other remedies available under the law.

In summary, the judgment addressed the dispute between the Operational Creditor and the Corporate Debtor regarding non-payment and contractual obligations. The Tribunal emphasized the need for detailed examination of the claims and counterclaims, highlighting the presence of a bonafide dispute and the arbitration clause for resolution. Due to the complexity of the issues and time constraints, the Tribunal declined to admit the petition, suggesting alternative legal remedies for the Operational Creditor.