2017 (8) TMI 454 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedure - Insolvency and Bankruptcy Code, 2016 - qualification to maintain an application as an Operational Creditor - Held that - The matter is covered against the Applicant by our order in case Col. Vinod Awasthy v. AMR Infrastructures Ltd. 2017 (5) TMI 663 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI wherein held that the Operational Creditors are those persons to whom the Corporate Debt is owed and whose liability from the entity comes from a transaction on operations. The final report of the Committee in para 5.2.1 defines Operational Creditor like the wholesale vendor of spare parts whose spark plugs are kept in inventory by Car Mechanic and who gets paid only after spark plugs are sold to acquire the status of Operational Creditor so and so forth. The Petitioner in the present case has neither supplied any goods nor has rendered any service to acquire the status of an Operational Creditor . We are further of the view that given the time line in the code it is not possible to construe section 9 read with section 5(20) & (21) of the Code so widely to include within its scope even the cases where dues are on account of advance made to purchase the flat or a commercial site from a construction company like the Respondent in the present case especially when the Petitioner has remedy available under the Consumer Protection Act and the General Law of the land. Therefore we are not inclined to admit the petition.

Summary

Issues:
1. Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for triggering insolvency process against a Corporate Debtor.
2. Claim by an operational creditor for refund of advance amount deposited for purchase of a plot.
3. Dispute regarding the demand raised by the Applicant and false defense raised by the respondent.
4. Interpretation of the definition of 'Operational Creditor' and 'Operational Debt' under section 5(20) & (21) of the Insolvency and Bankruptcy Code.
5. Application dismissal based on the precedent set in a previous case.

Analysis:
1. The judgment concerns an application filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate insolvency proceedings against a Corporate Debtor. The Applicant, an operational creditor, claimed a refund of an advance amount deposited for the purchase of a plot in a residential township. The Applicant alleged that the respondent failed to fulfill the commitment of plot allotment within the agreed timeframe, leading to the demand for a refund of the principal amount along with interest.

2. A significant aspect of the case involved a dispute over the demand raised by the Applicant and the false defense put forth by the respondent in response to the demand notice. The respondent claimed that the amount deposited was utilized in the project and offered options of allotting a unit to the Applicant. However, the Applicant contended that the terms and conditions were violated, justifying the refund claim.

3. The judgment delves into the interpretation of the definitions of 'Operational Creditor' and 'Operational Debt' as outlined in section 5(20) & (21) of the Insolvency and Bankruptcy Code. The court referred to a previous case to establish the scope and applicability of these definitions. It was emphasized that operational debt pertains to goods, services, employment, or government dues, excluding debts associated with immovable property possession delays.

4. Drawing from the precedent set in a prior case, the court dismissed the present application. The judgment highlighted that the Applicant did not meet the criteria to be considered an operational creditor as defined in the Code. The court concluded that the application was not maintainable under section 9 and section 5(20) & (21) of the Insolvency and Bankruptcy Code, aligning with the decision in the referenced case.

5. Ultimately, the court found no merit in the application and dismissed it without imposing costs on the Applicant. The judgment clarified that the dismissal should not prejudice the Applicant's rights to seek recourse through other legal avenues. The decision was based on the specific legal interpretation of the Code's provisions and the facts presented in the case, in line with the established legal principles.