2017 (9) TMI 854 - Tri - Insolvency and Bankruptcy

Corporate insolvency resolution process - eligibility of Application by corporate applicant - whether the petition has been filed under Rule 7(1) read with Section 10 of the Code or the petition has to be treated as the one under Section 9 of the Code? - Held that - A perusal of the Rules shows that a Corporate Debtor can approach the Tribunal for initiation of a Resolution Process under Section 10 of the Code by filing an application on the Form 6. Form 6 is necessarily related to a Corporate debtor invoking Section 10 of the Code and has been created under rule 7(1) of the Adjudicating Authority Rules (supra). On the contrary the demand notice is stated to have been issued under Section 8 of the Code which depicts that the petitioner claims himself to be an Operational Creditor . There are thus patent contradictions in the claim made by the petitioner which cannot be resolved by reading it one way or the other. Therefore, there is no option except to dismiss this petition as misleading and contradictory. For the reasons aforementioned, this petition fails and the same is dismissed with cost of ₹ 10,000/-

Summary

Issues:
1. Jurisdiction of the Tribunal over the petition filed under the Insolvency and Bankruptcy Code, 2016.
2. Contradictions in the petitioner's claim of being an Operational Creditor or a Corporate Debtor.
3. Dismissal of the petition and permission to file a fresh petition with correct details.

Analysis:
1. The petitioner, Knowiz Solutions Private Limited, filed a petition under sub-rule (1) of Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of the insolvency resolution process against a corporate debtor, claiming to be an Operational Creditor under Section 8 of the Insolvency and Bankruptcy Code, 2016. However, the Tribunal noted discrepancies in the petitioner's claims as the petition seemed to be filed under Rule 7(1) read with Section 10 of the Code, which is meant for corporate debtors, rather than under Section 9 for Operational Creditors. The Tribunal found the petition misleading and contradictory due to these inconsistencies.

2. Rule 7(1) specifies that a corporate applicant must file an application in Form 6 for initiating the corporate insolvency resolution process against a corporate debtor under Section 10 of the Code. In this case, the petitioner's demand notice was issued under Section 8 of the Code, indicating its status as an Operational Creditor. The Tribunal highlighted the clear contradiction between the petitioner's claim of being a Corporate Debtor under Rule 7(1) and an Operational Creditor under Section 8, making it impossible to determine the correct nature of the petition. Consequently, the Tribunal decided to dismiss the petition due to its misleading and inconsistent nature.

3. The Tribunal dismissed the petition with a cost of ?10,000 but granted the petitioner permission to file a fresh petition with accurate details and the correct legal status. Emphasizing the importance of clarity and accuracy in legal filings, the Tribunal allowed the petitioner the opportunity to rectify the errors and submit a new petition that aligns with the appropriate provisions of the Insolvency and Bankruptcy Code, ensuring a fair and transparent adjudication process. The dismissal of the petition was based on the need for precision and adherence to legal requirements, with the Tribunal providing the petitioner a chance to correct the deficiencies in the initial filing.