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2018 (12) TMI 1372 - Tri - Companies LawPetition under Insolvency and Bankruptcy Code - existence of a dispute before the petition was filed - corporate debtor filed an application under section 17 of the SARFAESI Act before the Debts Recovery Tribunal, Madurai, challenging the sale notice issued by the financial creditor - Held that - The Tribunal observes that the amount claimed by the financial creditor herein is ₹ 68,65,428.53 whereas the corporate debtor in their counter has disputed the amount claimed stating that the corporate debtor through other entities has repaid a sum to the tune of ₹ 2.16 crores. Further, there are civil suits pending for adjudication and other transactions between the financial creditor, corporate debtor and TVKL Properties P. Ltd., with respect to the possession of the property of the corporate debtor. In view of the above, the Tribunal observes that the petition is liable to be dismissed under sections 5(6) and (6)(a) of the IBC, 2016 as there is a civil suit pending and there exists a dispute in the amount of debt between both the parties. The Tribunal is of the opinion that there is in existence a dispute before the petition was filed in this Tribunal and hence under the provisions of the IBC, 2016 the petition stands dismissed.
Issues Involved:
1. Validity of the debt claimed by the financial creditor. 2. Dispute regarding the amount of debt owed by the corporate debtor. 3. Pending civil suits and their impact on the insolvency proceedings. 4. Intervention application by a third party as a financial creditor. Detailed Analysis: 1. Validity of the Debt Claimed by the Financial Creditor: The financial creditor, M/s. International Asset Reconstruction Co. P. Ltd., filed a petition against the corporate debtor, M/s. Paramount Mills P. Ltd., under section 7 of the Insolvency and Bankruptcy Code, 2016. The corporate debtor had obtained loans from Axis Bank Ltd., which were later assigned to the financial creditor. The total debt, including principal and interest, amounted to ?6,08,65,428.53 as of December 31, 2017. The corporate debtor defaulted in repayment, and the account was declared a non-performing asset on September 30, 2011. The financial creditor took symbolic possession of the mortgaged property and issued sale notices, but the auctions failed. 2. Dispute Regarding the Amount of Debt Owed by the Corporate Debtor: The corporate debtor disputed the amount claimed by the financial creditor, stating that ?2.16 crores had been repaid through various entities. The financial creditor's statement of account did not reflect these payments, showing only a repayment of ?10 lakhs. The corporate debtor argued that the actual outstanding amount should be ?1.64 crores, based on an agreement with TVKL Properties P. Ltd., which had agreed to take over the debt. 3. Pending Civil Suits and Their Impact on the Insolvency Proceedings: There were ongoing civil suits and transactions involving the financial creditor, corporate debtor, and TVKL Properties P. Ltd. The corporate debtor had filed an application under section 17 of the SARFAESI Act before the Debts Recovery Tribunal, Madurai, challenging the sale notice issued by the financial creditor. The Debts Recovery Tribunal granted a conditional stay, which was later vacated due to non-payment by the corporate debtor. Additionally, the financial creditor had moved a petition under section 14 of the SARFAESI Act to take physical possession of the secured property, which was granted by the District Collector and Executive Magistrate, Madurai. 4. Intervention Application by a Third Party as a Financial Creditor: M/s. India Growth Fund filed an application to intervene in the petition as a financial creditor. The Tribunal directed the applicant to seek legal remedies separately and dismissed the intervention application. Conclusion: The Tribunal observed that there was a dispute regarding the amount of debt and ongoing civil suits between the parties. Under sections 5(6) and 5(6)(a) of the Insolvency and Bankruptcy Code, 2016, the existence of a dispute and pending litigation rendered the petition liable for dismissal. Consequently, C.P. No. 774/(IB)/2018 stood dismissed. The intervention application M.A. No. 426/(IB)/2018 in C.P. No. 774/(IB)/2018 was also dismissed. There was no order as to costs.
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