2019 (12) TMI 1021 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - allegation that application is not in accordance with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016) and also not in accordance with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016) - Section 8 of I B Code, 2016 - HELD THAT - Although applicant submitted application in form 1 r/w Rule 4 but part 1 to part 3 is of Form-1 and part 4 to part 5 of the application is of Form-5 i.e. a particular of operational debt. Therefore, it can be said that applicant filed the application partly in form 1 and partly in form-5. This Adjudicating Authority further find that in the synopsis the applicant also mentioned as financial creditor/operational creditor. This Adjudicating Authority further find, applicant has stated that the demand notice was issued on 04.02.2019 under Section 8 of I B Code, 2016. This Adjudicating Authority is of considered view that Application submitted by the Applicant is not in accordance with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016) and also not in accordance with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016) under which Operational Creditor is required to file application, rather it is combination of both Rules 4 and 6 and that it is the reason applicant has filed application partially in Form -1 and partially Form-5 - Since in present case application is not in accordance with Rule 4 or Rule 6 and applicant itself not sure under what provision he is required to file the application for the amount, which he claims to be paid to M/s. Sunworld Residency Pvt. Ltd. fall (Financial Debt/ Operational Debt), under such circumstances this Adjudicating Authority is of considered view that present application filed by the Applicant is not as per prescribed Form and not as per IB Code, 2016. Application not maintainable.

Summary

Issues:
- Application filed under Section 7 of IBC, 2016 for CIRP against Corporate Debtor.
- Whether the application qualifies as a financial creditor or operational creditor under IBC.
- Compliance with the requirements of Form 1 and Form 5 in the application.
- Adherence to the rules of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Analysis:
1. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by the applicant to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, a real estate company. The applicant claimed to have paid a substantial amount towards the purchase of a flat from the Corporate Debtor, leading to a debt dispute.

2. The main contention arose regarding whether the applicant qualified as a financial creditor or operational creditor under the IBC. The applicant initially filed the application as a financial creditor but later mentioned the possibility of being considered an operational creditor due to the nature of the transaction involving the purchase of the flat.

3. The Adjudicating Authority scrutinized the application and found discrepancies in the submission of forms. The applicant had filed the application partly in Form 1, which pertains to financial debt, and partly in Form 5, which relates to operational debt. This non-compliance raised concerns about the proper adherence to the prescribed forms under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

4. As per the requirements of Section 7(3) of the IBC, a financial creditor must provide specific details and documents related to the default, including the name of the proposed resolution professional. However, the Authority noted that the applicant failed to attach the necessary parts of Form 1, which led to a conclusion that the application did not align with the prescribed rules and forms of the IBC.

5. Considering the discrepancies in the application and the uncertainty regarding the classification of the applicant as a financial or operational creditor, the Adjudicating Authority deemed the application as not maintainable and dismissed it. The decision was based on the lack of compliance with the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, highlighting the importance of adhering to the specified forms and requirements under the IBC for the proper filing of insolvency applications.