9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 797 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount(s), but it can be invoked to initiate CIRP for the justified reasons as per objective of the Code. The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. The instant Company Petition is not a fit case to initiate CIRP and the Parties can prosecute the alternative remedy by way of Mediation, which is already filed on 31,12,2019, before the District Legal Services Authority, Bengaluru Rural District, and Notice issued under PIM No. 25/2019 dated 31.12.2019 and the next date of hearing is stated to be 18.06.2020 - the instant Company Petition is not maintainable, and there is pre-existing dispute over the issue raised in the instant Company Petition, there is no prima facie case made out, and it is filed with an intention to recover the alleged outstanding amount rather to initiate CIRP on justified reasons. Petition dismissed.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Existence of a pre-existing dispute between the parties. 3. Maintainability of the Company Petition. 4. Allegations of fraudulent or malicious initiation of proceedings under Section 65 of the IBC, 2016. Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The Petitioner, M/s. BASF India Limited, sought to initiate CIRP against the Respondent, M/s. Prakash Seating Private Limited, for a default amounting to ?20,33,226, which includes the principal and interest. The Petitioner claimed that despite multiple reminders, the Respondent failed to clear the outstanding dues, leading to the filing of the present petition under Section 9 of the IBC, 2016. 2. Existence of a Pre-existing Dispute: The Respondent opposed the petition, arguing that there was a pre-existing dispute regarding the quality of goods supplied by the Petitioner. The Respondent highlighted several issues, including defective supplies, additional costs incurred due to mould modifications, and losses from expired chemicals. The Respondent had issued legal notices on 20.03.2019 and 17.08.2019, demanding compensation for these losses, which the Petitioner denied. The Tribunal noted that the Petitioner failed to disclose these disputes, which are material facts, thus misleading the Adjudicating Authority. 3. Maintainability of the Company Petition: The Tribunal emphasized that the IBC, 2016, is not a substitute for a recovery forum but is meant for the resolution of insolvency. The Tribunal referred to the Supreme Court judgments in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited and Transmission Corporation of A.P. Ltd. vs. Equipment Conductors and Cables Ltd., where it was held that the existence of an undisputed debt is a prerequisite for initiating CIRP. The Tribunal concluded that the existence of a pre-existing dispute made the petition non-maintainable. 4. Allegations of Fraudulent or Malicious Initiation of Proceedings: The Respondent alleged that the Petitioner initiated the CIRP proceedings with malicious intent, contrary to Section 65 of the IBC, 2016, which penalizes fraudulent or malicious initiation of proceedings. The Tribunal found merit in the Respondent's argument that the petition was filed to recover the outstanding amount rather than for justified reasons to initiate CIRP. Conclusion: The Tribunal dismissed the Company Petition, citing the pre-existing dispute and the petition's non-maintainability. The Tribunal also noted that the parties could pursue alternative remedies, such as the ongoing mediation proceedings before the District Legal Services Authority, Bengaluru Rural District. The dismissal of the petition does not preclude the parties from settling the issue through mediation. No order as to costs was made.
|
