2020 (9) TMI 798 - Tri - Insolvency and Bankruptcy

Maintainability 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 not in dispute that Petitioner has rendered his faithful services to the Respondent in good faith without getting his fees settled before his services. Therefore, the Respondent has rejected the case of Petitioner purely on legal grounds by taking advantage of limited scope available to the Petitioner to invoke provisions of Code. It is true that the Respondent can legally deny the legitimate claim of Petitioner by taking advantage of summary proceedings as provided under the provisions of Code. In any case, professional fee to an experienced person like the Petitioner cannot be mere travelling expenses incurred. Though the instant Petition is not maintainable under the provisions of Code, it would be just and proper for the Respondent to consider the claim of Petitioner at least to pay for some advolreum amount by taking into consideration of principle of good Corporate governance, as the Petitioner is senior Citizen having rendered substantial service to the Company at crucial time. Even though the instant Petition is not maintainable, as per law, we are inclined to dispose the Petition by exercising inherent powers conferred on the Adjudicating Authority, Under Rule 11 of NCLT Rules, 2016, in the interest of justice - Petition disposed off.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the IBC, 2016 for default in payment.

Analysis:
The case involved C.P. (IB) No. 128/BB/2020 filed by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process against the Corporate Debtor due to default in payment amounting to 10,00,000/-. The Operational Creditor had rendered professional services for almost eight years related to Kerala State commercial Tax Departmental proceedings. The dispute arose when the Corporate Debtor refused to pay the invoiced amount of 10,00,000/-, claiming that all payments were settled. The Operational Creditor insisted on payment for services rendered, leading to the filing of the petition under Section 9 of the IBC, 2016.

The Operational Creditor had issued a demand notice and subsequent invoice to the Corporate Debtor, claiming the outstanding amount for professional services. In response, the Corporate Debtor denied the claim, stating that all payments for services rendered were made, including fees for lawyers and consultants appointed for the same matter. The Corporate Debtor contended that the invoiced amount was not legally due and payable, providing detailed ledger statements and accounts to support their position.

The Tribunal, after hearing both parties, acknowledged that the Petitioner had provided services in good faith without settling the fees beforehand. Despite the legal grounds for the Respondent to deny the claim, the Tribunal recognized the substantial service rendered by the Petitioner, a senior citizen, and emphasized the importance of good corporate governance. The Tribunal, while noting that the petition was not maintainable under the provisions of the Code, directed the Corporate Debtor to consider paying a reasonable amount to the Petitioner within four weeks as a gesture of goodwill and justice.

In conclusion, the Tribunal disposed of the petition by exercising inherent powers under Rule 11 of NCLT Rules, 2016, directing the Corporate Debtor to sympathetically consider and pay a reasonable amount to the Operational Creditor for the services rendered, emphasizing the principles of good corporate governance and fairness in dealing with claims of service providers.