2020 (10) TMI 160 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor has committed default in payment of outstanding debt - Existence of debt and dispute or not - HELD THAT - When we look at the scheme of the IBC, 2016, the preliminary condition is that there must be a debt which is met. The second condition is, such debt must be due and payable. In regard to this, as apparent from the provisions of clause 4.3 of Article IV of the Agreement between the parties as mentioned herein above, it is established that the delivery of the said flats has to be given upto May, 2020. Having said so, if we accept the contentions of the Financial Creditor that it may not be possible owing to prohibition on construction due to violation of sanction plan, hence, debt should be considered due and payable particularly when the Financial Creditor has repudiated the contract. This is particularly in the background of the fact that Financial Creditor does not wish to give effect to the provisions of the contract in toto i.e., if, based upon termination notice, the amount is considered as due and payable, then, obviously clause 9.1(i) of Article IX of the Agreement shall come into play. Hence, based upon the above proposition, it cannot be said that debt becomes due and payable. This petition is pre-mature at this stage and thus, not maintainable - Petition dismissed.

Summary

Issues:
1. Application under section 7 of IBC, 2016 filed by Financial Creditor against Corporate Debtor for default in payment.
2. Dispute over non-delivery of commercial property, subsequent agreement for residential units, and termination of Purchase Agreement.
3. Arguments on debt due and payable, default occurrence, and contractual obligations.
4. Legal contentions regarding termination, repudiation of contract, and applicability of agreement clauses.
5. Analysis of Agreement clauses on construction, termination, and consequences.
6. Decision on debt due and payable based on Agreement provisions and pre-mature nature of the petition.

Analysis:
1. The Financial Creditor filed an application under section 7 of IBC, 2016 against the Corporate Debtor for defaulting on a debt of ?66,81,20,672, including principal and interest, due to non-delivery of a commercial property and subsequent termination of the Purchase Agreement.

2. The Financial Creditor contended that the debt was due and payable as the Corporate Debtor failed to deliver the property, leading to a default. The Corporate Debtor argued that the debt was not yet due as per the agreement terms, citing a grace period for possession until May 2020.

3. Legal arguments focused on the contractual obligations, termination versus repudiation of the contract, and the applicability of agreement clauses determining the forfeiture of amounts in case of termination.

4. The Tribunal examined clauses from the Agreement, highlighting the construction and handover timeline, as well as the consequences of termination, emphasizing the specific conditions for forfeiture of amounts in case of termination before fit-out notice issuance.

5. Considering the scheme of IBC, 2016 and the Agreement provisions, the Tribunal concluded that the debt was not yet due and payable based on the construction timeline specified in the Agreement, rendering the petition premature and thus not maintainable.

6. Consequently, the Tribunal dismissed the petition, emphasizing the pre-mature nature of the claim and refrained from expressing opinions on other contentions raised by the parties, directing the Registry to communicate the order to the concerned parties and issue certified copies as necessary.