2020 (10) TMI 440 - Tri - Insolvency and Bankruptcy

Maintainability of application - Dishonor of Cheque - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The petitioner has initiated the instant proceedings with an intention to recover alleged outstanding amount in question. The claim relates to the period 1 April, 2017 to 16th May, 2019 covering about 18 invoices. The petitioner has not produced any Purchase order/Contract issued by the Respondent in support of supply of goods in question but produced invoices along Petition. At bottom of invoices, there is un-signed declaration by declaring that @ 18 % Per annum shall be charged if payment is delayed beyond 30 days from the date of supply or Credit terms agreed up on in writing. However, the Petitioner has not produced any evidence in support of supply of goods in question or Credit terms in question - The Petitioner has not initiated any legal action for the cause of action started from 12th February, 2018 except issuing a legal notice dated 23rd January, 2019 under the provisions of Code. The Petitioner has also not explained the delay in initiating proceedings. In view of the Respondent coming forward to settle the issue and paid Rs. Eight lakhs by way of Cheque, the Petition is to be disposed of by directing the Respondent to honour the cheque in question, when it is presented for realisation of amount, without fail - petition is disposed of by directing the Corporate Debtor to honor the cheque as mentioned above, when it is presented to the Bank by the Petitioner, without fail, failing which, the Petitioner would be at liberty to approach this Tribunal by filing fresh Petition, in accordance with law.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC for default in payment.

Detailed Analysis:
The case involved a petition filed by M/s. Truemix Concrete (India) Private Limited, the operational creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Nitesh Housing Developers Private Limited, the corporate debtor, for defaulting on a payment of ?11,15,064.09. The petitioner provided ready mix concrete to the respondent as per purchase orders, and despite issuing a demand notice, the respondent failed to pay the outstanding amount, leading to the initiation of the petition under the Insolvency and Bankruptcy Code, 2016.

The petitioner, engaged in the business of producing and supplying high-quality ready mix concrete, had a total outstanding amount due from the respondent. The respondent, a company involved in real estate development, had defaulted on the payment despite receiving invoices and a demand notice as per the terms and conditions agreed upon. The respondent's failure to pay the debt led to the petitioner seeking relief through the insolvency resolution process.

During the proceedings, both parties expressed willingness to settle the issue. The petitioner insisted on the full claimed amount, while the respondent offered ?8,00,000 as a post-dated cheque for settlement. The legal counsels for both parties presented their arguments, emphasizing the need for a resolution to avoid further litigation.

The judgment referred to relevant legal precedents, highlighting that the Insolvency and Bankruptcy Code is not meant for mere recovery of outstanding amounts but for justified reasons as per the law. It emphasized the necessity of an undisputed debt for initiating the CIRP, as outlined in previous court decisions. The judgment analyzed the conditions required for admitting an application under Section 9 of the Code, emphasizing the need for operational debt exceeding ?1 lakh, documentary evidence of the debt, and the absence of disputes between the parties.

Based on the presented facts and circumstances, including the respondent's willingness to settle the issue by paying a significant amount, the tribunal disposed of the petition by directing the corporate debtor to honor the cheque provided for settlement. Failure to comply would grant the petitioner the liberty to approach the tribunal with a fresh petition. The judgment concluded without any order as to costs, settling the matter in light of the respondent's payment offer and the absence of sufficient evidence supporting the petitioner's claim.