2020 (10) TMI 544 - 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 - The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is more than minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - Moratorium declared.

Issues Involved:
1. Enforceability of a Foreign Arbitral Award in India.
2. Pre-existing dispute between the parties.
3. Defective petition due to authorization issues.

Issue-wise Detailed Analysis:

1. Enforceability of a Foreign Arbitral Award in India:
The Corporate Debtor argued that the Foreign Arbitral Award needs to be declared enforceable in India before it can be considered binding. They cited Section 46 of the Arbitration and Conciliation Act, 1996, which states that a foreign award is binding only if it is enforceable under Indian law. The Corporate Debtor relied on the judgment of the Bombay High Court in Noy Vallesina Engineering Spa v. Jindal Drugs Ltd., which held that a foreign award is not binding until a competent court finds it enforceable. The Operational Creditor countered that the United Kingdom, where the award was passed, is a reciprocating territory under Section 44A of the Code of Civil Procedure, making the award executable in India. The tribunal agreed with the Operational Creditor, stating that the award is capable of execution in India due to the UK being a reciprocating territory.

2. Pre-existing dispute between the parties:
The Corporate Debtor claimed that there was a pre-existing dispute, as the foreign award had not obtained finality and could still be challenged. They cited the Supreme Court's decision in K. Kishan vs. M/s. Vijay Nirman Company Pvt. Ltd., which held that the pendency of a challenge to an arbitral award qualifies as a pre-existing dispute. However, the tribunal noted that there was no pending challenge to the Arbitral Award and that the award was passed after considering the disputes and submissions made by the Corporate Debtor. Therefore, the tribunal rejected the Corporate Debtor's objection, stating that the award cannot be considered a pre-existing dispute.

3. Defective petition due to authorization issues:
The Corporate Debtor argued that the petition was defective because the Board Resolution authorized Mr. Vijaykumar Gopalan Iyengar to file the petition, but it was signed by Mr. Nirav Gandhi. They relied on the NCLAT judgment in Palogix Infrastructure Private Limited vs. ICICI Bank Limited, which held that only authorized representatives, duly authorized by a board resolution, can present an insolvency application. The tribunal found that the Board Resolution appointed Mr. Iyengar as the Company's Constituted Attorney, who then authorized Mr. Gandhi to initiate the proceedings. The tribunal held that Mr. Gandhi had the proper authority to file the petition, rejecting the Corporate Debtor's objection.

Conclusion:
The tribunal admitted the petition filed by the Operational Creditor and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The tribunal ordered a moratorium under Section 14 of the IBC, appointed Mr. Rajeev Mannadiar as the Interim Resolution Professional (IRP), and directed the Operational Creditor to deposit ?3,00,000 with the IRP to meet the expenses arising out of issuing public notice and inviting claims. The tribunal also directed the Registry to communicate the order to the relevant parties and the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the Corporate Debtor.

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