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2021 (2) TMI 147 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - petitioner seeks to enforce the sale agreement as an operational debt - existence of debt and dispute or not - present petition has been filed by a power of attorney holder on behalf of the petitioner - HELD THAT - In Palogix Infrastructure Private Limited v ICICI Bank Limited, 2017 (10) TMI 913 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI the Hon ble NCLAT, after noting the judgment of the Hon ble Supreme Court in Innoventive Industries Limited v ICICI Bank, 2017 (9) TMI 58 - SUPREME COURT that the IBC was an Act to consolidate and amend the laws relating to reorganisation and insolvency resolution, and that it is settled law that a consolidating and amending act like the present Central enactment forms a code complete in itself, exhaustive of the matters dealt with therein, went on to hold that a power of attorney holder is not competent to file an application on behalf of a financial creditor or operational creditor or corporate applicant - Therefore, the present petition filed by a power of attorney holder on behalf of the petitioner is not maintainable. We have considered the underlying nature of the transaction between the parties. The petitioner had offered her flat, which she was entitled to in the premises in question on account of redevelopment of the existing building, to the respondent. The respondent had paid what has been called earnest money to the petitioner. The present petition is for the remainder of the purchase price of the flat, apparently on the strength of an MoU dated March 2017 (we are unable to ascertain the exact date of the MoU from the petition). Prima facie, an MoU is a sort of agreement which will lead up to a formal agreement in due course. It is generally considered to be non-binding and legally non-enforceable, though exceptions would exist particularly in cases where a binding understanding can be inferred from its various clauses. Section 5(21) of the IBC defines an operational debt as a claim in respect of the provision of goods or services, or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. In the present case, the underlying nature of the transaction is akin to that of a sale agreement. The present petition seeks to enforce the sale agreement as an operational debt. There is no supply of goods or service from the respondent to the petitioner, as a result of which a debt could be said to have arisen. Rather, it is the petitioner who is required to supply the good in the form of the new flat, to the respondent. Therefore, such a transaction is not covered within the meaning of section 5(21) of the IBC. This is more in the nature of specific performance of the transaction, which can, if necessary, be enforced in a civil court. This Adjudicating Authority cannot take upon itself the role of a civil court in enforcing specific performance of such contracts. Petition dismissed.
Issues:
Company Petition under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) seeking Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor for non-payment of dues. Detailed Analysis: 1. Jurisdiction and Background: The Company Petition was filed by an Operational Creditor against a Private Limited Company under the IBC. The Corporate Debtor failed to pay a substantial sum, leading to the initiation of CIRP. The jurisdiction of the Mumbai Bench of the National Company Law Tribunal was established due to the Corporate Debtor's incorporation in Maharashtra. 2. Operational Creditor's Claim: The Operational Creditor's claim stemmed from a failed real estate transaction where the Corporate Debtor failed to make payments as agreed. The Operational Creditor detailed the sequence of events, including dishonored cheques and subsequent legal actions taken, resulting in the petition for the outstanding amount plus interest. 3. Corporate Debtor's Defense: The Corporate Debtor presented a defense based on the collapse of a building leading to redevelopment and a subsequent agreement for the sale of a flat. The Corporate Debtor argued that the transaction was not a debt but part of a larger agreement for redevelopment, emphasizing the non-operational nature of the alleged debt. 4. Legal Analysis and Judgment: The Tribunal analyzed the nature of the transaction, considering whether it constituted an operational debt under the IBC. The Tribunal highlighted the distinction between operational debt and contractual obligations, emphasizing the need for goods or services to flow from the creditor to the debtor. The Tribunal concluded that the transaction was akin to a sale agreement and did not fall under the definition of operational debt as per the IBC. 5. Decision and Conclusion: The Tribunal dismissed the petition, ruling that the transaction did not qualify as an operational debt under the IBC. The Tribunal clarified that its decision did not prejudice the petitioner's rights to seek remedy through civil courts for specific performance. The order was communicated to the parties as per the provisions of the IBC. 6. Note on Maintainability: The Tribunal noted the issue of maintainability regarding the filing of the petition by a power of attorney holder, citing relevant legal precedents. While acknowledging the lack of maintainability, the Tribunal proceeded to consider the petition on its merits before delivering the final judgment.
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