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2021 (4) TMI 1178 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt - annual listing fees and other charges as well as penalty - dues of BSE - application has been filed by B.S.E and due to default of Corporate Debtor - HELD THAT - It is not in dispute that the Corporate Debtor is listed on B.S.E. It is also not in dispute that it is liable to pay annual listing fees and other charges and, if any, delay occurs in payment thereof, the Corporate Debtor is also liable to pay penalty. Four invoices have been raised. Two invoices pertain to period which is beyond three years and remaining invoices are within the period of limitation. The outstanding amount of invoices which are within the limitation period is more than ₹ 1,00,000/-. We have also perused the relevant Clause 38 of the original agreement as well as Clause 3 of renewal agreement. As per these clauses, the liability of the Corporate Debtor has accrued and remains to be paid. As far as the nature of such dues is concerned, it has been established beyond doubt that these are of the nature of operational debt. Further, B.S.E is not a Statutory Authority and it is a commercial entity established under a statute, hence, an entity of this nature, B.S.E can file an application under Section 9 of IBC, 2016. Merely because in the authorization, it has been mentioned that the person was authorized to recover the dues, such authorization does not alter the nature of application. At this point of time, we consider it pertinent to mention that if this logic is applied then all applications filed under Section 9 can be dismissed because such petitions are essentially filed for this purpose only irrespective of wordings of authorization. Even, applications under Section 7 of IBC, 2016 have got primary purpose of recovery. The design of IBC, 2016 is successful because of two factors i.e., it is a regime where creditors take charge of the Corporate Debtor and stringent timelines have been provided so that timely resolution or liquidation can take place. No specific guidelines either under statute or by judicial pronouncements have been provided in this regard and the criteria under IBC, 2016 is default and not inability to pay dues unlike earlier statutory legislations; hence, it is the need of the hour that some amendments/guidelines are provided as soon as possible although the legislature has increased the threshold limit of ₹ 1,00,000/- under Section 4 to ₹ 1,00,00,000/-. Further, this application has been filed by B.S.E and due to default of Corporate Debtor, many retail investors have got struck as they cannot exit/trade the shares of the Corporate Debtor held by them, hence, for this reason also application needs to be admitted. The application is otherwise complete and defect free - Application admitted - moratorium declared.
Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC based on default in payment of annual listing fees by a Corporate Debtor. Detailed Analysis: - Operational Creditor's Submissions: The Operational Creditor, B.S.E Limited, filed an application under Section 9 of the IBC against the Corporate Debtor, M/s. Synergy Cosmetics (Exim), for non-payment of annual listing fees. The Creditor highlighted the default in payment since 01.04.2015 and provided evidence of efforts to recover the outstanding amount. The Creditor emphasized the liability of the Corporate Debtor to pay listing fees as per the terms of the agreement and pointed out relevant clauses supporting the claim. Additionally, the Creditor mentioned the proposal of an Interim Resolution Professional for the case. - Corporate Debtor's Submissions: The Corporate Debtor argued against the maintainability of the application, claiming that regulatory dues did not constitute operational debt. Reference was made to the Insolvency Law Committee report and a previous judgment by NCLT Mumbai Bench. The Debtor contended that the application sought to recover arrears of annual listing fees, which did not fall under the purview of IBC as a recovery mechanism. The Debtor also raised the issue of limitation on the debt. - Operational Creditor's Rejoinder: In response, the Operational Creditor cited relevant judgments, including one by NCLAT, to support the classification of regulatory dues as operational debt. The Creditor pointed out similar cases where charges like annual listing fees were considered operational debt, emphasizing the admissibility of the application. - Conclusion: After considering the submissions and evidence, the Tribunal found that the Corporate Debtor was liable to pay the annual listing fees and penalties for delayed payments. The Tribunal established that the dues qualified as operational debt and were within the limitation period. It clarified that B.S.E, being a commercial entity, could file an application under Section 9 of IBC. The Tribunal emphasized the purpose of IBC in resolving issues related to debts and the need for timely resolution or liquidation. Additionally, the Tribunal admitted the application, declared a moratorium, appointed an Interim Resolution Professional, and issued necessary directives for the Corporate Insolvency Resolution Process to proceed smoothly. This detailed analysis of the judgment outlines the key arguments presented by both parties, the Tribunal's reasoning, and the consequential orders issued by the Tribunal in response to the application for initiation of Corporate Insolvency Resolution Process under Section 9 of the IBC.
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