2021 (6) TMI 24 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - only agreement entered and no further goods/ services in respect to agreement provided by Operational Creditors - existence of debt and dispute or not - HELD THAT - Applicant has totally failed to prove that he falls under the category of operational creditor. It is to be mention herein that to fall under the definition of operational creditor, the claim must be in respect of the provision of goods or services including employment or debt in respect of the dues arising under any law for the time being in force. On perusal of the record it is found that, no service has been provided to the corporate debtor at any point of time by the operational creditor save and except an agreement entered between both sides, as claimed. To attract the provision of IB Code under Section 9, there must be 'due' and 'default' which is found absent in the instant application - application is also not complete as the due date and default date is not provided, even no invoices are annexed or ever raised upon corporate debtor. In absence of such primary information, it is difficult to come to the conclusion that the amount claimed is operational debt - Application dismissed.

Summary

Issues:
Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 - Operational Creditor/Applicant - Claim of due payment from Corporate Debtor - Alleged breach of construction agreement - Failure of payment by Corporate Debtor - Dispute regarding partnership agreement between parties - Lack of evidence for financial claim - Claim validity as operational debt under IB Code - Absence of due date and default date in application - Dismissal of application.

Analysis:
The petitioner, an operational creditor engaged in construction business, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 against the respondent, a private limited company, for non-payment of due amount related to a construction project awarded by the Government. The petitioner claimed that despite completing a substantial portion of the work, the respondent failed to make any payment from the funds received. The respondent disputed the claim, alleging a partnership agreement with the petitioner's brother, holding that the petitioner's claim was an attempt to recover money. The respondent also argued that the petitioner failed to produce evidence such as bills or vouchers for the work done. The respondent contended that the claim was a civil dispute and not an operational debt as per the IB Code.

The Tribunal observed that the petitioner failed to provide invoices, bills, or debit notes to establish the due date and default date for the claimed amount. It was noted that the petitioner did not fall under the category of operational creditor as defined in the IB Code since no goods or services were proven to have been provided to the respondent. The absence of essential information such as due date, default date, and invoices led to the dismissal of the application under Section 9 of the IB Code. The Tribunal emphasized the necessity of meeting the criteria for operational debt to invoke the provisions of the IB Code.

The Tribunal dismissed the application, stating that without the required information and evidence, it was challenging to determine the claimed amount as operational debt. However, the Tribunal clarified that its decision did not prevent the petitioner from seeking remedy in other forums or competent authorities for the recovery of the claim. The Tribunal also declared a related application as infructuous and directed the Registry to communicate the order to both parties. The judgment highlighted the importance of providing complete and relevant documentation to support claims under the IB Code for effective legal proceedings.