2021 (10) TMI 113 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its outstanding dues - Operational Creditors - pre-existing dispute or not - HELD THAT - The Appellant is an Operational Creditor who had valid Restaurant, Bar, Bakery and Eating House licenses from the ground and first floor premises of a bungalow knows as Pioneer House, situated at 9, St. John Baptist Road, Bandra, Mumbai. The Appellant entered into a Business Conduction Agreement with the Respondent No. 1 (Corporate Debtor) on 29.04.2010 (at page 65 to 82 of the Appeal Paper Book) which was followed by two Supplemental Agreements dated 30.04.2010 - Business Conducting Agreement was initially envisaged to be operative for a period of 5 years. However, subsequently, it was extended for another 2 years, expiring on 30.09.2017 vide Clause 2 of the Supplemental Agreement -1 dated 30.04.2010 - It is also admitted fact that as per the terms of the Supplemental Agreement, extension also entailed a revision of the monthly Business Conducting Fee from the pre-existing 10% of the Gross Revenue (as per Schedule B to the BCA dated 29.04.2010 r/w Clause 12 thereof) to 11% thereof. It is also admitted fact that the Respondent No. 1 is supporting the case of the Appellant. It is also fact that the Appellant had not made party as Respondent Nos. 2 and 3 before this Tribunal when the Appeal was filed. Vide order dated 12.01.2021 passed by this Tribunal the Appellant made party as Respondent Nos. 2 and 3 and they opposed the submissions of the Appellant - there is pre-existing dispute between the parties and two cases also pending one is before the Hon ble Bombay High Court and other is before the Court of Small Causes Bandra. The Ld. Adjudicating Authority rightly come to the conclusion that total amount of 14,62,205/- (Municipal Taxes) which is claimed by the Appellant from period 2010 to 2017 and the Petition under Section 9 of the IBC was filed on 12.03.2018, so all claims prior to 12.03.2015 are time barred. There is no merit in the instant Appeal - the Appeal is hereby dismissed.

Summary

Issues Involved:
1. Maintainability of the Company Petition under Section 9 of the Insolvency and Bankruptcy Code (IBC).
2. Pre-existing disputes between the parties.
3. Time-barred claims.
4. Classification of debt as operational debt under IBC.

Issue-wise Detailed Analysis:

1. Maintainability of the Company Petition under Section 9 of the Insolvency and Bankruptcy Code (IBC):
The appellant, an operational creditor, filed a company petition under Section 9 of the IBC, seeking to initiate insolvency proceedings against the corporate debtor for unpaid dues. The adjudicating authority dismissed the petition, stating that the claims were not maintainable before the tribunal. The appellate tribunal upheld this decision, agreeing that the petition was not maintainable due to the nature of the claims and the locus of the applicant.

2. Pre-existing disputes between the parties:
The appellant and the respondents had entered into a Business Conducting Agreement (BCA) and supplemental agreements. However, disputes arose, leading to multiple lawsuits, including R.A.D. Suit No. 348 of 2017 and Commercial Suit No. 187 of 2018. The existence of these disputes was cited as a reason for dismissing the insolvency petition. The appellate tribunal noted that the disputes were ongoing and significant, thereby justifying the adjudicating authority's decision to dismiss the petition.

3. Time-barred claims:
The adjudicating authority found that the claims made by the appellant were time-barred. Specifically, claims prior to 12.03.2015 were deemed barred by limitation since the petition was filed on 12.03.2018. The appellate tribunal agreed with this finding, affirming that the claims for municipal taxes from 2010 to 2017 were time-barred and could not be considered for insolvency proceedings.

4. Classification of debt as operational debt under IBC:
The appellant claimed various dues, including municipal taxes, conducting fees, electricity bills, and water bills, under the BCA. The respondents argued that these dues did not constitute operational debt under Section 5(21) of the IBC. The appellate tribunal agreed with the respondents, citing a previous judgment which held that unpaid rent or utility bills do not qualify as operational debt. The tribunal concluded that the appellant could not be considered an operational creditor for the purposes of initiating insolvency proceedings under the IBC.

Conclusion:
The appellate tribunal upheld the adjudicating authority's decision to dismiss the company petition under Section 9 of the IBC. The tribunal agreed that the claims were time-barred, there were pre-existing disputes, and the nature of the debt did not qualify as operational debt under the IBC. The appeal was dismissed, and the judgment was ordered to be uploaded on the tribunal's website and communicated to the adjudicating authority.