2021 (12) TMI 359 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - Even if specific permission has not been sought to re-file the proceedings on the cause of action having arisen in favour of the operational creditor, once the corporate debtor has failed to comply with the terms and conditions fixed in the settlement agreement, the right of the operational creditor still subsists and he has all the rights to file this petition for enforcing the settlement agreement dated October 11, 2018 having been entered into by the parties and admitted before this Adjudicating Authority. It is no doubt true that the settlement agreement dated October 11, 2018 has indeed been a clever handiwork of a draftsman, especially designed to take the operational creditor in its fold and avoid the imminent court orders against the corporate debtor, without even paying a penny after the settlement - the operational creditor has satisfied this Adjudicating Authority on all the issues raised in opposition by the corporate debtor. The failure of the corporate debtor to comply with the terms settled between the parties is a proved default on its part and its failure to pay the instalments, the right to sue rightly accrued in favour of the operational creditor. The agreed debt forming part of the settlement agreement dated October 11, 2018 is an admitted operational debt which had to be paid off within the stipulated time but since the corporate debtor has failed to perform its obligation under the aforesaid agreement, it is certainly a default which calls for an immediate action by this Adjudicating Authority. The application filed by the operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating corporate insolvency resolution process against the corporate debtor, BST Infratech Ltd., is hereby admitted - application admitted - moratorium declared.

Issues Involved:

1. Admissibility of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Existence of operational debt and default by the corporate debtor.
3. Validity and enforceability of the settlement agreement dated October 11, 2018.
4. Allegations of pre-existing disputes and fraudulent intent by the corporate debtor.
5. Legal implications of withdrawing the previous petition without leave to refile.

Issue-wise Detailed Analysis:

1. Admissibility of the Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016:

The petition was filed by the operational creditor seeking initiation of the corporate insolvency resolution process against the corporate debtor. The operational creditor claimed an outstanding amount of ?15,47,40,891 along with interest at 24% per annum from October 12, 2018 to November 14, 2019, totaling ?19,53,38,118. The court found that the operational creditor had satisfied all the procedural requirements under Section 9 of the IBC, 2016, including the submission of relevant documents and the proposal of an Interim Resolution Professional (IRP).

2. Existence of Operational Debt and Default by the Corporate Debtor:

The operational creditor submitted that between August 9, 2012, to March 6, 2017, it raised 1017 invoices for supplies made to the corporate debtor, who made part payments but failed to pay the balance amount of ?25,34,86,791. After adjustments, the due amount was ?25,31,61,711 as of March 6, 2017. The corporate debtor admitted liability in its reply and undertook to pay ?20,47,40,891 within 180 days but only paid ?5 crores. The court found the operational debt and default by the corporate debtor to be established.

3. Validity and Enforceability of the Settlement Agreement Dated October 11, 2018:

The settlement agreement was signed between the parties, where the corporate debtor agreed to pay ?15,47,40,891 in installments, failing which the operational creditor could initiate fresh proceedings under the IBC, 2016. The corporate debtor failed to make any payment as per the settlement agreement. The court held that the settlement agreement was valid and enforceable, and the operational creditor had the right to file the petition due to the default by the corporate debtor.

4. Allegations of Pre-existing Disputes and Fraudulent Intent by the Corporate Debtor:

The corporate debtor claimed that the settlement agreement was erroneous and invalid, and that a pre-existing dispute existed due to a title suit filed in the City Civil Court at Kolkata. The court found that the suit was filed with fraudulent and malicious intent to avoid payment and was not a genuine pre-existing dispute. The operational creditor's claim was based on the default of the settlement agreement, which the court found to be an admitted operational debt.

5. Legal Implications of Withdrawing the Previous Petition Without Leave to Refile:

The corporate debtor argued that the previous petition was withdrawn without leave to refile, thus barring the operational creditor from filing a fresh petition. The court noted that the withdrawal was not "withdrawal simplicitor" but was based on a joint request pursuant to the settlement agreement. The court held that the operational creditor had the right to file the present petition due to the corporate debtor's failure to comply with the settlement agreement.

Orders:

(i) The application under Section 9 of the IBC, 2016, is admitted.
(ii) A moratorium and public announcement are declared in accordance with Sections 13 and 15 of the IBC, 2016.
(iii) The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and recovery of property by owners or lessors.
(iv) Essential goods or services to the corporate debtor shall not be terminated during the moratorium.
(v) Mr. Santosh Choraria is appointed as the Interim Resolution Professional (IRP).
(vi) The operational creditor is directed to deposit ?1,00,000 with the IRP within three days.
(vii) The registry is directed to communicate the order to all concerned parties.

The matter is listed for filing a progress report on January 12, 2022.

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