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2022 (8) TMI 235 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHIScope of IBC - dishonor of cheque - compounding of offences - Recovery of the dues - whether the Section 7 Application admitted against a Solvent Company, in the background where the Company has issued two cheques as security for the amount lent, and one cheque amount has been paid, (pursuant to the Order of the Trial Court under Section 138 of the NI Act, 1881, to compound one of the cases), and for the balance second cheque amount, does the initiation of Insolvency Proceedings fall within the ambit of the scope, objective and spirit of the Code which is ‘Resolution’ and not ‘Recovery’? - Whether the Adjudicating Authority while admitting a Section 7 Application, as in this case, examine only if there is a ‘Debt’ and ‘Default’ but also assess if the intent of the Applicant is primarily only ‘Recovery of the dues’? HELD THAT:- From the particulars of ‘Financial Debt’, it is clear that the amount claimed as ‘default’ is Rs.87,50,000/- which is inclusive of cheque amount of Rs.57,00,000/- issued on 01.09.2016 and against which the ‘Corporate Debtor’ paid an amount of Rs.67,90,000/- vide a Demand Draft dated 09.09.2019 before the Trial Court to compound one of the cases. It is an admitted fact that the said payment led to the closure of Case No. 1505 of 2017 which was filed for the dishonour of the cheque of Rs.57,00,000/- - In Part IV of the Application, the debt amount is claimed to be Rs.87,50,000/-. It is pertinent to mention that the said Application was filed on 30.11.2018 while there were parallel proceedings for recovery of the amount under Section 138 of the NI Act, 1881 before the District Court, Gurgaon. The amounts claimed pertain to the period prior to the date of Notification. We also do not wish to delve into the other submissions of the Appellant regarding the nature of transactions, absence of Financial Contract, non-registration of debt with the information utility whether interest at 18% per annum was ever concluded between the parties except for reference in the legal Notice issued by the second Respondent. The Preamble of IBC is carefully worded to describe the spirit and objective of the Code to be ‘Reorganisation’ and ‘Insolvency Resolution’, specifically omitting the word ‘Recovery’. The Parliament has made a conscious effort to ensure that there is a significant difference between ‘Resolution’ and ‘Recovery’ - Section 65(1) of the Code does not expressly mention ‘Debt Recovery Action’ under ‘for any purpose other than resolution of insolvency..’, keeping in view the factual occurrence of the events of this particular matter, we hold that the ‘intent’ may not be a ‘malafide intent’, but is nevertheless a fundamental attempt to obtain an edge/ advantage / an upper hand in ‘recovering their dues’. ‘A Recovery Proceeding’ of this nature does fall within the scope and ambit of the words ‘for any purpose other than Resolution’, as defined under Section 65 (1) of the Code - this Appeal is allowed and the Order of the Adjudicating Authority is set aside.
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