2022 (8) TMI 648 - 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 - time limitation - HELD THAT - The Corporate Debtor filed a detailed reply alongwith Annexure R-l to R-16, primarily denying, the averments in the application to the effect that there is no debt and default. That the entire amount due and payable has been already been paid. The Ld. Counsel for the Corporate Debtor refers to the admitted bills and Statement of Account of the applicant to prove that the entire amount of Rs. 68,86,105/- has been paid and that there is no due - While it is the contention of the Petitioner that there is debt and default in excess of Rs. 68,86,105/- which has been already paid by the Corporate Debtor. The Ld. Counsel for the Petitioner was asked to explain how the petition is maintainable; in view of two important factors namely limitation and pendency of Arbitration Proceedings, which is a fall out of the series of notices and the Suit proceedings with reference to Arbitration. Time Limitation - HELD THAT - The plea that Section 14 of the Limitation Act, 1963 will save the present case does not find merit. At the time of filing of the petition, i.e., on 27.01.2020, the Petitioner/Applicant knows about the pendency of Arbitral Proceedings and should have withdrawn the same at the time of filing and prosecuting the matter before this Tribunal. The afterthought to withdraw the Arbitral Proceedings before the Hon'ble High Court, that too after filing this petition before this Tribunal clearly shows that it was done to overcome the limitation and to invoke Section 14 of the Limitation Act, 1963. Therefore, it cannot be said that the applicant was bona fide prosecuting the proceedings before another forum. It is a sham plea to overcome the mandate of the IBC. The original petition should normally contain relevant documents in support of the petition in its complete form. But in this case not only the documents are not placed but the pleadings are also incomplete. The relevant documents namely, exchange of notices, suit proceedings, Arbitration Proceedings etc. have been deliberately omitted for reasons best known however, it will be fatal to the proceedings. There are no hesitation to hold that this Petition does not have any merit both in law and on facts. The dispute between the parties is clear and present. It attracts the provision of IBC as contended by the Respondent that the proceedings are barred by law in the facts of the present case - petition dismissed.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIR proceedings against Respondent M/s. Mahavir Stone Crushing Pvt. Ltd.

Analysis:
1. The applicant, the sole proprietor of M/s. J.N. Behura & Company, filed an application seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Respondent under Section 9 of the Insolvency and Bankruptcy Code, 2016. The applicant claimed that a significant amount was due from the Respondent for sanitation and plumbing services provided under a contract. However, the original documents supporting the claim were not submitted with the petition.

2. The applicant asserted that bills were raised periodically on the Respondent for services rendered, totaling to Rs. 1,18,88,901.35. The Respondent allegedly paid Rs. 68,86,105, leaving a balance due. The applicant filed a suit in the District Court claiming Rs. 50,02,796.36, including interest, which was subsequently referred to arbitration by the District Court.

3. The Respondent disputed the claim, contending that the entire due amount had been paid. The Respondent highlighted the bills and the applicant's statement of account to support their stance that no outstanding debt existed. The Respondent also raised objections regarding the maintainability of the Section 9 petition due to ongoing arbitration proceedings and a pre-existing dispute.

4. The Respondent argued that the Section 9 petition was not maintainable under the IBC, 2016, as there was a pre-existing dispute and pending arbitration proceedings at the time of filing the petition. Additionally, the Respondent emphasized the applicant's suppression of crucial documents such as notices, suit proceedings, and arbitration details, which were essential for a fair adjudication of the case.

5. The Tribunal found the petition lacking in merit both legally and factually. It concluded that the dispute between the parties was evident and that the proceedings were barred by law in the given circumstances. Consequently, the petition under CP(IB)-419(PB)/2020 seeking CIRP against the Respondent was dismissed, along with other related applications.

This detailed analysis outlines the key arguments, contentions, and findings of the Tribunal in the judgment concerning the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.