2022 (9) TMI 635 - AT - Insolvency and Bankruptcy

Initiation of CIRP - Assignment of debts - Operational Creditors - existence of debt and dispute or not - Settlement is already arrived at between parties - HELD THAT - The Application filed under Section 9 of the IBC has rightly been rejected by the Adjudicating Authority in view of the Settlement Agreement dated 21.07.2015 arrived between the Appellant Sansing Limited with HSBC and Respondent APL Metals Limited. The Adjudicating Authority has rightly come to the conclusion that Corporate Debtor raised a bonafide dispute regarding the operational debt wherein the Appellant- Operational Creditor had assigned the debt to HSBC Bank and HSBC Bank has not instituted this proceeding under Section 9 of the IBC, therefore, taking in the above facts, the Application under section 9 is not maintainable as the reasons assigned by the Adjudicating Authority is cogent and require no interference. Appeal dismissed.

Summary

Issues:
1. Dispute over operational debt under the Insolvency and Bankruptcy Code, 2016.
2. Validity of the Settlement Agreement dated 21.07.2015.
3. Assignment of debt to HSBC and its impact on the appeal's maintainability.

Detailed Analysis:
1. The Appellant filed an appeal under Section 61 of the IBC due to an order dismissing their application under Section 9. The dispute arose from the Respondent's default in paying an operational debt of USD 6,46,466.00, leading to the Adjudicating Authority deeming the dispute genuine and rejecting the application.
2. The facts revealed a history of supply, invoices, and payment commitments between the parties. Despite acknowledgments and commitments to settle the debt, the Respondent failed to make full payments as per the agreed schedules, leading to legal notices and a Settlement Agreement in July 2015. The Settlement Agreement detailed payment terms and consequences of default.
3. The Respondent argued that the debt had been assigned to HSBC, making HSBC the rightful party to initiate IBC proceedings. They highlighted that the Appellant failed to disclose the settlement with Euler Hermes, the credit insurance provider. The Respondent contended that the dispute was over various issues, including delayed shipments and invalidated contracts, making the claim highly disputed and questioning the Appellant's standing in the appeal.
4. The Tribunal affirmed the Adjudicating Authority's decision, citing the Settlement Agreement as a key factor. The Agreement, involving HSBC and Euler Hermes, discharged the liabilities against the invoices, rendering the Appellant's claim non-maintainable under the IBC. The Tribunal upheld the finding of a bona fide dispute raised by the Respondent regarding the operational debt, emphasizing that HSBC did not institute proceedings under Section 9, further supporting the rejection of the application.

In conclusion, the Tribunal dismissed the appeal, affirming the Adjudicating Authority's decision based on the Settlement Agreement and the assignment of debt to HSBC. The judgment highlighted the importance of honoring agreements and the impact of third-party involvement on the maintainability of IBC proceedings.