2023 (3) TMI 241 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or Operational Debt - HELD THAT - From the perusal of the documents, the Bench is of the view of that there is no dispute that this money was collected for the maintenance/taxes payment and there is no default in handing over the flats booked by members of the Applicant Society. The amount in question is akin to the money paid in advance to a service provider for availing services and defraying expenses to be incurred by such service providers in rendition of agreed services. Any debt arising from supply of goods or services including advance paid towards supply of such goods or services fall under the definition of Operational Debt. In the present case, the Applicant has filed this Application claiming itself to be a Financial Creditor under section 5 (8) (f) of the Code whereas the amount in question is in nature of an Operational Debt recoverable from the Corporate Debtor, even if the debit notes towards common amenities as claimed by the Corporate Debtor for the period subsequent to the handing over are not considered. Since the amount in question is not a financial debt, the Applicant cannot said to be a Financial Creditor so as to make eligible to file an application under section 7 of the Code. The Present Application is not maintainable and hence is liable to be dismissed.

Summary

Issues:
1. Application for initiation of Corporate Insolvency Resolution Process under section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Default amount claimed by the Financial Creditor against the Corporate Debtor.
3. Nature of the amount claimed - Financial Debt or Operational Debt.
4. Eligibility of the Financial Creditor to file the application under section 7 of the Code.

Analysis:
1. The application was filed by a Co-operative Society seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor under section 7 of the Insolvency & Bankruptcy Code, 2016.
2. The Financial Creditor claimed a default amount of Rs.1,55,31,417/- against the Corporate Debtor, which was the surplus amount collected for maintenance of a building occupied by the society members in the year 2016-2017.
3. The Tribunal noted that the amount in question was collected for maintenance charges and taxes, akin to an advance payment for services, making it an Operational Debt rather than a Financial Debt as claimed by the Financial Creditor under section 5 (8) (f) of the Code.
4. As the amount did not qualify as a financial debt, the Tribunal held that the Financial Creditor could not be considered eligible to file the application under section 7 of the Code, leading to the dismissal of the application.

Conclusion:
The Tribunal rejected the application for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, emphasizing that the observations made in the order should not be construed as expressing an opinion on merits. It was clarified that the dismissal of the petition would not prejudice the petitioner's right to seek recourse before any other judicial forum.