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2023 (11) TMI 377 - AT - Insolvency and BankruptcyMaintainability of application 9 application - failure in remitting the funds - Corporate Debtor showed his readiness and willingness to make the entire payment. Operational Creditor submits that the debt of the Operational Creditor having been acknowledged by the Corporate Debtor which is due and has not been paid by the Corporate Debtor inspite of repeated assurances the Adjudicating Authority committed error in not admitting Section 9 Application. HELD THAT - The present is not a case where Adjudicating Authority has directed the Corporate Debtor to settle the dispute with the Operational Creditor. It was the Corporate Debtor who acknowledged and showed his readiness and willingness to make the entire payment. The judgment of the Hon ble Supreme Court in E.S. Krishnamurthy 2021 (12) TMI 683 - SUPREME COURT does not help the Appellant-Corporate Debtor in any manner. The next judgment of this Tribunal relied by learned Counsel for the Corporate Debtor is judgment of this Tribunal in Praveen Kumar Mundra vs. CIL Securities Ltd. 2019 (8) TMI 783 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI where the Appeal preferred against the order rejecting Section 9 Application was heard. The Appellate Tribunal in the above case in paragraph 9 has upheld the order of the Adjudicating Authority on the ground that the Appellant has initiated CIRP with fraudulently and malicious intent which judgment has no application in the present case. Present is a fit case to admit when inspite of several promises and acknowledgement the Corporate Debtor failed to pay the outstanding debt. The Corporate Debtor also has not complied with the order of the Adjudicating Authority directing for depositing the amount equivalent to Indian Rupee in the Court instead it cited certain regulatory procedure in obtaining the permission for remitting the amount which order was also not complied by the Corporate Debtor - the Adjudicating Authority ought to have admitted Section 9 Application. Appeal disposed off.
Issues Involved:
1. Whether the Corporate Debtor committed default in payment of the outstanding debt. 2. Whether the Adjudicating Authority erred in not admitting the Section 9 Application. 3. Whether the inability to obtain RBI permission constitutes a valid reason for non-payment. 4. Whether the Adjudicating Authority has equity jurisdiction to direct the deposit of the amount. Summary: 1. Default in Payment: The Corporate Debtor placed multiple purchase orders and received goods from the Operational Creditor but failed to make full payments. Despite issuing a 'Guarantee Letter' and several acknowledgments in 2014 and 2015, the Corporate Debtor did not clear the outstanding debt of USD 1,441,490.78. The Operational Creditor issued a statutory notice under Sections 433, 434, and 439 of the Companies Act, 1956, and later a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, claiming USD 621,348.05. The Corporate Debtor acknowledged the liability but cited the need for RBI permission for remittance. 2. Adjudicating Authority's Decision: The Adjudicating Authority did not admit the Section 9 Application, concluding that the Corporate Debtor's failure to pay was due to a force majeure situation, specifically the lack of RBI clearance. The Authority directed the Corporate Debtor to deposit the equivalent amount in Indian Rupees in an interest-bearing deposit within 60 days but refused to initiate the Corporate Insolvency Resolution Process (CIRP). 3. RBI Permission: The Corporate Debtor argued that the inability to obtain RBI permission for remittance was beyond its control. The Adjudicating Authority accepted this argument, noting that the Corporate Debtor had filed a writ petition seeking directions from the Reserve Bank of India and had shown willingness to pay once permission was granted. 4. Equity Jurisdiction: The Corporate Debtor contended that the Adjudicating Authority lacked equity jurisdiction to direct the deposit of funds. The Adjudicating Authority's orders directing the deposit were challenged as falling outside its scope under the Code. The Tribunal observed that the Corporate Debtor's repeated assurances and failure to comply with the deposit orders indicated a deliberate attempt to avoid payment. Conclusion: The Tribunal held that the Corporate Debtor committed default within the meaning of the Code, and the inability to obtain RBI permission could not be a valid reason to hold that no default occurred. The Tribunal found the Adjudicating Authority's view unsustainable and directed the admission of the Section 9 Application. The Corporate Debtor was given 60 days to make the payment to the Operational Creditor, failing which the Adjudicating Authority was to pass an order of admission under Section 9 of the Code.
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