2017 (9) TMI 1077 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedure - application under Sec.9 of Insolvency and Bankruptcy Code, 2016 - pre-existing dispute between the parties - Held that - In this case admittedly the petitioner has not given any document to prove the date of service of notice on the corporate debtor. Operational creditor has also failed to file affidavit to show that there is no compliance of sub-clause (c) of Clause (5) Rule 9. There is also no compliance of sub-clause (d) of Clause (5) of Rule 9, because operational creditor has not filed any affidavit to specify whether he has received any notice of dispute from the corporate debtor. Compliance of this provision is mandatory and not discretionary. Since the operational creditor has failed to comply with the statutory provision so on the above grounds the petition cannot be admitted. It is pertinent to mention that this petition has been filed on account of unpaid salary dues from May, 2016 to February, 2017 and total claim of the operational creditor is ₹ 35,00,000/-. It is also pertinent to mention that the claim of the petitioner is based on the basis of order passed by NCLT on 18/8/2016. This clearly shows that the claim of the operational creditor is mainly on the basis of existing dispute between the parties, which is pending in NCLT. Sub-section 3(b) of Sec.9 provides that operational creditor has to file an affidavit to the effect that there is no notice given to the corporate debtor relating to dispute of unpaid operational debt. In this case the operational creditor has not submitted any affidavit in compliance of sub-clause (3)(b) of Sec.9 and the documents which have been filed by the corporate debtor in reply clearly indicates that dispute is pending between the parties before the NCLT and claims of operational creditor is based on the order of the NCLT in that case. In case of pre-existing dispute, provision of Sec.9 of IB Code cannot be invoked. It is thus clear that the application under Sec.9 is not maintainable on account of pre-existing dispute between the parties.

Summary

Issues:
1. Maintainability of the application under Sec.9 of the Insolvency and Bankruptcy Code, 2016.
2. Dispute regarding the operational debt claimed by the applicant.
3. Compliance with statutory provisions and mandatory requirements for admitting the petition.

Analysis:
1. The judgment by the National Company Law Tribunal, Kolkata, involved the application filed by an Operational Creditor under Sec.9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor, South Eastern Carriers Pvt. Ltd. The applicant claimed a debt of &8377; 35,00,000 on account of salary dues from May 2016 to February 2017. The applicant issued a demand notice to the Corporate Debtor, which was not paid by the stipulated date, leading to the application being filed.

2. The Corporate Debtor objected to the application, disputing the operational creditor's claim and contending that the applicant lacked the standing to file the application. The Corporate Debtor also raised objections based on the pendency of another proceeding before the Tribunal. The Tribunal considered these objections along with the evidence presented by both parties.

3. The Tribunal emphasized the mandatory compliance with statutory provisions for admitting such petitions. It noted that the applicant failed to provide evidence of the date of service of the demand notice to the Corporate Debtor. Additionally, the Operational Creditor did not file an affidavit to demonstrate compliance with specific clauses of Rule 9, highlighting the importance of adhering to procedural requirements.

4. The Tribunal referred to previous judgments and legal provisions, emphasizing that the existence of a pre-existing dispute between the parties, as evidenced by proceedings before the NCLT, rendered the application under Sec.9 not maintainable. The Tribunal underscored that the statutory provisions must be strictly followed, and in cases of pre-existing disputes, the provisions of the Insolvency and Bankruptcy Code cannot be invoked.

5. Ultimately, the Tribunal dismissed the application by the Operational Creditor under Sec.9 of the Insolvency and Bankruptcy Code, 2016, on the grounds of the pre-existing dispute and the lack of compliance with mandatory statutory provisions. The order was issued to both the Applicant/Operational Creditor and the Corporate Debtor, concluding the legal judgment delivered by the Tribunal.