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2018 (1) TMI 1190 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - whether the Company petition is maintainable and it is eligible to be admitted or rejected as per section 9(5)(i) or 9(5)(ii) r/w Section 5(6) of IBC, 2016? - Held that - Now, it is settled position of law that the Hon ble Supreme Court especially, in Mobilox Innovations (P.) Ltd. 2017 (9) TMI 1270 - SUPREME COURT OF INDIA has made clear the scope of dispute, default etc., as mentioned in IBC, 2016 so as to invoke jurisdiction of this Tribunal/Adjudicating Authority. The contention of the learned senior Counsel for the Operational Creditor that paying ₹ 2 Cr. amounting to settlement of the issue in question, is not at all tenable in view of reply given by the Corporate Debtor to Demand notice given by the Operational Creditor and appointment of third Arbitrator as stated supra. We have no doubt in our mind that there is a valid and legal dispute raised by the Corporate Debtor, and thus the case is liable to be rejected. In the light of above discussion of the case and law, by exercising the powers on the Adjudicating Authority, under section 9(5)(ii)(d) r/w Section 5(6) of IBC, 2016, we hereby rejected the Company Petition
Issues Involved:
1. Maintainability of the Company Petition under Section 9 of the IBC, 2016. 2. Validity of the demand notice under Section 8 of the IBC. 3. Existence of a dispute, including pending arbitration proceedings. 4. Whether the petition constitutes forum shopping. Issue-wise Detailed Analysis: 1. Maintainability of the Company Petition under Section 9 of the IBC, 2016: The Company Petition was filed by the Operational Creditor to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The petition was opposed by the Corporate Debtor on the grounds that it was not filed in the prescribed format and suppressed material facts. The Tribunal noted that the petition was filed while arbitration proceedings were pending, which is contrary to the provisions of the IBC. The Tribunal emphasized that it would not invoke its jurisdiction unless alternative remedies like arbitration were exhausted. 2. Validity of the Demand Notice under Section 8 of the IBC: The Corporate Debtor argued that the demand notice issued by the Operational Creditor was not in accordance with the law, as it did not follow the prescribed format in Form-3 of the IBC. The Tribunal acknowledged that the demand notice was indeed flawed and did not meet the statutory requirements. The Operational Creditor's failure to adhere to the prescribed format rendered the demand notice invalid. 3. Existence of a Dispute, Including Pending Arbitration Proceedings: The Tribunal examined whether there was a valid dispute between the parties as defined under Section 5(6) of the IBC. It was established that the Operational Creditor had invoked the arbitration clause, and both parties had nominated their arbitrators. The arbitration proceedings were still pending, and the appointment of the third arbitrator was in process. The Tribunal noted that the existence of pending arbitration proceedings constituted a valid dispute, which precluded the initiation of CIRP under the IBC. The Tribunal referred to the Supreme Court's judgment in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., which clarified that if a genuine dispute exists, the petition must be dismissed. 4. Whether the Petition Constitutes Forum Shopping: The Corporate Debtor accused the Operational Creditor of forum shopping by invoking multiple jurisdictions for the same debt. The Tribunal agreed with this contention, emphasizing that the Operational Creditor should not seek multiple remedies for the same issue. The Tribunal highlighted that the parties had already settled their disputes through conciliation and entered into a Minutes of Meeting, which indicated that the arbitration proceedings should be the appropriate forum for resolving any remaining issues. Conclusion: The Tribunal concluded that the Company Petition was not maintainable due to the existence of a valid dispute and pending arbitration proceedings. It emphasized that the Operational Creditor should exhaust alternative remedies before approaching the Tribunal. Consequently, the petition was rejected under Section 9(5)(ii)(d) read with Section 5(6) of the IBC, 2016. The Tribunal also disposed of the related application (CA No. 186/2017) and clarified that the parties could still explore solutions before the Arbitration Tribunal.
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