2018 (8) TMI 1375 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - failure to pay debt - Held that - the present Petition is filed by Operational Creditor ignoring the order passed in the past. Therefore, the subject claim is in dispute and therefore Petition is liable to be dismissed. It is the contention of the Corporate Debtor that only ₹ 7 lakhs is due since 75% of the amount awarded i.e. ₹ 24,50,046/- was already deposited and withdrawn by Operational Creditor. The liability according to the Corporate Debtor is ₹ 7 lakhs whereas the claim is filed for ₹ 3,79,61,269/-. Thus, it is clear dispute is existing with regard to quantum of liability. Therefore, Petition cannot be admitted in view of the dispute by virtue of Section 9 (5) (ii) (d).

Summary

Issues Involved:
1. Whether the petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 is maintainable.
2. Whether there exists a dispute regarding the quantum of liability.
3. Impact of previous litigation and orders on the current petition.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition under Section 9 of IBC:
The petition was filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking to initiate insolvency proceedings against the Corporate Debtor. The Operational Creditor argued that the petition is maintainable as the debt and default are unambiguously admitted. The Operational Creditor relied on Section 3(10) of IBC, which includes a decree holder within the definition of a creditor, and the judgment of the NCLAT in Annapurna Infrastructure Pvt. Ltd. v. SORIL Infra Resources Ltd., which held that the pendency of execution proceedings does not bar the initiation of IBC proceedings.

2. Existence of Dispute Regarding Quantum of Liability:
The Corporate Debtor contended that there is a pre-existing dispute regarding the quantum of liability, which was communicated to the Operational Creditor in response to the demand notice. The Corporate Debtor referred to the decision in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, which mandates the rejection of the application if a genuine dispute exists. The Tribunal noted that the dispute centered around the quantum of liability, as evidenced by ongoing litigation and various court orders, including the determination of the amount by the District Court at Chandigarh and subsequent appeals.

3. Impact of Previous Litigation and Orders:
The Tribunal examined the prolonged litigation history between the parties, starting from the award by the Haryana Micro and Small Enterprises Facilitation Council in 2010. The Corporate Debtor had challenged the award through various legal avenues, including objections before the ADJ, Chandigarh, and appeals to the Punjab & Haryana High Court and the Supreme Court. The Tribunal noted that the District Court at Chandigarh had determined the liability at ?24,50,046, and 75% of this amount had been deposited and withdrawn by the Operational Creditor. The Tribunal also observed that the Operational Creditor had filed multiple execution petitions, some of which were dismissed, and the matter was still pending adjudication.

Conclusion:
The Tribunal concluded that the petition under Section 9 of IBC could not be admitted due to the existence of a genuine dispute regarding the quantum of liability. The Tribunal emphasized that the dispute was not spurious, hypothetical, or illusory, as it was supported by substantial litigation history and court orders. Consequently, the petition was rejected under Section 9(5)(ii)(d) of the IBC, which mandates the rejection of the petition if a notice of dispute has been received by the Operational Creditor.