2019 (1) TMI 1316 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - proof of debt payable - Held that - Debt in question is not only in serious dispute, but it is also barred by laches and limitation, and the petitioner, in fact seeking recovery of alleged debt under the provisions of code. We have gone through the citations given by the learned Counsel for the Petitioner, and found that ratio given in those judgments is not applicable to the facts and circumstances of the instant case. Therefore, it is not a fit case to initiate CIRP as prayed for, and thus it is liable to be rejected.

Issues Involved:
1. Territorial jurisdiction and maintainability of the petition.
2. Existence of a bona fide dispute regarding the debt.
3. Applicability of arbitration clause.
4. Alleged breaches of the Master Licence Agreement by the Petitioner.
5. Limitation and laches in the claim.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction and Maintainability:
The Respondent contended that the petition is not maintainable before this Bench as the dispute arose in Hyderabad and the parties are located there. However, the Tribunal has territorial jurisdiction as per Section 60 of the Insolvency and Bankruptcy Code, 2016. The Tribunal found that the objection regarding territorial jurisdiction was not sufficient to dismiss the petition.

2. Existence of a Bona Fide Dispute Regarding the Debt:
The Respondent argued that there is a bona fide dispute about the debt, citing defective services and non-compliance with the terms of the Master Licence Agreement. The Tribunal noted that the Respondent had raised several issues about the quality of services provided by the Petitioner, including faulty supplies and poor service. The Tribunal found that the debt in question is not only in serious dispute but also barred by laches and limitation, making it inappropriate to initiate Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code.

3. Applicability of Arbitration Clause:
The Respondent pointed out that the contract between the parties included an arbitration clause, stipulating that any dispute should be subjected to arbitration proceedings in Hyderabad. The Tribunal acknowledged the arbitration clause but emphasized that the existence of such a clause does not bar the initiation of CIRP if the debt is undisputed and due. However, in this case, the dispute about the debt's validity and amount made the arbitration clause relevant, further supporting the dismissal of the petition.

4. Alleged Breaches of the Master Licence Agreement by the Petitioner:
The Respondent alleged multiple breaches of the Master Licence Agreement by the Petitioner, including failure to provide Telugu content, inadequate training sessions, and non-compliance with specific clauses. The Tribunal examined the relevant clauses of the Master Licence Agreement and found that the Petitioner had not fulfilled all its obligations, which contributed to the bona fide dispute over the debt. The Tribunal also noted that the Addendum Agreement dated August 1, 2016, which allegedly confirmed the outstanding amount, was not properly executed and could not be relied upon to establish the debt.

5. Limitation and Laches in the Claim:
The Tribunal referred to the Supreme Court's judgment in B.K. Educational Services (P.) Ltd. v. Parag Gupta & Associates, which held that the provisions of the Limitation Act apply to proceedings before the NCLT/NCLAT. The Tribunal found that the debt in question fell due on various dates starting from October 2011, and there was no explanation for the delay in filing the petition. The Tribunal concluded that the claim was barred by laches and limitation, further justifying the dismissal of the petition.

Conclusion:
In view of the above facts and circumstances, the Tribunal concluded that the debt in question is in serious dispute, barred by laches and limitation, and the Petitioner was effectively seeking recovery of the alleged debt under the provisions of the Insolvency and Bankruptcy Code. Therefore, the petition to initiate CIRP was dismissed. The Tribunal noted that this order does not prevent the Petitioner from seeking other remedies available under any other law. No orders as to costs were made.

← Previous Next →