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2019 (7) TMI 965 - Tri - Insolvency and BankruptcyAdmissibility of petition - Initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor - default in repayment of outstanding amount - HELD THAT - There are several questions of facts and law are involved in the instant case. Even the amount claimed itself is not terms of Settlement Agreement in question, in which interest issue did not mention and part payment of ₹ 5 Lakhs was received, after issue of demand notice. Therefore, there is a serious disputes exists with reference to the claim made by the Petitioner. The application is not only defective as rightly claimed by the Respondent, but it is instituted with an intention to recover the alleged outstanding amount by initiating CIRP proceedings, and it is not a fit case for admission and the same is liable to be rejected. Application dismissed.
Issues Involved:
1. Maintainability of the claim under the Insolvency and Bankruptcy Code (IBC), 2016. 2. Definition and applicability of 'Operational Debt' and 'Operational Creditor'. 3. Validity and implications of the Settlement Agreement. 4. Dispute regarding the outstanding amount and interest. 5. Procedural compliance under the IBC, 2016. Issue-wise Detailed Analysis: 1. Maintainability of the claim under the Insolvency and Bankruptcy Code (IBC), 2016: The Respondent contended that the claim made by the Petitioner is not maintainable under the IBC, 2016, as the Respondent is not insolvent or undergoing liquidation or bankruptcy. The Tribunal noted that the IBC is not intended to be a substitute for a recovery forum and is meant to initiate the Corporate Insolvency Resolution Process (CIRP) for justified reasons. The Tribunal emphasized that the provisions of the Code cannot be invoked merely for the recovery of outstanding amounts. 2. Definition and applicability of 'Operational Debt' and 'Operational Creditor': The Respondent argued that the Petitioner does not qualify as an 'Operational Creditor' under Section 5(20) of the IBC, 2016, and the amount claimed does not fall within the definition of 'Operational Debt' under Section 5(21). The Tribunal observed that the claim arises from a Settlement Agreement, which does not constitute an operational debt as defined in the IBC. The Tribunal further noted that the Settlement Agreement did not involve the Respondent directly, and there was no authorization from the Respondent to enter into such an agreement. 3. Validity and implications of the Settlement Agreement: The Tribunal examined the Settlement Agreement dated 05.12.2016, which was executed between the Petitioner and the sister concerns of the Respondent. The Agreement stipulated the payment of ?65,00,000 as a full and final settlement. The Tribunal highlighted Clause 6 of the Agreement, which stated that all rights and obligations between the parties were fully extinguished, and neither party would raise any claims against the other before any court or tribunal. The Tribunal noted that the Petitioner is estopped from invoking the provisions of the IBC based on this Settlement Agreement. 4. Dispute regarding the outstanding amount and interest: The Tribunal observed that there were several disputes regarding the outstanding amount and the interest claimed by the Petitioner. The Respondent had made a partial payment of ?5,00,000, and the claimed amount did not align with the terms of the Settlement Agreement, which did not provide for the payment of interest on delayed payments. The Tribunal found that there were serious disputes regarding the claim made by the Petitioner. 5. Procedural compliance under the IBC, 2016: The Respondent raised several procedural objections, including the lack of a fresh demand notice after the partial payment, the Petition being signed by the counsel instead of the Petitioner, and the absence of a verifying affidavit. The Tribunal noted that the Petition was defective and not in compliance with the procedural requirements under the IBC, 2016. Conclusion: The Tribunal concluded that the application was defective and instituted with the intention to recover the alleged outstanding amount by initiating CIRP proceedings. The Tribunal rejected the application, stating that it was not a fit case for admission. However, the Tribunal clarified that this order would not prevent the Petitioner from seeking other remedies available under the law to address its grievances. No order as to costs was made.
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