2021 (1) TMI 3 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - On a perusal of the material brought on record it is clear that this is a fit case for dismissal. The Corporate debtor denies the debt. The copy of the Memorandum of Agreement filed by the Petitioner shows that it has no date on which it was stated to have been agreed to. It also does not have the signature of the parties to the agreement. The witness column is blank. The same therefore cannot be relied upon by the Petitioner. No right to payment or debt can arise in the absence of a valid agreement. The notice issued to the Respondent by the Petitioner also states that the Agreement was entered into in the month of March 2016, and provides no specific details or evidence of the agreement having been signed or amounts spent on purchase and supply of kitchen plant and machinery etc. for the Respondent. Hence in the absence of any valid agreement, any evidence regarding the expenditure stated to have been incurred out of his own funds, or sums due to him as an investor or as share in profits as claimed in the Petition, and the Respondent's denial of all the averments made by the Petitioner, with no counter by the Petitioner in spite of sufficient opportunity, we have no option but to dismiss the petition - Petition dismissed.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under IBC, 2016 based on default amounting to ?3,50,00,000.

Detailed Analysis:
1. The petition was filed by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a sum of ?3,50,00,000. The Operational Creditor's late husband had invested in the Corporate Debtor's business but did not receive profits as agreed upon, leading to the default amount. The Operational Creditor faced challenges in tracing all investment-related documents due to her husband's sudden demise.

2. The Corporate Debtor responded by denying the allegations, stating that the late husband was only a manager and not an investor or partner in the company. They accused the late husband of misusing his position, transferring funds fraudulently, and owing a significant sum to the company. The Corporate Debtor emphasized that no agreement existed regarding profit-sharing or investment by the late husband.

3. Despite notices and hearings, both parties failed to appear, indicating a lack of interest from the Operational Creditor's side. The Corporate Debtor's objections, including the absence of a valid agreement and denial of debt, were not effectively countered by the Operational Creditor. The evidence provided by the Operational Creditor, including the Memorandum of Agreement, lacked crucial details and signatures, making it unreliable.

4. The Tribunal concluded that without a valid agreement or substantial evidence of investment or profit-sharing, the petition lacked merit. The Corporate Debtor's consistent denial of the Operational Creditor's claims, coupled with the absence of a rebuttal from the Operational Creditor, led to the dismissal of the petition. The Tribunal emphasized the importance of valid agreements and concrete evidence in insolvency proceedings.

5. As a result, the Tribunal dismissed the petition (C.P. (IB) No.169/BB/2020) without any costs, highlighting the necessity of substantial evidence and valid agreements to support claims in insolvency cases.