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TMI Blog2017 (3) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... yment has been made. The Creditor says that the Debtor made last payment on 17.05.2013 ever since the debtor has not made any payment till date towards invoice amounts outstanding as on 17.5.2013, resulting into default in making repayment of balance of Rs. 3,12,83,758 to the creditor. In this claim, the debtor defaulted in making payment of Rs. 2,84,52,328 in relation to GF Toll Project, and Rs. 28,31,430 towards DS & NK Toll Projects. Despite the debtor has not paid the money against the invoices raised on the debtor, the creditor, by virtue of the Purchase Order between the creditor and the debtor, kept on rendering services in terms of the purchase order and raised invoices against the services until 31.5.2015. After much persistence from the creditor, two separate reconciliation statements were jointly prepared on 12.8.2015 by the creditor and the debtor admitting that the balance payable to the creditor in respect to GF Toll Project is Rs. 2,74,92,594, the difference in reconciliation statement is only Rs. 9,59,734. As to DS Toll & NK Toll Projects, it has been admitted the balance to come to the creditor is mentioned as Rs. 1,00,000. To which, the creditor counsel submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it has liability of Rs. 29,000 crore and assets of Rs. 51,000 crore. The debtor Counsel further submits that since this Company has huge business supplying LP Gas to some parts of Mumbai and also having infrastructure projects, in case moratorium is declared in this company just on a claim of Rs. 3 crores, it will make the debtor company upside down causing adverse effect to the public as well as Corporate functioning of this company. In view of the same, the debtor Counsel states that this creditor, in case has any grievance against the debtor, it should have initiated proceedings for recovery of the claim, but not to resort to Insolvency Resolution process against the solvent company. It is no-where mentioned that this company is unable to make payment nor it has been said that the debtor refused to make payment to the Creditor, it is only said that the services provided by the creditor are not in accordance with the Agreement and claim is in variation to the figures of the company books, therefore, the Petition is liable to be dismissed. 5. Looking at the narration and the Code, two aspects are clear, one - the amount claimed is not supported by the record available, some va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed, the Court will not act upon a defense that the company has the ability to pay the debt but the company chooses not to pay it. (iii) Where the defense of the company is in good faith and one of substance and the defense is likely to succeed in point of law, and the company adduces prima facie proof of the facts on which the defense depends, the petition should be rejected. (iv) The Court may consider the wishes of creditors so long as these appear to be justified. (v) The machinery of winding-up should not be allowed to be utilised merely as a means of realizing its debts. [For the above propositions see Pradeshiya Industrial & Investment Corporation of Uttar Pradesh v. North India Petro-Chemical Ltd. [1994] 2 Comp. LJ 50 (SC) in which the observations in Amalgamated Commercial Traders (P.) Ltd. v. Krishnaswami [1965] 35 Comp. Cas. 456 (SC) and Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 (SC) have been paraphrased]. (vi) If the stance of the adversaries hangs in balance, it is always open to the company court to order the respondent-company to deposit the disputed amount. This amount may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as refusal to repay leads to non-payment to the creditors. 14. In the present case, the debtor is neither a Cash Flow Insolvent nor otherwise Insolvent. The Company's assets are double to the liabilities of the company. Its net worth is admittedly Rs. 24,000 crores. Therefore, by any stretch of imagination, it cannot be said that the company is unable to clear 3 crores of rupees to this creditor company. Normally insolvency proceedings will be initiated against the person or a company when the pleading party apprehends that the insolvency is the only recourse to recover its dues to the extent possible. But here, it is a clear case once the decree is passed in this company, there won't be difficulty for the pleading party to realize such debt from the company. It is no-where said in this Code that the proceedings under Insolvency & Bankruptcy Code are meant for recovery of debts, it has been time and again mentioned that in first stage, resolution for restructuring the company, if not possible, liquidate the company so that the creditors who invested their money in the company would realize their dues from the proceeds of the company. If this procedure is deployed in a he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy of claims. Of course, ultimate object is to ensure that creditors' interest is not evaporated by letting the company become insolvent; no doubt creditors have every right to take swift action if the company is insensitive to make payments to the creditors or when it is unable to make payments. Therefore, since claim is in variation to the computation, we make it clear that this creditor is at liberty to seek other remedies which are available to it under Law. 19. This Corporate debtor Company has Reserves and Surplus of Rs. 21,477 crores, but whereas the creditor Counsel vehemently argued that it need not be seen whether Debtor is able or not able to pay, the only criteria that has to be considered is whether default occurred or not. In this case, default occurrence is clear therefore, since the cause of action is arising u/s. 9, the creditor is entitled to file u/s. 9 of I & B Code. He has also submitted that, according to the Code provisions, default occurrence has to be taken as benchmark to grant relief under 13, 14 and 15 not by saying whether Corporate Debtor is insolvent or is likely to be insolvent or not. 20. Our answer to this argument is the Code itself is me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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