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TMI Blog2020 (9) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Creditor) U/s 9 of the IBC, 2016, R/w Rule 6 of the I&B (Application to Adjudicating Authority) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/s. Body sculpt Health club Pvt. Ltd., on the ground, that it has committed default for total amount of ₹ 63,15,924.24/- (Rupees Sixty Three Lakhs Fifteen Thousand Nine Hundred and Twenty Four and Twenty Four Paisa Only) along with interest at 21% p.a. till August 2019. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: (1) M/s. Prime Assetsource Pvt. Ltd., (herein after referred to as Petitioner/Operational Creditor) bearing the CIN: U72200KA 2009PTC050135 and having its Registered Office situated at Level 1 to 4, 58/1, 13th Cross, Margosa Road, Malleshwaram, Bengaluru 560003. It is engaged in the business of renting out computer hardware, peripherals, furniture, Air Conditioners and other equipment's and products. (2) M/s. Bodysculpt Healthclub Pvt. Ltd., (herein after referred to as Respondent/Corporate Debtor) was incorporated on 9.11.2011 having CIN: U74999KA2011PTC061108 and having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of Objection dated 30.01.2020 and Memo of Factual Matrix dated 17.02.2020 by inter alia contending as follows: (1) The Respondent had been put to multiple hardships by the claims made by the Applicant/Petitioner herein. The amount that was agreed to be paid was about ₹ 65 Lakhs (including Principal and interest) and part amount was already paid by the Respondent to the Applicant/Petitioner. And the aforesaid amount was agreed by both the Parties in January, 2019. The Application was filed in the month of May 2019 and during the said gestation period, multiple cheques were issued by the Respondent in favour of the Applicant to make the payment. Further the Respondent had already issued cheques for the remaining balance amount. The following is the table establishing the fact of repayment and the balance payment to be made: Particulars Amount Paid (In Rs. ) CC 21775/19 5,00,000 CC 22388/19 5,00,000 PCR 15573/19 20,70,845 CC 18199/2019 14,83,769 Total Repayment Made 45,54,614 (including principal and interest Balance Amount Payable 20,00,000 (including principal and interest) The Petitioner has already initiated to recover such balance amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational Private Limited corresponding to the outstanding amount in the present subject matter. (4) It is alleged that the Applicant is charging exorbitant interest of about 21% which is not all specified in any of the terms and conditions appended to the services provided by the Applicant to the Respondent. The Applicant is only trying to make an unjust enrichment by claiming more amount and there is no proper rationale behind imposing such interest rate. The Corporate Debtor is adversely affected by the inflated interest rate charged by the Operational Creditor. It is alleged that the Applicant is trying to put up pressure on the Corporate Debtor by invoking the provisions of Code. The Corporate Debtor is a going concern and not an Insolvent Company. The provisions of the Code cannot be invoked as a recovery forum. The Respondent is a Solvent Company with about 50 employees and is continuously carrying out its business activities. (5) Therefore, the instant Petition is not maintainable and liable to be dismissed. 4. Heard Shri Kanni Selvakarsan, learned Counsel for the Petitioner, and Shri Hari Babu Thota, learned PCS for the Respondent, through Video Conference. We have ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia by taking into consideration of present economic scenario due to epidemic has taken several mitigating steps to save the Companies from going into CIRP and then Liquidation. Accordingly, the Govt. of India, so far as provisions of Code is concerned, has increased threshold to initiate CIRP proceedings from the existing Rs. One lakhs to Rs. one Crores. Similarly, provisions of Sections 7, 9 and 10 of Code, are suspended temporarily. The Central Government has vide Notification No. S.O. 1205(E) [F.N0.30/9/2020-INSOLVENCY], dated 24.3.2020, specified one crore rupees as the minimum amount of default. It is relevant to note that Section 4 refers to Part II of the the Insolvency and Bankruptcy Code, 2016which covers from Section 4 to Section 77. Therefore, Part II is not applicable in the instant case as the amount of default is less than one crore rupees. Moreover, Section 9(5) is under Part II which is not applicable as on this date, implying that the provision on admitting the application does not apply today. Further, Section 9(6) of the Code specifically provides that corporate insolvency resolution process shall commence from the date of admission of the application under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t between the Parties, including any question regarding its existence, validity or termination (Dispute), the parties can settle the dispute by referring the matter to Arbitration in Bangalore, in accordance with the Arbitration Rules as laid down in the prevalent provisions of the Indian Arbitration Act, 1996, for the time being in force. Since cause of action and the dispute arise out of said Agreements, the Petitioner has not even made attempt to resolve their dispute either through mediation or Arbitration. Instead, it has resorted to initiating Criminal case for dishonouring the post-dated Cheques. By pursuing the criminal case for recovery of alleged due and receiving part payment, the Petitioner has, yet again resorted to invoking the provisions of Code in order to settle and recover the alleged dues. The facts and circumstances of the case clearly established that the Petitioner is using the provisions of Code with main object to recover the alleged due rather than to seek to initiate CIRP on. justified grounds. It is also relevant to point out here that role of Operational Creditor, who filed case U/s. 9 of the Code, will be nominal during the process of CIRP, and it is do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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