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TMI Blog2021 (4) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... , application under Section 9 of Insolvency and Bankruptcy Code, 2016 is as such not maintainable because for non-implementation for an approved resolution plan, a different application has to be made as per the provisions of Section 33(3) of Insolvency and Bankruptcy Code, 2016. From the perusal of 3rd proviso which was inserted in the EIGHTH SCHEDULE with effect from 24.05.2017 by the Insolvency Bankruptcy Code (removal of difficulties) order, any scheme sanctioned or under implementation in terms of provisions of SICA Act, 1985 is deemed to be an approved resolution plan and the same is to be dealt with in accordance with Part-II of the Code. Part-II of the Code pertains to Corporate Insolvency Resolution Process and also provide for passing of an order of liquidation under Section 33(2) of Insolvency and Bankruptcy Code, 2016 in case an approved resolution plan is not implemented. Any aggrieved party can initiate such action. Accordingly, this application is not maintainable and therefore, rejected. Even otherwise, such application, is not maintainable because this application has been filed after expiry of 643 days from 01.12.2016, being the date of Insolvency and Bankruptcy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record. 3. Submissions of the Operational Creditor A. BRIEF FACTS OF THE CASE: 1. This present Application is filed under Section 9 of the Insolvency Bankruptcy Code, 2016 ( IB Code ) by Mr. Surendra Singh Hada and 125 employees of Arfat Petrochemicals Pvt. Ltd. ( APPL ), as the operational creditors, represented by the authorised representative and power of attorney holder Mr. Habib Khan being one of the applicant in CP (IB) No. 469 of 2018 for Default of Rs. 11,49,39,302 arising due to Non-payment of dues and Non-Compliance of Hon'ble AAIFR sanctioned Rehabilitation Scheme (vide its order dated 07.01.2005) by APPL/Corporate Debtor herein. The said Rehabilitation Scheme is also considered as deemed Resolution Plan and provisions of Part II of the IB Code are applicable to them and brings them under the supervision of the Hon'ble Adjudicating Authority (ref. S. 252 Schedule VIII of the IB Code) 2. That the J.K. Synthetics Limited ( JKSL ) was the sick industrial unit whose revival was in question. That IDBI was appointed as the operating agency ( OA ) to examine the viability of the company's rehabilitation and formulate the Draft Rehabilitation Scheme ( DRS ). 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of operational debt of Rs. 11,49,39,302/- (inclusive of interest), non-implementation and gross violation of sanctioned BIFR Scheme, and consequent Repeal of the SICA, 1985, a group of 125 workers filed the present Application under section 9 of the IB Code seeking initiation of CIRP of APPL. B. WHY THIS PETITION UNDER SECTION-9 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 SHOULD BE ADMITTED FOR CIRP. 1. Default in payment of debt to the Applicant workers/opera by the Corporate Debtor (APPL) is continuous since sanctioned Rehabilitation Scheme dated 07.01.2005 and triggers the initiation of CIRP in fittest of the cases. 1.1. That non-payment of dues of the 125 workers/employees (the Operational Creditors herein) under the Sanctioned Rehabilitation Scheme dated 07.01.2005 of the Hon'ble BIFR/AAIFR, which the APPL (corporate debtor herein) miserably failed to implement in order to achieve their ulterior motive to satisfy their soul and not the society at large. 1.2. Gross violation and non-compliance of AAIFR sanctioned Scheme and two TLSA dated 09.10.2002 and 22.10.2002 by APPL triggers insolvency resolution. The Respondent failed to provide any proof of payment of defaulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation and Hence application u/s. 9 of IB Code, 2016 is within the Limitation Period. It may be noted that by virtue of Section 22(1) read with 22(5) of SICA the period from the date of filing of Reference with BIFR until implementation of Rehabilitation Scheme stand excluded for the purpose of computation of period of limitation, i.e. entire period from April 1998 till December 1, 2016 (till the SICA, 1985 was repealed) shall stand excluded for the purpose of computation of period of limitation under the lb Code. 2.2 The following cases decided by Hon'ble NCLAT supports the arguments of the Applicant on exclusion of period of limitation 2.3 Pursuant to an order of BIFR under SICA, a creditor was unable to take any action against its debtor until introduction of the Code, the period during which such creditor was barred by the order of BIFR shall be excluded for the purpose of determining limitation. The same has also been appreciated by the Hon'ble NCLAT in the matter of Mr. Gouri Prasad Goenka v. Punjab National Bank ors. (Company Appeal (AT) (Insolvency) No. 28 of 2019) [18] wherein the Hon'ble Appellate Authority held that- 9. Admittedly, in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. , has provided a new test plausible contention to determine the existence of dispute . In that regard, the expression genuine dispute has been extensively discussed by the Supreme Court in their judgment by understanding the jurisprudence of dispute for the purpose of Corporations Law of other countries and lately concluded in Para. 37 of the judgment. The relevant excerpt of the judgment is depicted below:- In our view a genuine dispute requires that: (i) the dispute be bona fide and truly exist in fact; (ii) the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived. We consider that the various formulations referred to above can he helpful in determining whether there is a genuine dispute in a particular case, so long as the formulation used does not become a substitute for the words of the statute. 44. If a dispute truly exists in fact and is not a hypothetical or an illusory one, then, the 'Adjudicating Authority' is to reject the Application. A defence being a mere bluster can also be rejected by an 'Adjudicating Authority'. 3.3 Questions to be seen by the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DATED : 11.05.2019, AMOUNT : 43,903/- 2. CHEQUE No.:898395, DATED : 11.05.2019, AMOUNT : 57,858/- 3. CHEQUE No.:898394, DATED : 11.05.2019, AMOUNT : 95,000/-. Details separately mentioned in IA No. 115 of 2020 in CP (IB) 469 of 2018. As it was observed by the Hon'ble Supreme Court of India in Innoventive Industries Ltd. vs. ICICI Bank Anr. that claim means a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). C. REJOINDER a) Debt arising out of AAIFR sanctioned Scheme on 07.01.2005, hence it has statutory genesis and character. Applicant Workers were part of the compromise agreed by APPL and included in the list of worker forming part of the sanctioned Scheme. b) Three consistent judgments of Hon'ble NCLAT upheld applicability of Section 22(5) of SICA allowing exclusion of period of limitation when any sanctioned Scheme is under implementation and bars any suits, proceedings, etc. in terms of section 22(1). The word etc. used in section 22(1) is of vide implication and covers all forms of proceedings within its ambit. c) This issues is not res-integra has been settled in 3 consistent judgments of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erational creditor relied upon the decision of the Hon'ble Supreme Court of India in Macquarie Bank vs. Shilpi Cable Technologies Ltd. The application is otherwise complete and defect free....... D. COPIES OF JUDGMENT/ORDERS RELIED BY PETITIONER Case Title Forum Para Nos. Re: Innoventive Industries Ltd. vs. ICICI Bank Anr. Ratio - claim means a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more . (Section 4 of Code) Supreme Court 27, 28, Re: Swiss Ribbons Pvt. Ltd. v. Union of India (2018) Quoted RKGarg v. VOL (Para 8) Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. Para 85: The Insolvency Code is a legislation which deals with economic matters and, in the larger sense,, deals with the economy of the country as a whole. Earlier experiments, as we have seen, in terms of legislations having failed, trial 'having led to repeated errors', ultimately led to the enactment of the Code. Supreme Court 8, 11, 12, 85 Macquaire Bank Ltd. v. Shilpi Cable Technologies Ltd. Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UMENTS AND PRAYER There are two legal issues raised from this application which this Hon'ble Tribunal may consider, are as follows:- (i) Whether the petition is 'Maintainable under section 9' of the Code when BIFR proceedings were finalized and was under implementation in respect of the defaulted outstanding debt of the workers/employees of the CD? (ii) Whether the Corporate Insolvency Resolution Process be commenced in respect of the debt arising out of the Sanctioned Rehabilitation Scheme by the Hon'ble BIFR/AAIFR which is yet to be implemented after the BIFR/AAIFR stands dissolved? Firstly, the first issue is addressed as petitioner(s) are the workmen/employees being the operational creditors within the meaning of Section 5(20) of the Code where the debt and default has statutory genesis and character by the orders of Hon'ble BIFR/AAIFR. Workers having their outstanding debts have preferred the application u/s. 9 of the Code, in a joint capacity by. authorizing Mr. Habib Khan (one among the applicants herein) as an authorised representative to represent on their behalf against APPL who falls within the definition of Corporate Debtor under Section 3(8) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority. 4. Submissions of the Corporate Debtor 1. It is submitted that the present application has been preferred by Applicant under Section 9 of the Insolvency Bankruptcy Code, 2016 (Code) allegedly filed by Shri Surendra Singh Hada on behalf of himself and 125 other employees of M/s. J.K. Synthetics Ltd. through its power of attorney holder, deserves to be out rightly dismissed and rejected by the Hon'ble Adjudicating Authority in view of the submissions made and deficiencies pointed our hereunder:- Pre-existing Dispute 2. It is submitted that the various issues and multifarious litigation is pending between the parties before various forums of law. Copy of list of litigation between the parties along with the page number at which it is attached in our reply is annexed herein as Annexure W-1 to the written submission. 3. Therefore, it is submitted that the captioned insolvency petition is not maintainable being hit by Sec. 9(5)(ii)(d) of the Code as there are pre-existing disputes between the parties and the instant case is squarely covered by the law laid down by the Hon'ble Supreme Court in the matter of Mobilox Innovations Put. Ltd. vs. Kirusa Software Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even Gauri Prasad provided exclusion on the basis of Section 22(1) of SICA inter alia, provides that 'no suit for the recovery of money or for the enforcement of any security against the Industrial Company or any guarantee in respect of any loans or advance granted to the Industrial Company shall lie or be proceeded with further except with the consent of the Board or, as the case may be, the Appellate Authority'. This is also against the ruling of Gaurav Hargovindbhai Dave vs. Assets Reconstruction Company Ltd. Anr. in which Hon'ble Apex Court differentiate between suit and application and held that insolvency applications cannot be considered to be suit they are applications . Therefore, Section 22 of SICA cannot come in the way of filing application under the Code. (Copy of Hon'ble Supreme Court order in Gaurav Hargovindbhai Dave vs. Assets Reconstruction Company Ltd. Anr. is attached and marked as Annexure W-3) Vague Amount 6. It is submitted that Petition has been filed on the erroneous premise that an alleged amount of more than Rs. 10 Crores is due and payable to Shri. Surendra Singh Hada and 125 other employees of M/s. JK Synthetics Ltd. It is further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be changed in the manner which it is sought. Default Amount is below one lakh 10. Further it is submitted that as per Section 4(1) of the Code for filing insolvency application under Section 9 of the Code the minimum amount of default should be one lakh rupees. However, in the present application claim of each and every individual employee is below one lakh rupees. Therefore, the present insolvency petition ought to be dismissed at the threshold as it does not qualify the minimum threshold of default amount i.e., one Lakh rupees. List of claim of each employee is attached at page No. 23-25 of additional affidavit of petitioner. Demand Notice is defective 11. Further I submitted that the demand notice which is issued is defected in nature as no amount and the date of default is mentioned. Also, Nagendra Singh Hada had sent demand notice on behalf of 125 workmen which is not permissible under law. Copy of demand notice is attached as Annexure-07 of Petition at Page No. 329-332. Application not Maintainable (joint Petition) 12. Further in the case of JK Jute Mill Mazdoor Morcha vs. Juggilal Kamplavat (attached and marked as Annexure W-5) case it is settled principal that a trade un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made or inquiry pending to or before the Board or any proceeding of whatever nature pending before the Appellate Authority or the Board under the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall stand abated: Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eighty days from the commencement of the Insolvency and Bankruptcy Code, 2016 in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016: Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry stands abated under this clause. [Provided also that any scheme sanctioned under Sub-Section (4) or any scheme under implementation under sub-section (12) of Section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall be deemed to be an approved resolution plan under sub-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016 and the same shall be dealt with in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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