2017 (2) TMI 1339 - AT - Insolvency and Bankruptcy

IBC Case: Petition Dismissed for Lack of Clear Debt Proof

K.K.V. Naga Prasad Versus Lanco Infratech Ltd.

The Tribunal held that the Company Petition under the Insolvency and Bankruptcy Code was not maintainable as the petitioner failed to establish a clear, ... Corporate Insolvency Resolution process - Existence of eligible debt - Held that:- In totally of dispute as the petitioner claim was not only rejected by the Company but also filed a statement showing that the petitioner himself was due to the Company. Moreover, the petitioner having worked for more than 9 years in the Company as senior Executive i.e. from 19.11.2005 to 23.12.2013 and keeping quiet for a long time, make a demand basing on un-authentic and un-authorised FFS in question, is not at all tenable to invoke the provisions of IBC, which is meant for protection of bonafide stakeholders of a Company as per the objects of IBC as extracted above. The petitioner failed to show his bona fides to approach this Tribunal except technically contending that he has not received the notice of dispute in question from the Company before receipt of demand notice in question. The Tribunal cannot go into roving enquiry into the disputed claims of parties as the object of IBC, as explained is to ensure reorganisation and insolvency resolution of Corporate persons, individuals, etc., in a time bound manner for maximisation of value of assets persons to promoted entrepreneurship etc. As stated above, the Learned Counsel for the Respondents not only denied the claims in question but also explained with cogent reasons as to how the Petitioner is un-justified in filing the present petition by invoking the jurisdiction of this Tribunal under IBC, 2016. It is not a fit case to initiate Insolvency Resolution Process as prayed for by the Petitioner. Issues Involved:1. Maintainability of the Company Petition under the Insolvency and Bankruptcy Code, 2016.2. Existence of a dispute regarding the unpaid operational debt.3. Authenticity and validity of the Full and Final Settlement (FFS) document.4. Timeliness and propriety of the demand notice issued by the Petitioner.5. Allegations of malafide intentions and misuse of the Tribunal's process by the Petitioner.Detailed Analysis:1. Maintainability of the Company Petition under the Insolvency and Bankruptcy Code, 2016:The Company Petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Company. The Tribunal examined whether the petition met the requirements of Section 9, which mandates the operational creditor to provide a copy of the invoice demanding payment or demand notice, an affidavit stating no notice of dispute, a certificate from financial institutions confirming non-payment, and other specified information. The Tribunal found that the petitioner failed to demonstrate bona fides and relied on an unauthenticated FFS document, which did not justify invoking the IBC provisions.2. Existence of a dispute regarding the unpaid operational debt:The Tribunal noted that the Company had raised a dispute regarding the unpaid operational debt before the receipt of the demand notice. The Company contended that the petitioner was not entitled to the claimed amount and that there was a clear dispute about the debt, including allegations that the petitioner owed money to the Company. The Tribunal emphasized that the IBC is not intended to resolve disputed claims and that such disputes should be settled through civil courts.3. Authenticity and validity of the Full and Final Settlement (FFS) document:The petitioner relied on a SAP generated FFS document dated 14.07.2015, claiming unpaid dues. The Company argued that the FFS was unauthorized and issued without proper authority. The Tribunal found that the petitioner failed to prove the authenticity of the FFS document and noted that the individual who issued it had resigned from the Company. The Tribunal concluded that the FFS document could not be relied upon to establish the debt.4. Timeliness and propriety of the demand notice issued by the Petitioner:The petitioner issued a demand notice on 02.01.2017, demanding payment within ten days. The Company responded on 11.01.2017, disputing the claim and stating that the petitioner was not a financial creditor. The Tribunal observed that the demand notice and subsequent petition were based on disputed claims, and the petitioner did not take appropriate steps to resolve the issue before approaching the Tribunal.5. Allegations of malafide intentions and misuse of the Tribunal's process by the Petitioner:The Company alleged that the petition was filed with the ulterior motive of defaming and pressurizing the Company. The Tribunal noted that the petitioner had been silent for a long period after his resignation and only raised the issue in January 2017. The Tribunal found that the petitioner did not approach the Tribunal with clean hands and was attempting to misuse the IBC process for personal gain.Conclusion:The Tribunal concluded that the petition was not maintainable under the IBC as the petitioner failed to establish a clear, undisputed debt and relied on an unauthenticated FFS document. The Tribunal emphasized that the IBC is meant for genuine insolvency resolution and not for settling disputed claims. Consequently, the petition was rejected, but the Tribunal allowed the parties to settle the issue through other legal remedies if necessary.