2018 (4) TMI 1604 - Tri - Companies Law

Petition to Initiate Corporate Insolvency Process Rejected

The petition seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor was rejected by the Tribunal. The claims were ... Corporate Insolvency Resolution Process (CIRP) - non fulfillment of the conditions prescribed under section 9(5)(i) to admit the case - Held that:- The Company petition itself suffers various fundamental defects as pointed out by the learned Advocate General for the respondents in the reply as stated supra. Therefore it is to be held that there is a valid dispute rather no dispute as issue in question was substantially dealt with by various Courts as mentioned supra. Therefore, the Company petition is not maintainable as per law declared by the Hon 'ble Supreme Court in various judgments as mentioned supra. Therefore, the Company is liable to be rejected. The Adjudicating Authority cannot go into disputed question of debt and default, and whether the debt and default with regard to the claim arises or not, is the point for consideration. In the instant case, as stated supra, payment of interest on delayed payment on principal amount has suffered so much litigation ending with order dated 8.11.2016 by the Hon' High court for the states of AP and of Telangana. Therefore, the present Company petition also do not fulfill the conditions prescribed under section 9(5)(i) to admit the case, and, thus, it is liable to be rejected under Section 9(5) (ii) of IBC, 2016. And the petitioner was given ample opportunity duly following principles of natural justice as detailed . Petition dismissed. Issues Involved:1. Validity of the claim under the Insolvency and Bankruptcy Code (IBC), 2016.2. Whether the claims are barred by the Law of Limitation.3. Admissibility of the petition under Section 9 of IBC, 2016.4. Existence of a dispute regarding the debt.5. Procedural compliance with the IBC, 2016.Detailed Analysis:1. Validity of the claim under the Insolvency and Bankruptcy Code (IBC), 2016:The petition was filed by the Operational Creditor under Section 9 of the IBC, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of interest on delayed payments. The Tribunal noted that the claim had undergone extensive litigation and various judgments had been passed by different courts, which ultimately settled the matter.2. Whether the claims are barred by the Law of Limitation:The Haryana Micro and Small Enterprises Facilitation Council (HMSEFC) had declared that the claims for invoices Nos. 1 to 57 were barred by the Law of Limitation. This decision was upheld by the Hon’ble High Court of Punjab and Haryana and the Hon’ble High Court of Judicature at Hyderabad. The Tribunal emphasized that these claims had attained finality and were barred by limitation, making them unenforceable.3. Admissibility of the petition under Section 9 of IBC, 2016:The Tribunal evaluated the petition under the parameters set forth in Section 9(5) of the IBC, 2016. It was found that the petition did not meet the necessary criteria for admission, especially since there was no enforceable decree or award for the claims in question. The Tribunal noted that the petition suffered from fundamental defects and did not fulfill the conditions prescribed under Section 9(5)(i) of the IBC.4. Existence of a dispute regarding the debt:The Tribunal acknowledged the existence of a valid dispute regarding the debt. The Corporate Debtor had consistently opposed the claims, arguing that they were barred by limitation and that there was no admitted liability. The Tribunal referenced various judgments, including the Mobilox Innovations Pvt Ltd Vs Kirusa Software Pvt Ltd case, which established that the existence of a dispute precludes the admission of a petition under Section 9 of the IBC.5. Procedural compliance with the IBC, 2016:The Tribunal scrutinized the procedural aspects of the petition, including the issuance of the demand notice and the authorization of the advocate to issue the notice. It was found that the demand notice did not comply with the requirements of Section 8 of the IBC, 2016, as there was no evidence of a board resolution authorizing the advocate to issue the notice. This procedural lapse further contributed to the rejection of the petition.Conclusion:The Tribunal concluded that the petition was not maintainable due to the existence of a valid dispute, the claims being barred by limitation, and procedural non-compliance. The petition was rejected under Section 9(5)(ii) of the IBC, 2016. The Tribunal also noted that the Operational Creditor could pursue other legal remedies available under different laws.Order:The Company Petition bearing CP (1B) No. 316/9/HDB/2017 was rejected. The Tribunal clarified that this order does not preclude the Petitioner from pursuing other legal remedies. No order as to costs was made.