Petition for Corporate Insolvency Rejected, Cost Imposed on Creditor, Agreements Validity to Be Decided by Civil Court

The tribunal dismissed the petition seeking Corporate Insolvency Resolution Process against the corporate debtor due to disputed facts, procedural defects, and the application of the doctrine of "Approbate and Reprobate." The tribunal imposed a cost of Rs. 25,000/- on the creditor and clarified that the validity of agreements should be determined by a civil court.

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Issues Involved:
1. Default in payment of operational debt.
2. Demand notice and non-receipt of payment.
3. Non-receipt of notice of dispute.
4. Default in payment under the final settlement agreement.
5. Allegation of suppression of facts and parallel proceedings.
6. Non-joinder of necessary party.
7. Dispute over the validity and enforceability of agreements.
8. Allegations of fraud, undue influence, and coercion.
9. Disputed facts regarding the agreements.
10. Applicability of the doctrine of "Approbate and Reprobate."
11. Procedural defects and maintainability of the petition.

Issue-wise Detailed Analysis:

1. Default in Payment of Operational Debt:
The operational creditor alleged that the corporate debtor defaulted on the payment of Rs. 59,20,49,559/- as consultancy fees under a final settlement and consultancy agreement dated 15th March 2016. The operational creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.

2. Demand Notice and Non-receipt of Payment:
The operational creditor issued a demand notice dated 21st December 2016 to the corporate debtor, which remained unpaid. The creditor provided evidence of non-receipt of payment through bank statements.

3. Non-receipt of Notice of Dispute:
The creditor claimed that no notice of dispute was received from the corporate debtor within the stipulated period of ten days from the receipt of the statutory demand notice.

4. Default in Payment under the Final Settlement Agreement:
The creditor emphasized that the corporate debtor was obligated to pay the consultancy fee under the tripartite final settlement agreement dated 15th March 2016, which replaced the original agreement dated 8th July 2010. The corporate debtor allegedly defaulted on this payment.

5. Allegation of Suppression of Facts and Parallel Proceedings:
The corporate debtor argued that the creditor suppressed material facts about the pendency of a similar petition before the NCLT, Chandigarh, based on the same set of facts and agreements. This petition was disposed of by the Chandigarh Bench by order dated 8th May 2017. The corporate debtor accused the creditor of misleading the tribunal to obtain an order.

6. Non-joinder of Necessary Party:
The corporate debtor contended that the application was liable to be dismissed for non-joinder of M/s Isolux Corsan India Engineering and Construction Pvt. Ltd., a necessary party to the proceedings.

7. Dispute over the Validity and Enforceability of Agreements:
The corporate debtor disputed the validity and enforceability of the final settlement agreement dated 15th March 2016, alleging that it was signed under coercion and undue influence. The debtor argued that the creditor himself had earlier claimed the agreement was fraudulent and void.

8. Allegations of Fraud, Undue Influence, and Coercion:
Both parties accused each other of fraud, undue influence, and coercion. The corporate debtor claimed the creditor coerced it into signing the final settlement agreement, while the creditor alleged that the agreement was induced fraudulently by the debtor.

9. Disputed Facts Regarding the Agreements:
The tribunal noted that the allegations and counter-allegations raised disputed facts about the agreements' validity, enforceability, and the circumstances under which they were signed. The tribunal opined that such disputed facts should be ascertained by a competent civil court.

10. Applicability of the Doctrine of "Approbate and Reprobate":
The tribunal relied on the doctrine of "Approbate and Reprobate," which prevents a party from accepting and rejecting the same instrument. The tribunal cited the Supreme Court's decision in R.N. Gosain v. Yashpal Dhir, which held that a party cannot claim a transaction is valid to obtain an advantage and then claim it is void for another advantage.

11. Procedural Defects and Maintainability of the Petition:
The tribunal found procedural defects in the petition and noted that the creditor did not fairly disclose the parallel proceedings. The tribunal emphasized that the I&B Code is not intended to resolve disputed facts and that such disputes should be addressed by a competent civil court.

Conclusion:
The tribunal dismissed the petition, finding it not maintainable under the I&B Code due to the existence of disputed facts, the doctrine of "Approbate and Reprobate," and procedural defects. The tribunal also imposed a cost of Rs. 25,000/- on the creditor, payable to the corporate debtor. The tribunal clarified that its observations were not conclusive findings on the agreements' validity, which should be determined by a competent civil court.

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