2017 (7) TMI 1299 - Tri - Insolvency and Bankruptcy

Qualification as Operational Creditor under I & B Code leads to Corporate Insolvency Resolution Process

Nupower Renewables Private Ltd. Versus Cape Infrastructure Private Ltd.

The National Company Law Tribunal, Chennai, determined that the petitioner qualified as an Operational Creditor under the I & B Code, 2016, allowing ... Winding up of the company - appointment of OL as a liquidator to the respondent company - Whether or not the Operational Creditor falls within the purview of the definition of 'Operational Creditor' as provided under sub-section (20) of Section 5 of the IBC 2016? - HELD THAT:- The term 'services' used in Section 5(21) of the I & B Code, 2016 is of a wide connotation which is inclusive. In order to interpret the statutory provision, we have to place an interpretation which gives effect to the intention of the Legislature. The facts and circumstances disclosed in the petition clearly suggest that the petitioner had advanced money to the Corporate Debtor for providing services and the payment made is for services which the Corporate Debtor agreed to render for the said consideration. The 'operational creditor' means a person to whom an operational debt is owed and it includes any person to whom such a debt has legally been assigned or transferred - The definition of 'Operational Debt' refers to claim in respect of the provisions of goods or services or dues arising under any law. Therefore, we have to construe the term 'Operational Debt' with respect to purposive and contextual interpretation. Therefore, the petitioner's claim falls within the purview of 'Operational Debt'. The petitioner is falling within the purview of the definition of the Operational Creditor. We hereby allow the application of the Operational creditor and order the commencement of the corporate insolvency resolution process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed - There is no proposal for appointment of the Interim Resolution Professional (IRP). Therefore, we direct the Registry to make a reference to the IBBI for recommending the name of Interim Resolution Professional, within ten days from the date the copy of this order is received - Moratorium declared. Application admitted. Issues: Application under Section 9 of the I & B Code, 2016 for recovery of money advanced for services not rendered by the Corporate Debtor.Analysis:1. Background of the Case: The petitioner engaged the Corporate Debtor for services related to a Wind power Project in Gujarat. The Corporate Debtor received an advance payment but failed to perform the agreed services. Subsequently, an agreement was made for the refund, which the Corporate Debtor failed to fulfill, leading to a legal notice being issued.2. Petitioner's Prayer: The petitioner sought winding up of the company, appointment of a liquidator, and other appropriate reliefs due to the Corporate Debtor's failure to repay the advance amount.3. Procedural History: The petition was transferred to the National Company Law Tribunal, Chennai. Despite proper service to the respondent, the respondent did not appear, leading to the proceeding ex parte.4. Interpretation of 'Services' and 'Operational Debt': The Tribunal analyzed the definition of 'Operational Creditor' and 'Operational Debt' under the I & B Code, 2016. The petitioner's claim for the advance payment for services not rendered fell within the purview of 'Operational Debt' as defined in the statute.5. Decision on Operational Creditor Status: The Tribunal determined that the petitioner qualified as an Operational Creditor and allowed the application for commencing the corporate insolvency resolution process.6. Appointment of Interim Resolution Professional: The Tribunal directed the Registry to refer the matter to the IBBI for recommending the name of an Interim Resolution Professional within a specified timeline.7. Moratorium Order: A moratorium was declared from the date of the order until the completion of the corporate insolvency resolution process, prohibiting various actions against the Corporate Debtor, including legal proceedings and asset disposal.8. Protection of Essential Goods and Services: The order ensured that the supply of essential goods or services to the Corporate Debtor would not be terminated during the moratorium period.9. Admission of Application: The Tribunal admitted the application and directed the Registry to communicate the order to both the operational creditor and the corporate debtor for further action.