Debt dispute halts CIRP against Wipro Limited, emphasizing fundamental requirements

The Tribunal dismissed the main application to initiate Corporate Insolvency Resolution Process against Wipro Limited, as it determined that the claim had not converted into a debt and a dispute existed between the parties. The Tribunal emphasized that the Insolvency and Bankruptcy Code is not intended for chasing payments and highlighted that the fundamental requirement for initiating CIRP, the existence of a default, was disputed in this case. No costs were awarded in the judgment.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence of Debt and Default
3. Compliance with Insolvency and Bankruptcy Code (IBC) and Rules
4. Dispute between Applicant and Respondent
5. Jurisdiction of Tribunal
6. Allegations of Abuse of Process and Penalty

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Applicant, through his mother and Power-of-Attorney holder, filed a petition to initiate CIRP against the Respondent, Wipro Limited, for an amount of Rs. 2,13,252/-. The amount was claimed based on unpaid 'Car Allowance' and deductions made after the closure of a car lease. The Applicant issued a Demand Notice on 30.01.2018 for the claimed amount.

2. Existence of Debt and Default:
The Respondent argued that no amount was due to the Applicant and made several submissions. They claimed that deductions made from October 2016 to February 2017 were lawful and that the car lease payments were settled as per company policy. The Respondent also contended that the Applicant was not an Operational Creditor and thus not entitled to invoke the provisions of the IBC. Furthermore, the Respondent stated that the car allowance was not a fixed component and was payable to the vendor, not the employee.

3. Compliance with Insolvency and Bankruptcy Code (IBC) and Rules:
The Respondent challenged the validity of the Demand Notice, arguing it did not comply with the IBC and Rules, 2016. They claimed the notice was not addressed to the appropriate personnel and lacked necessary details. The Respondent cited the Supreme Court's judgment in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, emphasizing that the IBC is not a substitute for a recovery forum.

4. Dispute between Applicant and Respondent:
The Respondent highlighted that there was an existing dispute with the Applicant, including disciplinary proceedings and a complaint before the Ombudsman, which was decided against the Applicant. They argued that the Applicant had unauthorized absences and failed to settle the car lease before leaving for Japan. The Respondent also mentioned ongoing legal actions, including a petition under Section 43 of the IT Act and a police complaint for the return of a laptop.

5. Jurisdiction of Tribunal:
The Respondent argued that the Tribunal lacked jurisdiction to determine the existence of debt, as the fundamental requirement for initiating CIRP is the existence of a default, which was disputed. They emphasized that the situation contemplated by the legislature for CIRP is when a corporate debtor is under financial distress, which was not the case here.

6. Allegations of Abuse of Process and Penalty:
The Respondent accused the Applicant of abusing the process of law by filing multiple applications and called for imposition of penalties under Sections 75 and 76 of the Code. They argued that the Applicant's claims were baseless and that the demand notice did not comply with mandatory requirements.

Judgment:
The Tribunal, considering the submissions, concluded that the claim was not yet converted into debt and that a dispute existed. The Tribunal emphasized that the IBC is not meant for chasing payments and dismissed the main application CP (1B) No.57/BB/2018, along with I.A. No. 120/2018. No order as to costs was made.

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