2019 (7) TMI 1646 - Tri - Insolvency and Bankruptcy

Tribunal dismisses insolvency application for failure to meet debt criteria

Amit Singhal and Ors. Versus Experion Developers Pvt. Ltd.

The tribunal dismissed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, finding that the debt claimed did not meet the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The respondents relying on the clause 4.8 and clause 5.1 in the apartment buyer agreement submits that the refund amount was not arbitrary and whimsical and that the forfeiture was lawful - And has further relied on the Judgement of the Supreme Court of India in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] that there is no debt which is payable in law or in fact. It is seen from the apartment buyer agreement clause 5.1, timely payments was the essence of the agreement. The petitioners have also failed to disclose as to how the financial debt is 'Due' from the respondent and how the cancellation notice issued by the respondents was illegal and the money forfeited was not lawful. This tribunal is of the considered view that the debt claimed does not come under the definition of 'Debt' which is in 'default' and since the petitioners have failed to satisfy this tribunal about the requirements of the section 7 of IBC, 2016 to claim any relief - this tribunal is of the opinion that it is not a fit case to initiate Insolvency process as prayed for by the petitioner/applicant - application dismissed. Issues:1. Application filed under Section 7 of Insolvency and Bankruptcy Code, 2016 by financial creditors against the corporate debtor.2. Dispute over financial debt, cancellation of agreement, and refund amount.3. Interpretation of clauses in the apartment buyer agreement regarding forfeiture and timely payments.4. Consideration of legal precedents and judgments related to debt and default.5. Assessment of the application under Section 7 of IBC, 2016 for insolvency process initiation.Analysis:1. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by financial creditors against the corporate debtor. The financial creditors invested in an apartment with the corporate debtor, alleging illegal actions by the corporate debtor in issuing a notice and refunding only a portion of the invested amount.2. The dispute centered around the financial debt, cancellation of the agreement, and the refund amount. The financial creditors claimed that the corporate debtor admitted the liability of the due amount, while the respondent argued that the agreement was terminated lawfully due to defaults in payment by the petitioners.3. The interpretation of clauses in the apartment buyer agreement was crucial. The respondent relied on specific clauses to justify the forfeiture of certain amounts and the refund made to the petitioners. The tribunal analyzed these clauses to determine the lawfulness of the actions taken by the corporate debtor.4. Legal precedents and judgments were cited by both parties. The petitioners referenced a Supreme Court judgment related to exclusion of time under the Limitation Act, while the respondent relied on past judgments to support their actions in forfeiting amounts as per the agreement terms.5. The tribunal assessed the application under Section 7 of the IBC, 2016. After reviewing the application, responses, and relevant clauses of the agreement, the tribunal concluded that the debt claimed did not meet the definition of 'Debt' in default. As the petitioners failed to satisfy the requirements of Section 7, the tribunal dismissed the application for insolvency process initiation.In conclusion, the tribunal found that the application did not warrant initiating the insolvency process under the IBC, 2016. The decision was based on the lack of evidence to support the claim of default debt and the failure of the petitioners to meet the necessary criteria for relief under Section 7. The application was dismissed without costs.