Tribunal rejects CIRP initiation against struck off company, underscores need for undisputed debt

The Tribunal rejected the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to the company's name being struck off by the Registrar of Companies. The judgment clarified that the Insolvency and Bankruptcy Code cannot be used for recovery of outstanding amounts and emphasized the need for an undisputed debt for initiating CIRP. The Petitioner was advised to seek alternative remedies under different laws, and no costs were awarded in this decision.

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Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor for default in payment.

Analysis:
The case involved C.P.(IB) No. 407/BB/2019 filed by M/s. Bharat Elevator & Spring Co. as the Operational Creditor against M/s. Silicon Elevator Pvt. Ltd., seeking to initiate CIRP due to a default of Rs. 3,26,865. The Operational Creditor had delivered elevator parts to the Corporate Debtor as per purchase orders and invoices, but the payment remained outstanding. Despite reminders and a demand notice, the Corporate Debtor failed to pay the amount.

The Counsel for the Petitioner argued that the debt and default were admitted, and the Corporate Debtor did not respond to the statutory demand notice. Various judgments were cited to support the claim for initiating CIRP.

However, the Tribunal noted that as per the Code, CIRP cannot be initiated against a Company whose name has been struck off by the Registrar of Companies. The judgment cited in Elektrans Shipping Ltd. case clarified that the Code cannot be invoked for recovery of outstanding amounts. The Supreme Court's decision in Mobilox Innovations Private Limited case emphasized that IBC is not a substitute for a recovery forum, and the existence of an undisputed debt is crucial for initiating CIRP.

Consequently, the Tribunal rejected C.P.(IB) No. 407/BB/2019, stating that it was not a fit case for admission under the Code. The order did not prevent the Petitioner from seeking other remedies under different laws. No costs were awarded in this decision.

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