2019 (12) TMI 1390 - Tri - Insolvency and Bankruptcy

Tribunal dismisses petition over running royalty dispute, citing legal proceedings and Supreme Court precedent

The Tribunal dismissed the petition filed by the Operational Creditor against the Corporate Debtor for a running royalty amount due to the existence of a ... Maintainability of petition - initiation of CIRP - failure on the part of the Corporate Debtor in making payment of the amount claimed under the Demand Notice - Operational Creditor - HELD THAT:- In relation to the franchise agreement under which the claim is made herein, already it is up for consideration before the Hon'ble High Court of Judicature at Madras and taking into consideration the provisions of IBC, 2016, where there is an existence of a dispute between the parties in regard to the claim amount prior to the filing of the Petition, this Tribunal will not be in a position to entertain and go into the same. Petition dismissed. Issues Involved:Petition filed by Operational Creditor of Corporate Debtor claiming running royalty amount; Failure of Corporate Debtor to make payment leading to the petition under Section 9 of IBC, 2016; Dispute regarding the claimed amount as evidenced by documents and responses; Previous legal proceedings initiated by Petitioner in High Court of Judicature at Madras; Refusal of High Court to interfere in the matter; Tribunal's decision based on the existence of a dispute between parties prior to the petition.Detailed Analysis:1. Petition by Operational Creditor:The Petitioner filed a petition as an Operational Creditor of the Corporate Debtor, claiming a running royalty amount of Rs. 49,13,997.00, including interest. The Corporate Debtor was incorporated on 24.05.2016 with authorized share capital of Rs. 10,00,000/- and paid-up share capital of Rs. 1,00,000/-. The petition did not propose the name of an Interim Resolution Professional (IRP) and detailed the amount claimed under a 'Franchise Agreement' with interest at 12% per annum.2. Dispute and Legal Proceedings:The Petitioner listed various documents, including the 'Franchise Agreement' dated 12.08.2016, supporting the royalty claim. A notice was issued under Section 8 of IBC, 2016, claiming royalty amounts from March 2018 to December 2018. The Corporate Debtor replied to the notice, disputing the amount claimed. Legal proceedings were initiated by the Petitioner in O.A. No. 211 of 2019 in CS No. 166 of 2019 before the High Court of Judicature at Madras.3. High Court Proceedings and Tribunal Decision:The High Court of Judicature at Madras, in its order dated 01.08.2019, refused to grant interim reliefs sought by the Petitioner. The Division Bench of the High Court also declined to interfere in the matter, making the Single Judge's order final. Considering the existence of a dispute between the parties regarding the claimed amount before the petition was filed, the Tribunal cited the law laid down by the Supreme Court in Mobilox Innovations Private Ltd. v. Kirusa Software Private Ltd. and dismissed the petition without costs.This detailed analysis covers the petition by the Operational Creditor, the dispute over the claimed amount, the legal proceedings initiated by the Petitioner in the High Court of Judicature at Madras, and the Tribunal's decision based on the existence of a dispute prior to the petition. The Tribunal's decision was influenced by the previous legal proceedings and the Supreme Court's interpretation of the law regarding disputes under the IBC, 2016.