Debtor directed to settle outstanding debt within 3 months, emphasizing need for genuine efforts in debt recovery

The Court disposed of the petition seeking the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for defaulting on a payment. Despite acknowledging the debt, the Court noted the debtor's willingness to settle the outstanding amount and directed them to clear the balance within three months. The Court emphasized the importance of genuine efforts to resolve outstanding dues before resorting to insolvency proceedings, highlighting the need to consider parties' conduct in debt recovery cases under the I&B Code.

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Issues Involved:
Initiation of Corporate Insolvency Resolution Process based on default amount of Rs. 12,96,427/- by Operational Creditor against Corporate Debtor.

Detailed Analysis:

1. Facts of the Case:
The Operational Creditor filed C.P. (IB) No. 119/BB/2020 seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor for defaulting on a total amount of Rs. 12,96,427/-. The Corporate Debtor had placed a purchase order with the Operational Creditor for supply and commissioning of automation and control systems. Despite making part-payments, the Corporate Debtor failed to clear the remaining balance, prompting the Operational Creditor to issue a Demand Notice under the I&B Code, 2016.

2. Legal Proceedings:
The case was listed on multiple dates to allow the Respondent to defend its case. The Petitioner served notice to the Corporate Debtor and filed an affidavit confirming the same. The Court considered the pleadings of both parties, relevant provisions of the Code, and the law on the issue.

3. Judgment and Analysis:
The Court noted that the Corporate Debtor had made part-payments and assured to clear the remaining balance shortly. The Operational Creditor issued the Demand Notice only after waiting for a considerable period. The Court found that the Petition was filed with the intention to recover the alleged balance amount, contrary to the objectives of the Code. As the Respondent had shown willingness to settle the claim, the Court disposed of the Petition by directing the Respondent to settle the outstanding amount within three months.

4. Directions of the Court:
The Court directed the Respondent to settle the claim as promised within three months, failing which the Petitioner could take appropriate legal action. A certified copy of the order was to be forwarded to both parties, and no costs were awarded in the matter.

This judgment highlights the importance of considering the conduct of parties in debt recovery cases under the I&B Code, emphasizing the need for genuine efforts to resolve outstanding dues before resorting to insolvency proceedings.

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