2017 (10) TMI 462 - Tri - Insolvency and Bankruptcy

Operational Creditor's Winding Up Request Dismissed by Tribunal

The National Company Law Tribunal directed the Operational Creditor to approach the High Court for winding up proceedings due to the Corporate Debtor's ... Corporate Insolvency Resolution Process (CIRP) - claim of the 'Operational Creditor' - Held that:- A perusal of the additional affidavit and the documents annexed therewith also shows that based on the recommendations of the BIFR in the year 2010, the Hon'ble High Court has also taken notice of the said recommendation vide order dated 9.7.2010 and also put in motion the process of liquidation. Hence taking into consideration the documents annexed as above as well as the provisions of Notification dated 7.12.2016, as stated above we are in no doubt that the file is required to be placed before the Hon'ble High Court/Official Liquidator appointed by it and not before this Tribunal. The Petitioner is “directed to approach the Official Liquidator with the claim as made in the application, as this Tribunal is precluded from considering the Corporate Insolvency Resolution Process as sought to be initiated by the Petitioner based on amount claimed to be in default against the 'Corporate Debtor'. Issues involved:- Initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016- Compliance with Section 9 of IBC, 2016- Time-barred debt claim by Operational Creditor- Dispute over the debt amount between Operational Creditor and Corporate Debtor- Status of the Corporate Debtor as a sick industrial company- Jurisdiction of the National Company Law Tribunal versus the High Court in winding up proceedingsInitiation of Corporate Insolvency Resolution Process:Vinod Cotton Corporation, claiming to be an 'Operational Creditor' under the Insolvency and Bankruptcy Code, 2016, sought to initiate the Corporate Insolvency Resolution Process against Pasupati Fabrics Limited, alleging a debt of Rs. 5,16,17,335 towards the supply of cotton. The Corporate Debtor responded, denying the liability and citing its status as a sick company under the Sick Industrial (Provisions) Act, 1995, arguing against the initiation of winding up proceedings.Compliance with Section 9 of IBC, 2016:The Corporate Debtor raised objections regarding non-compliance with Section 9 of the IBC, 2016, contending that the debt claimed by the Operational Creditor was time-barred. The Corporate Debtor maintained that there was no dispute regarding the amount owed, and due to this bar, the Operational Creditor's claim should be dismissed.Status of the Corporate Debtor as a sick industrial company:The Corporate Debtor provided details of its status as a sick industrial company, registered before the Board for Industrial and Financial Reconstruction (BIFR), with a recommendation for winding up. Despite appeals and delays, the BIFR's order for winding up was upheld, leading to the initiation of liquidation proceedings by the High Court.Jurisdiction of the National Company Law Tribunal vs. High Court:Considering the provisions of a notification issued by the Central Government, it was determined that cases where the BIFR recommended winding up to the High Court should be dealt with by the High Court, not the Tribunal. Therefore, the Tribunal directed the Petitioner to approach the Official Liquidator appointed by the High Court with the claim, as the Tribunal was precluded from considering the Corporate Insolvency Resolution Process based on the claimed default amount against the Corporate Debtor.This detailed analysis of the judgment highlights the complexities surrounding the initiation of insolvency proceedings, compliance with legal provisions, the status of the Corporate Debtor, and the appropriate jurisdiction for winding up proceedings, providing a comprehensive overview of the legal issues addressed in the case.