2019 (8) TMI 1139 - AT - Insolvency and Bankruptcy

Tribunal Upholds Order Admitting Application Under Insolvency Code, Shareholders Allowed to Settle

The Tribunal upheld the order admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor, despite ... Admissibility of petition - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Debtor - pre-existing dispute - supply of goods (Batteries) supplied by the ‘Operational Creditor’ - HELD THAT:- There is no dispute about the quality or short supply of the goods and the communication relates to the warranty to be given by the respondent. The other e mail dated 1st March, 2018 are subsequent to the Demand Notice dated 4th January, 2018, we are not taking into consideration the communication between the parties. While we are not inclined to interfere with the impugned order dated 17th December, 2018. However, this order will not come in the way of the Appellants to settle the matter with ‘M/s. Jay Ace Technologies Ltd.’ and other ‘Financial Creditors and ‘Operational Creditors’ and thereafter move an application u/s 12A of the I&B Code before the ‘Committee of Creditors. Appeal disposed off. Issues involved:Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor, pre-existing dispute about supply of goods, communication regarding warranty, intention to settle the matter, claims received by Interim Resolution Professional, constitution of Committee of Creditors, scope of interference with impugned order, settlement with creditors, moving an application under section 12A of the I&B Code.Analysis:The judgment pertains to an appeal filed by the shareholders of a Corporate Debtor against an order admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor. The Appellants contended a pre-existing dispute regarding the supply of goods, citing an email communication regarding warranty terms. The Tribunal examined the communication and found no dispute about the quality or short supply of goods, as the communication primarily related to warranty obligations. The Tribunal noted the intention of the Appellants to settle the matter with the Operational Creditor.The Interim Resolution Professional informed the Tribunal about multiple claims received totaling Rupees Six Crores and Thirty Lakhs, with the Committee of Creditors already constituted. Despite declining to interfere with the impugned order, the Tribunal allowed the Appellants to settle the matter with the Operational Creditor and other creditors before moving an application under section 12A of the I&B Code before the Committee of Creditors. The appeal was disposed of with these observations, and no costs were awarded in the matter.