2020 (2) TMI 392 - Tri - Insolvency and Bankruptcy

Tribunal dismisses claim, rejects bid to join Committee of Creditors, emphasizing need for undisputed debts.

Invex (P.) Ltd. Versus Dome-bell Electronics India (P.) Ltd.

The Tribunal dismissed Nityank Infrapower & Multiventures Private Limited's application, ruling that its claim of Rs. 936.59 Crores against Dome Bell ... Conducting the Corporate Debtor's insolvency resolution to admit the Applicant's claim - disqualification/removal of such members from the purported Committee of Creditors with voting share proportionate to its amount of claim - HELD THAT:- A Financial Creditor is to submit a claim in respect of a Financial debt which is an ascertained liability due from the debtor. There are several types of 'financial debts', as defined in section 5(8) of the Code. There should be an apparent 'default' for non-payment of an ascertained and definite liability. Therefore a debt should be a clear, definite and ascertainable and must not be in dispute or doubtful. A doubtful or disputed debt is a subject matter of Civil Proceedings and therefore, within the domain of Civil Courts to decide the dispute about the debt contested by both the sides. As far as the scope and ambit of Insolvency Code is concerned, this Bench is not having jurisdiction to settle a disputed debt. The scope of Insolvency Code is to proceed in respect of an undisputed debt, the payment of which is defaulted. This Bench under Insolvency Code is not constituted to settle Civil disputes. Only in respect of a defined and unambiguous debt the Insolvency Proceedings are to be commenced. In the past on several occasions the alleged claim of this Applicant had already been rejected by several Judicial Forums, therefore, respectfully following the reasoning of rejection already assigned therein, we hereby conclude that this transaction has rightly been rejected by the RP and as a consequence this Application is also rejected - Application rejected. Issues Involved:1. Admission of the Applicant's claim as a financial debt.2. Constitution and disqualification of the Committee of Creditors.3. Stay on the insolvency resolution proceedings.Issue 1: Admission of the Applicant's Claim as a Financial DebtThe Applicant, Nityank Infrapower & Multiventures Private Limited, sought the Tribunal's direction to admit its claim of Rs. 936.59 Crores against Dome Bell Electronics India Private Limited (Dome Bell) and to be inducted into the Committee of Creditors (CoC). The Tribunal reviewed the past decisions and noted that Nityank's previous attempts to intervene in the insolvency proceedings were rejected. The Tribunal emphasized that the claim was not a straightforward financial debt but involved complex transactions, including a Corporate Guarantee and Share Pledge Agreement. The Tribunal found no direct nexus between Nityank's debt and the debt in question, thus rejecting the claim. The Tribunal reiterated that only undisputed debts should be considered under the Insolvency Code, and Nityank's claim was disputed and complex, thus not fitting within the definition of a financial debt under Section 5(8) of the Code.Issue 2: Constitution and Disqualification of the Committee of CreditorsThe Applicant also sought to ascertain the constitution of the purported CoC and disqualify/remove certain members. The Tribunal did not find merit in this request, as the Applicant's claim was already rejected, and thus, Nityank had no standing to challenge the CoC's constitution. The Tribunal emphasized that the CoC's constitution and the admission of claims are governed by the Insolvency and Bankruptcy Code, which requires clear, undisputed debts. Since Nityank's claim did not meet these criteria, the Tribunal dismissed this part of the application.Issue 3: Stay on the Insolvency Resolution ProceedingsNityank requested a stay on the insolvency resolution proceedings pending the final disposal of its application. The Tribunal noted that the insolvency proceedings had already reached an advanced stage, with the Resolution Plan being considered for approval. The Tribunal found that Nityank's repetitive litigation was an attempt to delay the proceedings and expressed displeasure over such tactics. The Tribunal rejected the request for a stay, emphasizing the need to avoid multiplicity of legal proceedings and ensure the timely resolution of insolvency cases.ConclusionThe Tribunal dismissed Nityank's application, reiterating that the claim was not a financial debt under the Insolvency Code and that the Applicant had no standing to challenge the CoC's constitution or seek a stay on the proceedings. The Tribunal emphasized that the Insolvency Code is designed to deal with undisputed debts and that complex, disputed claims should be resolved through civil litigation. The Tribunal's decision aimed to uphold the integrity of the insolvency resolution process and prevent undue delays caused by repetitive and frivolous litigation.