Tribunal rejects insolvency petition due to discrepancies in claim amount and suppression of facts

The Tribunal rejected the petition filed by Vitson Steel Corp Private Limited against Capacit'e Infraprojects Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016. The rejection was primarily due to discrepancies in the interest claimed, lack of clarity in the claim amount, and suppression of material facts. The Tribunal emphasized that operational creditors should not misuse the Insolvency Code and clarified that its decision should not affect the petitioner's rights in other forums.

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Issues Involved:
1. Jurisdiction and eligibility of the petition.
2. Validity of the claim amount and interest.
3. Compliance with statutory requirements.
4. Status of the Operational Creditor under MSME Act.
5. Offer of settlement by the Corporate Debtor.
6. Suppression of material facts.

Issue-wise Detailed Analysis:

1. Jurisdiction and Eligibility of the Petition:
The petition was filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 by the Operational Creditor, Vitson Steel Corp Private Limited, against Capacit'e Infraprojects Limited, a listed public company. The Tribunal confirmed its jurisdiction based on the Corporate Debtor's registered office being in Mumbai.

2. Validity of the Claim Amount and Interest:
The Operational Creditor claimed a principal amount of Rs. 13,84,122 and interest of Rs. 60,81,842, calculated at 24% per annum from 20.10.2017 to 06.03.2019. However, the invoices did not provide for interest on delayed payments, and there was a lack of clarity on the quantification of the claim. The Tribunal noted discrepancies in the date of default and the interest component, as well as the absence of a contractual rate of interest.

3. Compliance with Statutory Requirements:
The Corporate Debtor argued that the petition was defective due to the absence of a bank certificate as mandated by Section 9(3)(c) of the IBC. Additionally, the Corporate Debtor had made a payment of Rs. 15 lakh post the Demand Notice and contested the interest rate as unilateral and not contracted for.

4. Status of the Operational Creditor under MSME Act:
The Operational Creditor claimed interest based on "industry practice" and later under the MSME Act, 2006. The Tribunal highlighted that the MSME status was not disclosed to the Corporate Debtor until questioned by the Bench. The Tribunal referred to Sections 16 and 17 of the MSME Act, which cover the interest component and mode of recovery, respectively.

5. Offer of Settlement by the Corporate Debtor:
The Corporate Debtor expressed willingness to pay the principal amount due, but the Operational Creditor did not accept this offer. The Tribunal directed the Corporate Debtor to pay the principal sum within fifteen days and left it to the Operational Creditor to accept the payment.

6. Suppression of Material Facts:
The Tribunal found that the Corporate Debtor was kept in the dark about the MSME status of the Operational Creditor and that there was suppression of material facts when the Demand Notice was issued. The Tribunal cited previous judgments, emphasizing that operational creditors cannot misuse the Insolvency Code for extraneous considerations or as a substitute for debt enforcement procedures.

Conclusion:
The Tribunal rejected the petition, stating that it was primarily based on the interest component, which was not contractually agreed upon. The Tribunal also noted the lack of clarity in the claim and the suppression of material facts. The Tribunal clarified that its observations should not prejudice the petitioner's rights before any other forum.

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